What do we know about the 1 per cent?

Little, but enough to debunk a few common misconceptions

by Stephen Gordon

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Not enough, really.

The surge in the share of total income that goes to the very top earners has been widely documented and much discussed. But without a proper understanding of why it’s happening, there’s not much we can say about what policy measures would solve the problem—or even if there’s a problem to solve. Many of the proposals currently being floated about have a whiff of the Politician’s Syllogism: “We must do something. This is something. Therefore, we must do this.”

So when Mike Veall, an economics professor at McMaster University, took the podium at last June’s meetings of the Canadian Economics Association to give the Presidential Address—entitled “Top income shares in Canada: recent trends and policy implications”—there was a certain amount of anticipation in the auditorium. Mike has been working on this issue for a long time, and has written or co-written some of the most important studies on the topic. If anyone could come up with a convincing explanation for the surge in top-end income in Canada, it would be Mike Veall. His answer:

“I don’t know”

That doesn’t mean we don’t know anything, of course. His talk was recently published in the Canadian Journal of Economics (ungated version available here), and is worth taking the time to read if you’re interested in the topic. Here, I’m going to provide what is essentially a summary of a summary.

One feature of the surge that is perhaps not as well-known as it should be is the way top earners are making their money. In the post-war era, the popular image of high earners being people whose incomes derived from large holdings of capital was largely based in reality. Most of the income that went to the top 0.01 per cent in 1946 came from capital (interest, profits, dividends, etc) and about one-fourth was in the form of wages. In 2009, though, wages accounted for two-thirds of the income in the top 0.01 per cent. So although capital markets and profits attract a lot of attention, the real story of the top income surge is primarily one of labour markets and wages.

Why did wages at the top increase so much? Veall identifies four main theories that have been proposed and that are not without at least partial support in the data:

  1. ‘Globalization’: This is the term Veall uses to describe the internationalization of the market for high-skilled workers. To the extent that high-skilled workers in Canada can credibly threaten to move to (say) the U.S., Canadian employers would be obliged to match the wages being offered there. This theory has a lot going for it, but it simply raises the question of why salaries rose in the U.S. in the first place.
  2. Skill-biased technical change (SBTC): The idea here is that although technical progress increases productivity and wages, it doesn’t always do so uniformly. If new computers and new communications technologies only improve the productivity of those who have the skills to use them, then they will widen the wage gap between skilled and unskilled labour. SBTC may be a contributing factor, but it can’t be the principle explanation. Rapid technological change has been fairly ubiquitous, but only a few countries—most notably those with English-speaking populations—have seen top-end incomes skyrocket.
  3. Executive compensation practices: CEOs and other executives are employees; their bosses are the people who own the company, namely, the shareholders. In principle, executive salaries are negotiated between the executives themselves and people who represent the interests of shareholders, and if shareholders believe that a high salary is justfied by an executive’s contribution to the bottom line, then there’s not much cause for concern. Problems occur if CEOs have undue influence on the people who are supposed to be representing shareholders. This is, again, almost certainly part of the problem, but it’s hard to see how this theory explains the high salaries paid to CEOs hired from outside the firm.
  4. Changes in personal income tax (PIT) rates: There’s an extensive literature documenting the inverse relationship between taxable income and PIT rates: higher tax rates reduce the incentive to work and  increase the incentive to make greater use of mechanisms that allow people to avoid paying taxes. The relationship is even stronger for those with high incomes, so the reductions in PIT rates we’ve seen over the past decades could have been contributing to widening inequality. The problem here is that the PIT rate-tax base relationship estimated from Canadian data explains only a fraction of the increase in top income shares.

