Monday, May 9, 2011

Hurting financially? Not if you're a CEO

Dave Rutt photo
By GARY BAUMGARTEN

The haves and the haves nots. That's what this country is coming to.

If you don't have a crystal ball about what that all means, don't look forward, Look back. Back at what became of other nations whose middle class eroded.

The quality of life, when there is a shrinking middle class and growing poverty, declines for everyone. Everyone except the top elite.

Those who have an abundance of money gave an obvious hedge against poverty.

They can afford security. They can afford to travel to luxury destinations. And they live together in communities, creating a sufficient collective tax base, so when they call the cops, the police actually come to protect them. Unlike communities that are struggling and laying off police.

In the United States, we've not had to come to terms with this kind of an environment. Because the middle class was well fed and had enough discretionary income to be able to thumb its nose at the less fortunate among us. Folks many viewed as lazy. Or substance abusers. Or, whatever.

That was before the middle class became "them." Now there is an increasing awareness, even among those still gainfully employed, about the suffering of others. Because the new "others" are friends and family members - previously hard-working individuals - for whom the system is now failing.

It brings new perspective to the middle class, as they see homes foreclosed or people stuck in houses they can no longer afford to keep but can afford even less to sell.

Which leads me to two articles. One in the Wall Street Journal. The other, a CNN Money piece.

The Wall Street Journal story tells us that the highest paid CEOs in this nation are really not suffering like the rest of us mortal human beings.While America suffered through 2010, their value, the Journal tells us, increased. Significantly.

Worse yet, a number of those sufficiently well-off folks, (ready for this?) paid NO federal income tax.

That's right. None. Zero. Zilch.

According to CNN Money, 18,000 households that brought in more than half-a-million dollars last year were exempted from paying income tax. (Four-thousand of those made more than $1 million!)

Of course, we all look at life through a prism of self interest. But the very rich had better look into their crystal balls as well.

If they can't afford one, I'll provide them a glimpse. As a public service.

If this turning our back on the less fortunate continues, and the unemployment rate (which is arguably much higher than what is reported) continues to rise, the worker bees among us won't have money in their pockets to pay for the goods and services that the rich sell. Which means, eventually, the economy will catch up with them as well.

And if the gap becomes too great, if too many people who considered themselves to be middle class find themselves among the poor, there will be discontent. And, a resulting increase in crime as people try to figure out ways of just surviving.

When there are massive demonstrations on the streets of the United States about the economy, the kind of demonstrations we've seen in Europe and the kind we've seen in the Middle East, those 18,000 households making more than $500,000 a year but not paying taxes will take notice. Because their way of life will become threatened as well.

But by then, it may be too late.

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