Matt Taibbi and Chrystia Freeland on the One Percent’s Power and Privileges – BillMoyers.com 10-19-12

Salient to Investors:

New York City’s economic inequality rivals that of a third-world country – in 2011, the median annual income for the bottom 20% was less than $9,000, the top one percent was $2.2 million.

Income inequality is the highest since the Great Depression – the top 1% took 93 percent of the income earned in the first full year after the recovery. Studies indicate the divide between the superrich and everyone else may stifle jobs and growth for years to come. Never before in modern history has the top .o1% owned more of our wealth or paid so low a tax rate.

Chrystia Freeland of Thomson Reuters Digital said:

  • Income inequality is still taboo in American political and cultural life and why we have the billionaire class. People at the bottom and in the middle are being hammered.
  • The two real and present dangers of inequality are the people at the very top capturing the political system. Willem Buiter at Citigroup said that one cause for the financial crisis is that the entire intellectual establishment – investment banks, regulators, academic economists, financial journalists – have been captured by the financial sector’s vision of how the economy should work, with light touch regulation.
  • Elites think of themselves as acting in the collective interest, even as they act in their personal vested interest. As a result, social mobility will increasingly be squeezed, while powerful sectors, finance, oil, and soon technology getting lots of government subsidies. Much less money will be spent on the middle class and poor. Plutocracy want to cut entitlement spending because they don’t need it and don’t want to fund it.
  • Economic growth will be stifled as America moves to a more Latin American economic structure, with a few incredibly rich having great lives and the people at the bottom struggling.
  • The winner take all economic dynamic exists separate from politics, which are exacerbating the division rather than mitigating it, and is a global phenomenon.
  • Even in France and Canada, income inequality is increasing, and in the emerging market economies. Politics allowed globalization to happen.
  • There’s a battle of the millionaires versus the billionaires. While 93 percent of the recovery went to the one percent, 37 percent went to the top 0.01 percent. The elite are very keen to divide the world into good plutocrats and bad plutocrats, but everyone believed that they and their business belonged to good plutocrats, and somebody else belonged to bad ones.
  • Absolutely sincere self-justification is one of the biggest dangers in our society. Since the Reagan era there has been this vision of the successful businessperson as really a leader for the whole society, the hero of our capitalist narrative. The elite frame their influence as for the greater good, thereby devaluing the role of government as an independent, respected arbitration body in the center of the ring.
  • Leverage at U.S. levels was not allowed in Canada and Canada didn’t have a financial crisis – it’s the only G7 country that didn’t have to bail out its banks.
  • While the bailouts were absolutely essential, they should have had strings – Warren Buffett drove a much harder bargain with Goldman Sachs than the U.S. Treasury.
  • Barack Obama is in many ways a plutocrats – in education, in thinking. He could very easily be a top corporate lawyer. He thinks like them.

Matt Taibbi at Rolling Stone said:

  • The inequality began with Clinton and the New Democrats, who vowed never to lose the funding battle again after Mondale lost in 1984, though continue to campaign on social issues the same way. Democrats began to side more and more with Wall Street and the very rich – now neither party represents the very poor. The middle class is being decimated.
  • The poor are incredibly demoralized, with the media’s relentless message that being poor is your own fault and being rich is deserved.
  • A caricature of what is happening in America. and which the world is drifting towards, was when Russia in the mid 90s went capitalist, resulting in an instant division between hugely rich people at the top and everybody else who had nothing. The merger of state and private power empowered this one tiny little class – loans-for-shares privatizations essentially handed the jewels of Russian industry to a few people, many ex-KGB types.
  • The smaller hedge funds and banks get upset at bailouts for Citigroup, Goldman Sachs and J.P. Morgan Chase that enable them even greater market share. Since the very biggest commercial banks will never be allowed to go out of business, they are able to borrow money more cheaply and gain an inherent financial advantage over small, regional commercial banks. Smaller hedge funds believe big investment banks are selling them out to even bigger hedge funds that are giving away information about their positions to even bigger clients so that somebody else can trade against them.
  • Financial services people, particularly at the very top, sincerely believe that they have not done anything wrong and have built a very powerful insulating psychological justification for their lifestyles. They genuinely believe that they are the wealth creators and that they should get every advantage and break whereas everybody else is a parasite and they’re living off of them.
  • We are headed towards a community of rich people completely disconnected with the rest of the world, with the power and influence over the government to legalize whatever it is that they want to do. Raising money for campaigns is just too overwhelming for most legislators to get past. We face a continual worsening of the situation, continued decimation of the middle class.
  • The bailouts were necessary but were done without any conditions at all and without any investigations like in the S&L crisis.
  • Obama has surrounded himself with elite people, like Larry Summers and Bob Rubin, and has accepted many of the justifications and arguments that come from Wall Street and the business community. He is emotionally and culturally much closer to the elite than he is to the rest of us.

Read the full transcript at http://billmoyers.com/wp-content/themes/billmoyers/transcript-print.php?post=15186 or watch the video at http://billmoyers.com/segment/matt-taibbi-and-chrystia-freeland-on-the-one-percents-power-and-privileges/