In the absence of a “silver bullet” explanation, it’s hard to put together a policy agenda. Even so, here are some ideas Veall thinks we should be looking at:

  1. Tax policy. It turns out that Canadian PIT rates are already pretty close to available estimates for the rate that produces maximum revenue, and the rise in top incomes doesn’t change those estimates. Veall is pessimistic about the prospects for generating significantly higher revenues with higher rates. However, closer inspection of the myriad of tax deductions, exemptions and credits may produce measures that remove tax preferences that exacerbate inequality.
  2. Corporate governance: Veall notes that “it has been estimated that Canada has a relatively high prevalence of insider trading and it has not been immune to practices such as backdating options.” To the extent that this suggests the existence of an “insider culture” in Canada, initiatives to reinforce shareholder oversight are something to be looked at more closely.
  3. Social mobility: As Veall puts it, “many would argue that one of the most negative aspects of inequality is intergenerational immobility. If a high ability child born to lower socioeconomic status has little chance to advance and use her or his talents, or if someone of low ability takes home a large salary as the CEO of the family-controlled firm, it may be widely seen as unfair but it will also lead to a less dynamic and productive economy.” Canada actually does relatively well as far as international measures of social mobility go—due largely to access to public health care and education—but that doesn’t mean it always will, or that it can’t do better.

We would all like to know more about why the top-income surge is happening and what we should do about it. But all we have to go on for now are partial answers.




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What do we know about the 1 per cent?

  1. From what I can tell income ‘inequality’ started to occur when top marginal tax rates were reduced from 70-80% pre Brian Mulroney and Wilson’s income tax reforms between 1986-88.

    Do they teach anything other than communist economics in Ontario and Que universities, Prof Gordon? Why is this a even a problem, a few people are allowed to keep more of their wealth and use it productively to employ other people or buy things produced by working people. Since top tax rates were reduced there has been explosion of wealth creation and more money for government to steal from productive people.

    An ex-smackhead, his wife and two children moved across the road from us six months ago. Nice people actually – I wouldn’t know he was addict if he didn’t mention it – and the guy works part time and they collect at least $2,500 a month in government benefits.

    Every one looks at wealthy and complain about how unfair it is but no one talks about the crack addicts that we give lots of $$$ to so they can live comfortable lives. When we had top tax rates of 80% we sure were not producing enough wealth to give drug addicts an annual salary equivalent to your average working person.

    • How did you pick which words to read? Every tenth one? Every second sentence in every second paragraph? The ex-smack-head (if he is one) is not without humour, I see, because I think he pulled a fast-one on you. Unless, of course, both of his children suffer from a disability or something. The problem isn’t that some people make more than other people, and of course you know that–your argument about it notwithstanding. The problem is the rate at which those some people’s earnings are increasing vs. everyone else’s earnings. And that isn’t the whole problem, either, because I think the more pressing problem is how the increase in money is relating to an increase in power–right back to the Gilded Age.

      • That would explain it. I’ve often wondered how he does that!

        And naturally he doesn’t mention how ‘inequality’ exists in other countries, he just blames Mulroney.

        People just want access to the system…equal opportunity…..no one expects equal results.

    • “Do they teach anything other than communist economics in Ontario and Que universities, Prof Gordon?”

      This just demonstrates the sheer ignorance of right-wing ideologues. During the post-war era, North America was centrist, not communist. Then we were fighting the commies in the Cold War.

      If these people can’t even manage to comprehend the left-right economic spectrum, how on Earth are they going to understand anything as complex as the economy?

  2. Closing The Wealth Gap:

    The foundation of collectivism is simple: There should be no important economic differences among people. No one should be too rich. No one should be too poor. We should “close the wealth gap.”

    This is a very powerful idea. This is a very common idea. This is a very bad idea.

    “Gaps”–differences–are innate to mankind. Do we want to close the “beauty gap” and make every woman look like Margaret Thatcher? Do we want to close the “talent gap” and field a World Cup football team starring, for example, the people on this panel?

    But proposing to close the “wealth gap” is worse than silly. It entails a lie. The notion of economic equality is based on an ancient and ugly falsehood central to bad economic thinking: There’s a fixed amount of wealth. Wealth is zero-sum. If I have too many cups of tea, you have to lick the tea pot. But wealth is based on productivity. Productivity is expandable. Otherwise there wouldn’t be any economic thinking, good or bad, or any tea or tea pots either.

