As the FT reports this morning:
“We are the 99%”, the slogan of Occupy Wall Street, is a reference to the rising wealth of the top 1 per cent of US income distribution. But an equally valid slogan might be: “We get 58%”.
That figure is the share of US national income that goes to workers as wages rather than to investors as profits and interest. It has fallen to its lowest level since records began after the second world war and is part of the reason why incomes at the top — which tend to be earned from capital — have risen so much. If wages were at their postwar average share of 63 per cent, workers would earn an extra $740bn this year, about $5,000 per worker, according to FT calculations.
And you wonder why people are angry? They know the system is abusing them, because it is. And they know that this is straightforward exploitation. Because it is.
And it's worse in the UK. Our labour share is 53% (from memory).
No wonder Occupy resonates.
Now, where's the Labour Party?
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When you elect poiticans to have authority over the rest of us you create a class of people having far more in common with each other than with the electorate. Lately, with politicians routinely crossing the house to be on the winning side and the likes of Mandelson openly declaring they’ll happily work for whichever party’s in power, this lack of concern for the welfare of the electorate or the declared principles upon which they sought election is becoming overt. In short there’s no more political parties these days, there’s just the political class and they’re mostly after one thing; to use their authority over the public to grease up oligarchs and so be part of the ruling gang. You can forget all about Labour, or any political party, riding to the rescue. They don’t care about the electorate any more than the Tories do. I get the impression you’re a life-long Labour supporter and I know this is difficult for you to do but the old days have gone. You’ve really got to start smelling the coffee on this one, hard though it is.
I believe it possible to have ethics, political belief and real commitment still
“And you wonder why people are angry?”
Yes and we ARE angry
Angry about lack of regulation
Angry about feeble government
Angry about those who prey on the elderly
Angry about those who exploit the vulnerable
Angry about uninhibited greed
Angry about those who are economical with the truth
Angry about the corrupt “City” and its tax haven parasites
And REALLY ANGRY about the Isle of Man
But it’s Christmas and we (should) wish goodwill to all …..
This is utterly scandalous, and unfortunately recent figures show that the situation isn’t going to improve any time soon.I hope you don’t mind me linking to my recent post this morning, which has a little more context:
http://whypolitics.org/?p=157
Meanwhile, the IOM continues its important work of helping the wealthy to manage their wealth – now with ‘Royal assent’. Simply nauseating.
“New law adds to island’s offering as a centre for wealth management.”
“TREASURY Minister Eddie Teare MHK has welcomed the announcement of Royal Assent, in Tynwald this week, for new legislation which will add to the island’s offering as a centre for international wealth management.
The Foundations Act provides for the establishment of foundations, which are an alternative to trusts as vehicles for holding assets. While foundations resemble trusts in many respects, they also have separate legal personality, like a company. …”
http://www.iomtoday.co.im/news/business/new_law_adds_to_island_s_offering_as_a_centre_for_wealth_management_1_3998346
Richard,
In the spirit of fairness, no doubt TR-UK may want to present a more full picture of the US taxpayer.
Percents of total income taxes paid by the top 1%, 5%, 10%, 25% and 50% of income earners in the US:
The top 1% of earners pay 39% of all income taxes paid in the US.
The top 5% of earners pay 59% of all income taxes paid in the US.
The top 10% of earners pay 70% of all income taxes paid in the US.
The top 25% of earners pay 86% of all income taxes paid in the US.
The top 50% of earners pay 97% of all income taxes paid in the US.
When are the bottom 50% in the US going to start contributing their fair share?
Source: http://www.irs.gov
Georges
They make the system work for almost no pay
The top pay tax on the rent they extract from them
Richard,
Since we have established who pays the tax bill in the US, can TR-UK enlighten why the bottom 50% should not be compelled to contribute to society? Aren’t taxes the price we all pay to live in a civilised society?
Time for those (the bottom 50%) completely shirking their duty to start paying their fair share.
You know the routine…….
Georges
As I have pointed out – they more than do so
More so by far than those in the top 1%, I suggest
Geroges,
Can you post each section’s tax liability as % of income? Cheers.
Also, the simple answer to your query is when wages go up isn’t it? Higher the income, the more tax you will pay.
