The working class vs. the investment class

The recent divulging of Mitt Romney’s tax returns has put the 99% vs. 1% discussion into perspective. Although it is astonishing to see a guy talk about people who “don’t work” when he himself does not really work, I have come to expect anything coming from the republicans. If we set aside the elderlies and the veterans, whom everyone can agree have already done their fair share of work, we are left with the people that taxes through their payroll (people holding jobs) and the people the people that pay taxes on the revenues from their wealth (investments class) and by definition the don’t hold jobs and don’t work, at least not 9:00 to 5:00. Well I guess to say that they don’t work is not really fair, they work at maximizing the returns on their investments as to accumulate more wealth and, theoretically at least, create new jobs. The only difference here is that this kind of work is taxed at a lower rate.

This reminded me of something, in his book “Rich dad, poor dad’ Robert T.Kiyosaki talks about his experience as a young boy who grew up with two father figures. When discussing as a boy what to do with one’s life, each one had a different message for him. His highly educated, but poor, dad would say: “go to school get good grades, and then find a safe secure job”; whilst his rich, but uneducated, dad would say ”go to school, graduate, build businesses and become a successful investor”.  Two different mind sets that lead to two different results; one where you work for your money and the other where your money works for you.

At the heart of this dilemma lies risk & responsibilities, how they are perceived, how they are weighed and managed. Never mind the fact that job security is a thing of the past, risk averse people will then to look for a jobs a it will provide a sense of security, they do their work within an agreed timeframe and they get a paycheck, they don’t have to worry about anything else. The business owner or self-employed person needs to constantly be thinking about, at least maintaining if not growing their business or practice and revenues. Along with that comes all the administration work and looking after employees. So as you can see the rewards are potentially higher but there are a lot of other things to manage and be responsible for, in other words, a lot of work. Obviously if you have enough money working for you, then you hire people to take care of all that work for you.  Which brings us back to the original point that the investment class does not work for a living. Would they work then they would have pay taxes like the rest of us.

Then there is this “taxofobia”.  As is paying taxes should be a thing to avoid most. Ok, I agree no one wants to give their hard earned money, whether it is through years of patience and careful investments or a 40-hour week of brute force and sweat.  On the other hand we enjoy living in a society and communities where: we feel safe;  if we should fall ill, we can be certain someone will take care of us; we don’t have to miles to the nearest well to get glass of water; etc. So you can see there are lots of benefits to organizing ourselves and creating structures and organizations that can provide theses services to the community and population. That is what government does.

It is interesting to observe the evolution of the role of government in the Republican speech over the last 50 years. They appear to have swung completely off the chart. Under Nixon, government still had a role, some may even argue that his vision of government is what help bring him down, today the rhetoric has moved the masses to believe that government equals socialism. Any redistribution of income is bad. During the past Busch presidency, what was once considered a “holy cow” of government functions, the military has begun to get outsourced, with companies like Blackwater and Haliburton, to name a few, raking in huge profits in the process. Here is another example; this week kids in Kansas grab the media attention with a YouTube video parody of the song -we are young- titled “we are hungry”. The action was a protest against the new school lunch initiative that promotes a healthier diet, fruits and vegetables. This was picked up by the “rightist” media and blown into a debate about how the government is trying to tell kids what to eat! Considering that the USA has the highest child obesity rate in the world, that is actually a good idea.  Sadly this the number news channel in the US.  By exploiting sound bits, twisting or hiding facts or just plain lying, they constantly generate a kind of fog around the real issues and brainwash their viewers with their message, keeping everyone ignorant in the process. Ironically, I must say, it was refreshing to see Bill Clinton, at 66 years old, try to make a case with facts and numbers in his speech at the Democratic conventions a few weeks ago. Unfortunately he only represents one side of the divide.

When the pie is growing the 1% vs. 99% discussion is not so sensitive. The 99% get the 99% of the growth, each a tiny bit, and are satisfied with having the opportunity to dream about making the 1% on day. When the pie is shrinking the 99% have a lot more to lose and suffer a lot more. If growth is not restored to keep it in equilibrium, the pain builds up like pressure and can lead to explosions and revolutions.

Instead of hiding his income, Mitt Romney would have been better off showing his tax returns early on and explaining this difference in tax rate and tax class, creating a reason to celebrate his success. Encouraging more people to aspiring to belong to the investment class is not a bad thing; it’s the American dream!

Zabok, HR – 3rd October 2012

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