    Since the beginning of the industrial revolution human productivity has proven to be fabulously expandable. The economist Angus Maddison has been studying economic growth since the 1950′s. In 1995, under the auspices of the Organization for Economic Co-Operation and Development, he published a book, Monitoring the World Economy 1820-1992. The earth had fewer natural resources and no more farm land in 1992 than it had in 1820 and in that period the earth’s population multiplied by five. But, in 1990 U.S. dollars, the value of everything produced in the world grew from $695 billion in 1820 to almost $28 trillion in 1992 and the amount of that production per person went from $651 to $5,145.

    http://www.cato.org/publications/speeches/closing-wealth-gap

    • “The foundation of collectivism is simple: There should be no important economic differences among people. No one should be too rich. No one should be too poor. We should ‘close the wealth gap.’ This is a very bad idea.”

      How absurd. People across the political spectrum at talking about how rising inequality is a threat to prosperity. Even The Economist (a right-leaning magazine) came out with an in-depth study addressing the issue.

      No major political party is promoting the use of collectivism (communism.) No one is saying eliminate all levels of inequality. They are saying too much is bad for the economy. In fact, both global economic meltdowns (1929 and 2008) occurred when inequality reached very high levels.

      The purpose of macroeconomics is to develop a system that allocates economic resources so they are used most effectively creating the most prosperity. Free-market ideology utterly fails to accomplish this because: a) its premises don’t come close to describing the real-world economy; and b) it allows the wealthy to hog up all the resources putting them to waste preventing people from realizing their full economic and human potential.

      The only system that has worked so far is the Keynesian system which is in the center of the economic spectrum.

    • Hey–don’t diss Margaret Thatcher!

  3. Very good summary and post. I am appreciative of individuals who outline possible options and acknowledge no definitive but rather debatable results/options.

    On a related note, a CBC The Irrelevant Show clip (earlier posted on a CC blog) whose relevance comes in the form of the punchline:

    http://www.cbc.ca/irrelevantshow/popupaudio.html?clipIds=2298854735

  4. Try this on for size:

    1. Technological advances and outsourcing reduce factor inputs and boost productivity, increasing profits while displacing/replacing mid-level jobs.

    2. Strict regulations protecting management and upper end white collar professions from global competition (Banking, law, medicine).

    3. Increased leverage for management class, leading to regulatory capture and legislative action against organized labor.

    How’s that?

    • Oh, and a few more: Preferential tax treatment of capital gains and dividends, subsidies for corporate debt and financialized vehicles for tax avoidance.

      That should just about do it. So can I have a column?

      • Economic growth is not the growth of public debt.

        Sodom Hussein Obama is just a lawn jockey for the EUSSR…

        Forcing everyone to buy health insurance from the Wall Street insurance companies that are owned by the big banking cartels makes no sense at all.

        Occupy what?

        State governments alone have a 5.17 trillion dollar public employee pension liability and no way to pay for it.

        This was known for years, but like the looming mortgage disaster and the looming commercial real estate and student loan disaster, it will be hidden by the media and ignored until the bubble pops or the Democrats can figure out some way to blame George Bush…

        The United States Senate Exchange has been looting the public for decades, it is where both Obama and Biden came from.

        Keynesian economics is a model based on an exponential growth curve and is doomed to failure because it is a mathematical certainty.

        • Are you sure you’re on the right forum?

          • I’m sure you aren’t, this is not a pedophile hub like the Muppets on PBS…

          • I know I shouldn’t feed a troll, but what are you talking about?

          • Wolltest du nicht zur juedischen Bank gehen???

  5. I think you’re missing a theory.

    The reason is that it has become easier to reach a wider customer base.

    Why do sports stars and music stars make more money? Because it’s easy to sell to the entire planet. Sports stars get massive amounts of money from TV deals. Music stars can easily market and sell to the world through the internet.

    What about IT moguls? Google and facebook were able to acquire a user-base numbered in the millions in a short amount of time. In IT it is very easy to sell to vast numbers of people. This is how Mark Cuban and Kevin O’Leary on Dragon’s Den became rich. This is how Bill Gates and Paul Allen became bilionaires.

    But it’s not just restricted to IT and entertainment. Even chefs can market themselves to the world (Jamie Oliver and Gordon Ramsey).

    The Fords and Rockefellers (and their counterparts today like Carlos Slim) became rich by mass production and industrialization. Today just about anyone, anywhere, can do the same given the right amount of hard work, dedication, intelligence and of course luck.