So perhaps the 1% can pay the 50% a proper wage instead of extracting enormous rents off the work the 50% does.
Ben,
Numbers are here:
http://www.irs.gov/pub/irs-soi/05in05tr.xls
As this is a governmental source, there is a lag in current years data.
Interested here, exactly what rents (and how) are extracted off the bottom 50% by the top 50%?
Georges
Georges
You’re trolling, as ever
Always a mistake to let you on here
If you don’t understand ‘rent’ go and study some economics
Richard
And expect to be deleted if you reply for all the historic reasons that have justified you being so
Georges
You only mention income tax. There are both federal and state income taxes but they are lower, I believe, than is generally the case in Europe. There are also sales taxes which make up a significant proportion of the tax take. These tend to bear more heavily on the poor who less choice whether to spend or save. Also Americans have to pay for more of their education and health out of earnings than in Europe-a larger percentage of the income of the average and below average earner.
Lastly if the income of the bottom 50% had risen in line with growth of the economy, they would be paying more income tax.
i suspect this ‘proof by selective instance’.
When we have open borders in europe and freedom of capital and labour, wages will tend to move to the lowest level, this is what Nafta did to the USA manufacturing, Also the UK worker must earn enough to pay his bills and pay the interest bill of the government. John Major said in an andrew marr interview that uk pays 262million in interest each day. this makes UK worker uncompetitive,
It’s not that interest which makes work so unremunerative
It is high profits that do that
This is profit v labour
Labour and capital are not the only factors of production. What proportion goes to land? Nobody cares to estimate this. Yet land is surely a significant part of the economy. Consider it: most of the interest on mortgages (most of private debt) is land rent which has made banks so profitable.
Hi Carol Wilcox does Land come under the Capital category?
As any economy becomes more industrialised, it becoems more capital-intensive, so it would be expected that the labour share would fall and the capital share would rise. Of course we could go back to a time when car were mostly built by hand, and labour took more of the income, but we might then not be very competitive globally!
So what?
Is that just?
And if so, why?
Saying ‘we’d expect’ is as good as ‘all things considered we’d expect abuse’
It does not justify it
If employers are happy to have a literate, numberate, healthy work force in an environment which is governed by law and provides good road and rubbish collection I cannot see why they should not contribute towards the common good. It would be much more expensive to provide any of this for their chosen few without a general environment which is already commited to these things.
What does it matter if the share of income to labour has fallen by 3% from 61% to 58% since WW2 if the poorest are at least five times better off (probably more?) Would you rather we went back to WW2 standard of living?
Inequality matters, enormously
Poverty is a relative, not an absolute
Of course absolute poverty matters too
But you are offering the economics of the bankrupt philosophy of trickle down that delivers social disruption and chaos
Please read ‘The Spirit Level’
You are quite right in saying poverty is relative, but when people start to consider poverty as not having an iPhone 4S, latest PC with fastest possible broadband and a full Sky Sports subscription, there is something wrong in the world.
I agree – and argue as such in The Courageous State
But – that requires a reduction in the differentials too
When they are designed to rub the noses of the have nots in the trail of the haves you will not get change
So income redistribution is key whatever happens
With respect, I don’t think there is much that can be read into these figures without further information.
Firstly, unemployment has risen dramatically in recent years, as would be expected in a recession. Therefore the worker’s share is likely to decrease.
The counter argument to this is of course that profits should be decreasing if workers are being layed off. However, the article indicates that ‘profits and interest’. Given the hard times, basic risk-reward would indicate that interest rates will be higher as companies are more risky.
This is only speculation and cannot be confirmed without further information, but I personally would begrudge loan lenders seeking a higher return (thus reducing the worker share) when lending to ‘risky’ businesses, in the same way that when making investments ourselves we would expect a much greater return on shares than on say bank deposits.
I think you miss the point – worker share in the Uk has actually risen in recession (we have reduced productivity to keep people at work unlike the US so unemployment is not as high as it should be otherwise)
The trend is long term irrespective of recession
And it is about increasing division
It really is on this occasion what it looks like – the elephant of inequality that most will not name
# meant wouldn’t begrudge loan lenders!