www.lcurve.org -> www.lcurve.org/
Think of the L-Curve when you read your daily news I hope you do READ your daily news rather than rely on the TV infotainment that masquerades as news. What are its implications for tax structures, campaign finance reform, the policies of the IMF, the WTO, and the World Bank, abandonment of inner cities, factory closings, sweatshop labor, guest worker programs, US foreign policy, why we go to war, etc. Should the goal be to get motivated and get yourself onto the vertical spike? Some people who have responded to this site see it this way, but I think that misses the point. I saw a bumper sticker recently that says it best for me: Our economy produces tremendous wealth but it also produces tremendous poverty. Sure, some people can be lazy, but when large numbers of hard working people live in poverty and the middle class is shrinking, it is a systemic , not an individual problem. It goes to the top, and leaves the masses to fight over the crumbs. True, it has been this way through the ages, but that doesnt mean we should be satisfied with such a system. Some doctors and lawyers and professional people, with incomes of a few hundred thousand dollars may feel rich. They may have nicer homes and cars, and they may have attitudes that separate them from the masses. But they still must work for a living and are primarily consumers of their earnings. Whether they recognize it or not, they actually have more in common with the people at the bottom than they do with the people in the top 1/2. Can democracy meaningfully exist where the distribution of wealth, and thus the distribution of power, is this concentrated? We recently went through an economic boom where people on the horizontal spike showed little if any improvement in their condition while those in the vertical spike showed huge gains. Do we really want to gear up our national policies to repeat this performance? Those in the vertical spike would like to have you resent the poor who are portrayed as welfare leeches. Which group actually has a bigger negative impact on your lifestyle: the people in the bottom half of the graph, or the people in the vertical spike? In 1997 over 144,000 tax returns were filed with adjusted gross incomes of $1 million or more. As the vertical spike rises it thins down to a few individuals, but there is a growing class of billionaires that collectively holds a substantial fraction of the wealth of the country. People on the vertical spike can use their influence single-mindedly and very effectively. A single billionaire can get the undivided attention of any politician he wants, any time he wants. If he doesnt get what he wants he can, in fact , fight city hall, the statehouse, and even the federal government. People on the horizontal spike must pool their limited individual power and organize to have any effect at all. The mainstream media has been bought up by people in the vertical spike. The primary channels for information and expressed opinion are controlled and filtered by a small, powerful group on the vertical spike whose interests are not representative of the majority of Americans. Even when there is no direct political message the programming is tailored to the perspectives and sensitivities of large corporations. Programming is simply the hook to hold an audience until the next commercial. Serious examination of ideas of any kind is seen as counterproductive because it may alienate or bore part of the potential audience.
The growing media monopoly dilutes and distorts the national dialog, and thereby destroys the basis for democracy. We must find ways to rebuild community and learn to talk to each other directly . When taxes are cut, whose taxes are cut and whose programs are cut? What kinds of taxes are being cut and what kinds of taxes whether they are called taxes or not are being imposed? The pre-Reagan progressive income tax drew more from the vertical spike. Simplification is unrelated to the issue of who the money is coming from. You could have a simple progressive tax just as easily as a simple flat tax. The proposal to eliminate the income tax entirely would be disastrous. Those on the vertical spike would escape virtually all of their obligations and the burden of government would be born almost entirely by those of us on the horizontal spike, both through increases in other forms of taxation and reduction of services. This is the direction tax reform needs to take if it is to be truly considered reform. Can the people on the horizontal spike take control of their own destinies and truly make this a nation governed in the best interests of the people? The economy is a complex system, but it is essentially a human invention. If it is not managed intentionally, then it is managed or manipulated by those who hold political and economic power, typically to their own advantage. It is just as important to ask how the benefits of the economy are distributed through the population . A truly democratic society needs to find ways to manage the economy to benefit the population as a whole. Links to Related Sites Data sources: Census Bureau / Internal Revenue Service / Economic Policy Institute Note: these data sources are notably lacking in data within the top 1. Census data goes up to $300,000 and IRS data goes up to $1 million. Information to plot the vertical spike had to be obtained from news articles and other sources of commentary. If information on the top 1 is not known or easily obtained, statements about the socioeconomics of income and wealth are suspect. Michael Parenti has written an illuminating article on this topic. Since I first posted this site, several people have quibbled over various technical points. Here are a few of the issues raised: Increase in net worth is not the same thing as income, according to one reader. However, I recently received a comment from economist John Maher who wrote, I believe the first readers comment is incorrect. Increase in net worth IS income according to the renowned economist, John R. The income of very wealthy people typically varies radically from one year to the next. Sometimes years of huge earnings are followed by years with similarly huge losses. I have added a comment to this effect in the main body of the text above. Those of us on the horizontal spike, however, find radical jumps in income much harder to achieve. The published wealth of billionaires is typically estimated by their holdings in their own companies. These estimates do not included their typically vast diversified investments. Income on paper, from growth of investments, needs to be distinguished from taxable income. Its true that there are differences among different kinds of income, so they arent strictly comparable, but political and economic power derives from wealth, whether it is taxable or not. My response to all of these kinds of questions, in short, is that the truth of my central thesis is not dependent on the exact height of the graph or shadings of definitions. As one correspondent put it, there is a money spike and there is a population spike . One class derives concentrated power from its concentrated wealth. That power is effective only to the extent that it can be mobilized through organization.
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