    The 1% is comprised of people that found ways to sell themselves or sell their products to vast numbers of people, which has become easier today than ever before. This is of course a good thing, much like industrialization was. But it also has the same kind of societal impact that industrialization had, and it creates winners/billionaires on a scale never seen before, just like industrialization did.

    • Hockey players have always made more than teachers. Same goes for most of the other things you mention.

      The concern is about the middle class disappearing.

      • Wrong. He’s talking about the 1%. See the title of the blog post.

        • We have a 1% because the middle class is disappearing

          • Wrong. You can’t cram 30% into 1%. This is basic math.

            Also, there will always be a 1%, there has always been a 1%, anything that can be divided into percentages will have a 1%. This is basic math.

          • Actually it’s class structure, but I’m doubting you know much about that either.

    • That falls under SBTC. Veall does make reference to Rosen’s “economics of superstars”.

      • OK. I also like henry clarke’s point number 2 below, although I think it applies more to the top 5% than the top 1%.
        “Strict regulations protecting management and upper end white collar professions from global competition (Banking, law, medicine).”
        I think this is a big problem in today’s society, more and more professions including hair dressing and interior decorating are creating barriers to entry.

    • But the average person does not have to be taken in by such shallow fame and marketing techniques. We, the consumer, chooses to be taken in.

    • How many of the wealthy earned their wealth; ethically?

      • Aren’t you the class warrior. Your comment has nothing to do with my comment.

        If you want to ask a general question, start a new thread. If you want to make even the slightest reference to my comment, hit the reply button.

  6. http://www.cbc.ca/video/news/audioplayer.html?clipid=2141577453

    This link to an interview with Roger Martin resonates with me still, even though i haven’t yet read his book – Fixing The Game.

    My feeling for what it’s worth is he’s pretty much on the mark; it’s a moral question as much as an economic one. The well intentioned move toward maximizing share holder profitability after that seminal paper in ’76 has had some really nasty and unfortunate unintended consequences for us all. It’s all well and good to be moving toward a talent driven business/investor model – rather than a more hierarchcial capital one – but if that talent is not ultimately directed toward a broad common good goal, then just what kind of global society are we going to wind up with?

    http://www.businessweek.com/stories/2009-04-17/rethinking-ceo-stock-optionsbusinessweek-business-news-stock-market-and-financial-advice

    Perhaps a little more grist for Martin’s mill?

    • A global society of our own choosing. Each and every one of us has to answer to moral questions. Including the one: why do we, as individuals, feed the beast you are describing?

      • Maybe? But if it’s in everyone’s collective hands it is in a sense in no ones. Efficiency seems to be the name of the game these days. They seem to have little or no difficulty selling it to the great mass of the consuming public.
        It will take leadership from individuals asking tough questions before there is enough of a critical mass amongst consumers to push for a real change. Sometimes that comes from the oddest quarters. For all the pooh pooing from the wise heads of society it seems the hapless, leaderless Occupy crowd has had an enormous impact on public perceptions.

        • the leaderless Occupy crowd is a hodgepodge claim of grievances. Nothing more. The occupy movement vaguely understands that something is amiss within society and wealth distribution, but a shrill shout in the dark only makes matters worse.

          • Disagree. But it’s still a free country – for now.

          • Please explain how to read into such “enormous impact on public perceptions” the leaderless Occupy crowd may have had. I must have missed something real big.

          • What I saw coming out of the Occupy movement is this:

            the average human being is getting less intelligent, as shown by the Occupy movement.

            Why could the movement not find a leader to form all of these grievances into one coherent and overseeing complaint against that which is amiss?

            Why was there no clear idea forthcoming out of all the Occupy movement members minds? Lots of minds, yet very few, if any, good ideas delivered.

    • thank u for the link to the Sunday edition with Micheal Enright. I just listened to it and liked what was being used as an example of Johnson and Johnson for instance: corporate credo: consumer first, employees second, communities in which we work third, and when all goes well with the first three, the shareholders will be taken care of.

  7. The “why” behind skyrocketing inequality is simple enough. Over the past 30-year “age of greed” we implemented a number of free-market reforms that were entirely self-serving to businessmen. This created an economic tide that only raised the yachts. Living standards were continuously downsized for everyone else.

