Knowing it or not, Americans are engaged in “class warfare,” a Marxist phrase which Republicans and conservatives—the Right and the Rich—invoke to taint Democrats and liberals—the Left and the Rest—as Robin Hoods trying to redistribute wealth from the deserving to the undeserving. Warren Buffet spins the phrase differently: “There’s class warfare, all right. But it’s my class, the rich class, that’s making war, and we’re winning.”
Most Right-Rich claim otherwise. They complain that “entitlement” programs rob the rich to give to the poor. “Entitlement”? People pay for Social Security and Medicare, and receive benefits proportionate to their payments or needs, respectively. The poor receive more medical assistance because they live in unhealthy environments, work longer in unsafe or unhealthy jobs, and often have inadequate health care during their lives. Many Right-Rich complain that these and other safety-net programs like Medicaid, food stamps, child assistance, unemployment compensation, and job-training programs take money from workers and give it to deadbeats. Sadly, many in-betweens are joining this beggar-their-neighbors misanthropy.
The Left-Rest tell how the Right-Rich redistribute wealth to themselves. Federal and state tax codes are wealth-redistribution devices. Tax codes apply lower tax rates to income more common to the Right-Rich—unearned income from capital gains, dividends, and interest—and higher rates to income more common to the Left-Rest—salaries, wages, and tips. Tax codes have special rules allowing the rich to manage money to lower their rates. Tax codes minimize, or omit collecting, taxes from the rich; tax-funded programs assist the poor or unemployed. Both reducing tax revenues from the rich and giving tax dollars to programs for needy people redistribute wealth.
One obvious reform for tax fairness recognizes that, if money is money, the tax code should treat all income, regardless of source, equally. A second is that caps on revenues subject to “safety-net” taxes be removed, and payments be means-tested. A third is that a small annual tax on capital assets substitute for the estate tax.
The Rich-Right have other proposals to transfer more wealth to themselves from the Left-Rest. Most prominent is their recurrent proposal to privatize Social Security by permitting people to invest some, perhaps all, withheld amounts in stocks or bonds of their choice. The proposal promises individuals more “choice,” “freedom,” and control over their personal finances. Four factors make private accounts for future retirement very risky.
One: market ups and downs. So it may not be where people need it to be when they retire.
Two: a knowledge of stocks, bonds, and markets. Three: the temperament to make prudent investment choices. Many people, regardless of education, do not have these requisites, much less the time and energy to exercise them. Many less educated, more impoverished, or more desperate people are more likely to invest unwisely and thereby risk reducing or losing their retirements benefits. The dot-com boom-and-bust and the recent recession, with the loss of value of houses—many peoples’ primary investment—and the loss of high-skilled, high-pay jobs, should have taught the more educated that they cannot be confident of secure investments or strong markets. Perversely, across all economic classes, but more in the lower economic classes, this recent history may have encouraged a view of investments as lottery-like tickets.
Four: reliance on brokers who may or may not be knowledgeable, honest, prudent, and conscientious. To prosper, some brokers may “churn” portfolios—urge frequent transactions, each with a fee, each reducing investible amounts—, encourage gambling, or recommend investments serving their firms’ interests.
So, the greater the privatization of Social Security, the greater the risks to retirement assets from market fluctuations, blind guesses, gambles, and broker profiteering. Play the market, and make a small fortune from a large one. What is a senior citizen’s Plan B? Blaming someone else? Homelessness? Soup kitchens?
People may or may not benefit from privatization, but brokers and brokerage houses will—which is the Right-Rich’s purpose in privatizing Social Security. However their investments turn out, people will pay thousands of dollars in broker fees over the years. Brokerage houses will make hundreds of millions in annual profits. In their decisions investing billions in assets, they will be able to make winners and losers of businesses, even entire industries, and thereby exert enormous power over the economy. Likely adverse effects—not choice, freedom, or control—on hundreds of millions of working people and their families are incalculable and irreversible. What is society’s Plan B?
This concentrated wealth will influence government as well as the economy. If they succeed in privatizing Social Security and other government programs, the Right-Rich will have won their class war against the Left-Rest. For now, their “military secret” is their plan to advance privatization, a first step to a plutocratic oligarchy. Then, their “military budget” will sponsor candidates representing their interests, not those of the Left-Rest. To prevent this slow-motion collapse of capitalism and demise of democracy, Americans must resist efforts to privatize government by rejecting Right-Rich candidates.