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In 1965, the USA was one of the fairest societies on earth economically. My father, an executive with hundreds of people under him, made around 3-4 times what the milkman did who lived down the street. This was because of taxes that in 1955 were over 90% on the top bracket, and in 1970 hit 70%. A slow ratcheting down, but society was remarkably fair.

That tax policy did two major things:
A. It implemented the neo-classical economic model which we are supposed to be following. That model requires massive (actually “perfect”) redistribution of income or it breaks. Money, you see, is useful in circulation. As Francis Bacon said, “Money is like muck, not good except it be spread around.”  We have now broken the neo-classical economic model that Greenspan, Bernanke, Geithner, etc profess to believe in.

B. It prevented executives controlling corporations from raping their companies by taking huge amounts of money out of them. It is very rare for hugely wealthy private parties to invest in anything risky. They acquire mansions, buy yachts and hire servants with their personal money. Once in a while they become philanthropists. That’s about it.

Elin Woods, Tiger’s ex-wife is a classic of what wealthy do with their money. She bought a $12 million property with a home on it. She is now tearing it down to rebuild a bigger home. Say what you will about “property rights” the fact of the matter is that economically, what she is doing is destroying an equivalent utility value and replacing it with another. That is a form of “burning money”.  At the end, there is almost nothing to show for the expenditure. The value represented by that expenditure has disappeared for Elin. In this way, by making poor choices, societies and individuals create economic pathology.

Conclusion

The big mistake people make is to equate the view of one cell in the body which needs to acquire blood to live with the health of the body as a whole. That error when applied to money is the same error as cancer makes when it finds out how to acquire more and more blood in order to grow larger and larger. From the point of view of the cancer in a person’s body, everything is better and better until the body dies, taking the cancer with it. This is an excellent metaphor for what is happening in America today. As the wealthy get wealthier, everyone else gets more and more poverty-stricken, just like in cancer.

And to pound the point home with a sledgehammer – the view of the cell in that metaphor is the viewpoint of a household, or any company transacting business. All of those cells in the body of the nation need to be nourished by money. But when any individual cell or group of cells starts taking too much of the money, then the rest of the body is starved and the body starts to slowly die.

Look around you. This is what it looks like. We have a financial cancer in the body of our nation. It must be cured or it will destroy us.

Civil rights and other forms of fairness were another matter and a separate discussion in relation to economics.

Philanthropy is good, yes – not arguing with that.

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