    In the centrist post-war (Keynesian) era, we had a functioning economy that allowed all segments of society to benefit from GDP and productivity growth, creating modern living standards (what’s left of them.)

    During the free-market era, taxes for the wealthy were also continuously cut. As Gordon pointed out in his last blog, this was to “starve the beast” or destroy post-war government (1. cut taxes; 2. create a budget crisis; 3. justify deep spending cuts; 4) go back to 1.)

    During the post-war era, before the 25 years of “starving the beast” began, we had progressive taxation, rising living standards, phenomenal GDP growth and paid our bills. We paid down debt from 100% debt/GDP to 17% (now its back up to 85%.) The US paid its down from 135% to 35% (now 103%.)

    If we want to reverse all this damage, we just have to reverse the failed right-wing policies that caused it all.

    • Yet today average Canadians live better then average Canadians did in the ’50s, ’60s or ’70s.

      • No we don’t. Back in the post-war era, a factory worker could make it to the middle class, support a house and family on a single income, have a life-time job with good pay, benefits and a company pension. How much of that is left after 3 decades of continuous corporate downsizing?

        And the scariest part is that this process of destroying living standards and the social safety net is not done yet. More free-trade deals with developing countries and more reckless tax cuts for the rich will destroy more “jobs, growth and prosperity.”

        Fact is, the 2000s was the worst decade for GDP growth since the Great Depression. The 2010s will be even worse. (In the 1980s and 1990s, we could expect recovery growth of around 5%. During the 2000s it was 3%. Now Mark Carney says the economy is in recovery at 2.5%.)

        • In the ‘post-war’ era, much of the world was trashed, and needed consumer goods. So it was a boom-time. That was a one-off.

          Don’t hang around waiting for that to happen again.

          • So you are claiming people no longer need consumer goods? How absurd.

            The only difference between now and then is that there is a wider selection of consumer goods (thanks to technology and innovation) and they are higher value-added (thanks to technology, especially information technology.)

            The reason people are poorer now is because of 30 years of anti-Keynesian free-market reforms that promised prosperity but brought the very opposite. This flaky ideology was called “trickle down” economics. But really it was “trickle-up” economics: one-sided, self-serving policies that transferred wealth from the people to the 1% (that’s what the evidence says…)

            No need for outlandish conspiracy theories. The straight up facts explain everything comprehensively. The mixed-market system still works very well in northern Europe. Free-market ideology also caused the global economic meltdown in 2008 (which we have yet to recover from…)

          • No, I didn’t say that as you very well know, so stop lying.

            However very few people need consumer goods now as compared to post WWII. Most people already have fridges you know

            Stop with the Keynesian crap, and your conspiracy theories….no one is interested. Life….and change….go on, like it or not.

          • How about the several hundred million Chinese and Indians that have been lifted out of poverty in the last few decades? I’m sure they’re eager to buy the computers, cars, and other consumer goods that we (and by “we” I mean the late-capitalist societies of the West) produce. In fact, RIM is only staying afloat because of the market in the Developing World. So I’d say the market for consumer goods is as good as ever.

          • TV shows in the 50s gave away household goods….furniture, appliances…and people were hysterical about it. Today nobody swoons over fridges and stoves…they are a commonplace as most people have them. So they’re sold as replacements or to people ‘starting out’….although it’s cheaper to buy second-hand….but that’s it. Stoves now come in colours to tempt people, and fridges keep inventory and tell you when you’re out of cheese….and that sells a few more

            So yes, new markets were needed, and they exist in the east. It won’t be nearly as big as you imagine though…..the countries are crowded, homes are small, food is prepared differently…..and other cultural changes are taking place. Every single dwelling having one of everything….washers, dryers, etc is wasteful. Other arrangements will be made.

            But the key difference is this…’we’ aren’t making the items. ‘They’ are.

            And there went our manufacturing sector, and jobs, and the money to buy consumer goods……for a whole class of people.

            And now we have 3D…so we can make what we want within our homes

          • PS….I meant to add….
            RIM sells to the leaders, the business people, professionals, academics etc around the world….people who need reliable, secure communications.

            Samsung Galaxy, Nokia and the like sell to the masses.

      • Thats your opinion and just because you think you are right does not make you right.

  8. The issue is much more complex.

    Besides the points raised by Mike Veall within his address, it could be said that:

    the average person is getting dumber.

    It used to be that many of the articles and services consumed were made and provided for by the average persons themselves ( for instance: food was made from scratch, and the market for raw products – the carrots, potatoes etc – was kept down to earth.) The connection between the raw product and the end product to be consumed was much closer and so less distortion within markets and regarding wage setting.
    Now we have most anything prepackaged for us. Not just consumer products but consumer services as well. Hence, humans have made themselves dependent on readily made products and services.

    Markets have now become one of convenience (and shallowness), and whoever can provide the best conveniences (and shallowness) wins out regarding wage setting and return on monies invested.

    The more people rely on readily available convenience, the dumber our populations are getting, the more such dumbed-down populations will come to rely on outside provision of consumer goods and services. This trend obviously started long before the 1980′s.

    So I would say that Mike Veall’s points address but a portion of what has been going on. Nothing can be taken up in isolation, including Mike Veall’s points, including Justin Bieber’s appearance on the cover page of Macleans. Why, really, does a young man like Justin Bieber appear on the front cover of a relatively serious newsmagazine? To sell copies, of course, and to sell copies to as many as possible. Many dumb people are taken in by Bieber’s so-called fame without adequate substance attached, and Macleans feeds on this phenomenon again in the name of money. See how it all grows?

    • The answer to everything is to go back to the farm….yah, riiiight.

      • So now you’re trying to tell me you wish to leave the funny-farm? Better for you to stay there, EmilyOne. The world is a dangerous place, full of people with thoughtful opinions. Obviously a much too dangerous a place for you.

        • Topic here is economics

          • exactly: economically speaking we’re all better off if you stay at the funny farm, and economically speaking it would be better for you to stay there.

          • Again, enough with the sexist attacks….discuss the topic or don’t bother answering at all.

          • Sexist attacks? I was merely referring to the fact that many empty heads are proliferating, including the ones who adore Justin Bieber, and that on the shortcomings of such a dumb populace Justin can become stinking rich. People living in the funny farm setting don’t understand how it works. They just buy and believe and aren’t open minded enough to read into theories being of value.

            Or do you believe Justin Bieber makes his money on the heads of the wise? Because if you believe that you should have said so.

            Perhaps you can believe that Macleans puts Justin Bieber on its front cover because Justin is such an unbelievable artist and we must all be made aware of his extraordinary talents. Perhaps you believe anything Macleans wants you to believe. How am I to know what you think if all you pick out of my initial post is that I think we should all go back to farming. Perhaps you can’t read properly, and I have pointed that out to you many times before.

          • MmmHmmm. Red Bieber Herrings aside, stop with the attacks.

          • Red Bieber Herrings?? The topic under discussion is why some make so much money compared to others.

            Here we have an example in the name of EmilyOne: someone being afraid to say how it really is.

            Yes, people like Bieber make their riches on the dumbness of a populace. People like Justin Bieber know how to use the system, and so does Macleans by placing Bieber on its front cover.

            Why are people so afraid to say these things which are so obvious? Is there some secret code I am not aware of, a code which states you cannot discuss the real topic under discussion, that all should be in free wheeling AROUND the topic at hand? Since when were you whipped into obedience of such understandings?

          • Whenever you’re up to discussing it, go ahead.

            I’ve never reported anyone for abuse before, but there is always a first time.

          • Oh my! Now we are being threatened? For doing what? For giving valid opinions? That’ll be a sight to behold if Macleans kicks me off these boards because I’m expressing opinions. Don’t they offer these blog entries to be discussed?

            See, that’s my point, EmilyOne: the world is a dangerous place, a place in which opinions are traded back and forth. Every rational thinking human being understands that opinions may vary and that the validity of an argument rests within the giving of a counter argument. Such is the currency. You have shown to have no currency with which to trade in the world of opinions. Get (or earn) some currency, I would say.

          • Yes, opinions are traded back and forth….so far you haven’t expressed one, except about me.

          • Yes, it is my opinion that the topic under discussion is as much about you and people like you, as it is about the top 1% of high income earners.

            Because you were unable to read my initial post yet bothered to comment with a remark completely off topic. (Hint: even some people who didn’t or don’t live on farms would still prefer to make meals from scratch, and furthermore, my reference to ‘earth’ was not in direct relation to growing vegetables – earth as in dirt – but were in reference to keeping markets within margins of the here and now, as in earthly.

            And as stated in my initial post: the populace as a whole is getting dumber, a statement which has become much clearer over the past few hours.

            Very much worth discussing, I would say.

          • Me, and people like me?? You know nothing whatever about me.

            And since we’re supposed to be talking about the economy, I took your remark about farming to mean a return to a primary resource economy…the agricultural age.

            So then suddenly it’s about Bieber…..!

            The populace as a whole isn’t getting dumber….it’s just that another bunch has reached their limit.

          • I know as much about you as you reveal within your arguments and counter arguments.

            You took remarks within my initial post the way you did because you could not, or did not want to, read into the entire post as so written down by me. You choose to pick out one line, and set it in the wrong context. You tried putting words in my mouth which were never there to start with.

            It was not suddenly about Bieber; it was reasoned onto the Bieber segment. People are getting dumber because the average human being no longer is in close connect with that which we consume or get serviced by. Therefore, my argument is (see initial post) that because of a disconnect, the poplulace gets dumber and therefore an increased need for readily available products and services. Therefore the opening to be found to be exploited, just like we are being exploited by the likes of Bieber and Macleans by putting Bieber on the front cover.

            And no, there is no limit as to how far this dumbness can be exploited. If the average human being doesn’t smarten up, the opening for exploitation will increase, and the 1% at the top will get richer yet. But we seem to be ok with that, because on a personal level, the average human pretends it’s all out of our hands anyways. Most prefer to stay within the bounds of the funny farms, so to speak.

          • Well I was discussing economics, not music or Bieber or Lennon or ‘being close to the land’ or any other hippie concept.

            The top 1% aren’t about farming or Bieber or hippies….what isn’t inherited….. is tech. Jobs, Gates etc

          • What are you talking about? The 1% richness is not being shared by the movie stars and popstars? Do the earnings of pop stars and movie stars fall outside of our economies? That would be news to me.

            Perhaps one day you will write a thesis on that one!

            In the meantime, we are now denying that Lennon was and is still popular? Or are you saying that Lennon’s Imagine lyrics were a bit over the top?

            Or are you afraid to come out with a personal opinion about Lennon, or an opinion as to why Lennon became so popular (and filthy rich)? It’s all economics to me (and to Yoko Ono as well, the way I see it).

            Jobs, Gates etc are just a few of the examples. And what about Jobs and Gates? Do (did) they not also exploit the dumbness of the general populace in order to make themselves belong to the filthy rich? Do we need a new ipad, or iphone every few months? Do we really need a new version of windows every year? Apparently we do, because Gates and Jobs tell us so. Creepy eh, all that dumbness to be exploited.

          • I know you think you’re being very clever, but I find the high school attitude boring. Especially at your age.

            I’ve given you every opportunity, but ……….

            Ciao.

          • I will never give up on people like you. I want people to be smarter, to be able to read that which is being stated. I will never be a strong supporter of people who are afraid to give a well-thought-out and therefore personal opinion. I still have hope for the future, and here’s to hoping that you will come to see the light one day. Keep trying Emily.

          • You can tell the Dutch, but you can’t tell them much.

            Night, dude.

  9. If tax expenditures were curtailed, how high could PIT rates go?

    Would there be a big difference in marginal rates? A big difference in revenue?

    I remember seeing estimates (Saez 2011?) for the US that were very, very high―although I also remember seeing the criticism that this didn’t consider long-term incentives.

  10. let’s look at this example:

    A few years back, a Dr.Duckett was ‘hired’ (appointed) by the Alberta HSB supposedly for cleaning up the Alberta Health care mess. His salary was huge, somewhere in the $300.000 @ year plus benefits, plus expenses paid etc. After less than a year on the job, Dr.Duckett seemed to go off the rails when being more concerned about his cookie eating than answering a journalist’s question.

    Dr.Duckett was ‘let go’ after the incident took place and may or may not have received a severance package worth in the hundred’s of thousands as well.

    My question: why was Dr.Duckett deemed worthy of so much salary when in reality he could not solve the Alberta Health care problems, why was he deemed worthy of a severance package when he was let go, and why does no one at the Alberta Health Services Board answer letters in such regards?

    No one is accountable, and so everyone shrugs their shoulders and moves on. It happens all the time.

    • “No one is accountable”

      Correction: accountability at the $300,000 income level is relatively rare. People who work for $30,000, however, are held “accountable” on a regular basis — often for the mistakes of the $300,000 employees.

      • Thank you, Marquis Moon. Very good point you have raised!

        Sad to say, but the way you express it is how it often ends up in the real world.

        This topic under discussion is about why some are so rich. You could very well have given us an example of why the rich are getting richer. I mean: accountability does ultimately account for a lot!

  11. It actually isn’t that complicated. The financialization of the US economy over the last 30 years. (The US financial sector went from 10-15% of S&P 500 profits to 25-30% of S&P 500 profits. The American financial system became did the blood sucking for the vampire plutocratic class.) American bankster and plutocrats got control of both political parties, Congress, and Washington. US banking and finance went from a mutualistic relationship with the productive economy, to a parasitic one.

    The Canadian top end has just been dragged partially along. The disease is in the US. Canada is just so close to the cancer that we are being influenced by it.

  12. Occupy has certainly made the phrase ‘The OnePercent’ famous, and drawn attention to the enormous inequities that have developed.

    It even got Obama a second term, because it’s a cinch Romney wasn’t concerned about the middle class.

    Now if Obama just keeps up with the ‘Forward’………..because people want access to the system. And that’s now true all over the world.

    • There are many, many famous phrases. What a difference a famous phrase can make?

      “Imagine” by John Lennon. Remember?

      “Imagine no possessions

      I wonder if you can

      No need for greed or hunger”

      Very unrealistic, too, wouldn’t you think?

      • And I wonder how well Yoko Ono does in respects to greed and such..and what the state of her possessions is………for was she not a huge fan of and believer in Lennon?

        • You listen to far too much old music.

          • You are afraid to face the real world.

          • The real world doesn’t involve antique music

          • Question for you…

            Why would enjoying some music from a few decades ago or even a few centuries ago be incompatible with the real world?

          • ‘Famous phrases’…..hippies. It’s about being a hippy….Cons hate em, and see them everywhere..

          • So confused…who is the hippy in this?

          • LOL well don’t look at me. I was in the military in the 60s. Hated hippies.

            Cons, however, think everyone but them is a hippie.

  13. “I don’t know” seems to be the best non-explanation.

    I’d like to offer a less PC answer; it has to do with a more intelligence based economy where brains are in real short supply.

    • Agreed. Brains…the new oil.

  14. I appreciate seeing the other side of the occupy Wall Street movement. Moore then shifting perspective it has widened scope

  15. From the first idea that Veall thinks we should be looking at…

    However, closer inspection of the myriad of tax deductions, exemptions and credits may produce measures that remove tax preferences that exacerbate inequality.

    That is genuine tax reform, tax reform I could get behind, rather than the pseudo-tax reform of replacing the progressive tax rates with a single rate. Further, that type of tax reform should allow for administrative savings, both inside and outside of government.

    Also, I believe that the argument for contemplating an increase in the top tax rates has more to do with the perception of fairness rather than the absolute value of the tax revenue that might be generated.

    As an alternative measure I would be very open to a luxury tax in place of any income tax rate hikes. If I read it correctly, Conrad Black was arguing for this luxury tax apporach in his “Obama Disaster II” column over on NatPo.

  16. I think what the author is talking about is what seperates the top earners from the rest of the pack. While socio-economic factors and upbringing have some impact, the ultimate responsibility lies with the individual. Life is not always just or honest. To give myself a chance I learned I could not rely on others. When something got in my way, I did not take it personally. I just tried harder. If your feelings are easily hurt, you should buy lots of lottery tickets. There will never be total equality for all mankind. Redistribution will alway fail because it encourages people to be resentful or painfully desirous of another’s advantages. When you’re always jealous you never have time to devote to your own sucess.

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