Mexico

Mexico Needs Independence From the Cronies Who Hold Its Economy Back

The aristocrats who rebelled against Spain to maintain their high standing in Mexican society never really went away.

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JOSE MENDEZ/EPA/Newscom

Marking the occasion of Mexican Independence Day (which is not Cinco de Mayo but is actually celebrated today, September 16), David Frum of The Atlantic has an interesting look at the successes and problems plaguing the Mexican people and their government as the country enters its 207th year as an independent state.

Frum has a point to make here—which I'll get to in a moment—but libertarians and anyone who takes an interest in comparative analyses of government will find that the most interesting part of the piece has to do with how Mexico and the United States took divergent courses in the two-ish centuries since their respective tossing-offs of European powers.

The Mexican Revolution was nothing like the American one. It failed, at least as a populist movement. The agitators of the revolution—Mexico's equivalent of Sam Adams, Thomas Jefferson and the rest—were captured and executed shortly after the September 16, 1810, uprisings that are celebrated today. Mexico actually achieved its independence from Spain more than a decade later after a long process of colonial reforms were approved by the imperial government in Madrid.

Suppose there had never been a Declaration of Independence drafted in the summer of 1776, but that the 13 colonies had gained independence by an act of Parliament sometime in the late 1780s—perhaps our national myth would be built around the armed uprisings in Concord and Lexington and we'd celebrate our Independence Day on each April 19. That's basically what Mexico does.

In Mexico, ties with Spain were finally severed because Mexican aristocrats—think the bad guys in any Zorro flick—decided to rebel against the Spanish throne rather than risk losing their high economic and social status as liberalizing reforms spread across the Atlantic from a post-French-Revolution era Europe. A decade after putting down a populist revolution, they became the revolutionaries—not for high-minded ideals like many of the revolutionaries of that era, but rather to preserve their system of cronyism built atop an imperial edifice that subjugated native Mexicans (and many of their fellow settlers too)—and then constructed a founding myth that eulogized the failed 1810 rebellion.

As Frum puts it: "Imagine that it had been Benedict Arnold who achieved American independence, pronouncing himself Emperor Benedict I, banning all religions except the Church of England, and concentrating land ownership in the hands of a few grand Tory families."

The differences in the two nations' origins are reflected in the last two centuries, during which Mexico has struggled to shake-off the control of crony elites. Frum takes note of how that dynamic has prevented Mexico from taking the same path towards freedom and prosperity followed by the United State and Canada.

Even after the last 50 years, when Mexico began to loosen state controls over the economy, it's still burdened by disincentives to competition that benefit a handful of ultra-rich at the expense of the rest of the country.

"Overcharges by the country's telecommunications monopoly are estimated to cost 2 percent of Mexico's total economic output. That monopoly earns profits almost double those of its U.S. and Canadian counterparts," Frum writes. "Unsurprisingly, the monopoly's owner, Carlos Slim, ranks among the world's richest men. The Mexican state-dominated energy industry also remains staggeringly inefficient, paralyzed by privileged labor unions and starved of investment by a Mexican government that demanded the energy monopoly Pemex pay its profits into the national treasury, rather than use them to maintain fields and modernize equipment."

Those aristocrats who rebelled against Spain to maintain their high standing in Mexican society never really went away. Instead of owning vast stretches of land worked by poor peasants, today they run the country's telecommunications companies, energy monopolies and government contractors.

There's plenty of other examples, like Elba Esther Gordillo. She's the "president for life" of Mexico's national teachers' union who was busted in 2013 for spending the equivalent of $2.1 million in public funds at a Neiman Marcus store in San Diego, Calif., and using other union funds on plastic surgery. (To be fair to Mexico, union bosses do that sort of thing in this country too.)

Infrastructure projects are notoriously ripe for abuse by the country's elites. A Mexico City subway line built in 2012 went 70 percent over-budget, but the director of the project was later accused of paying more than 1 million pesos (about $54,000) to a private company for construction work that was never done. Irrigation and water treatment projects have been a staple of Mexico City's government for decades—you try building a city of 21 million people in the middle of a high mountain desert without it—but those projects are often beset by cost overruns and other inefficiencies.

It's no surprise that Transparency International ranks Mexico 95th out of 167 countries for corruption—23 spots behind El Salvador and 39 spots behind Cuba.

Frum ultimately chalks the country's problems up to a "weakness of Mexican institutions." Weak public institutions that tend towards corruption and self-dealing are a well-documented problem across Latin America, and they don't have an easy solution. Once lost, public trust can be remarkably hard to rebuild. Things like court systems, police and elections really only work if the people trust in them.

In Mexico, though, they were never really built to be trusted. Like the false narrative about the country's revolution that was created as a pleasing alternative the true story of aristocrats determined to maintain their grip on Mexico's people and its resources, the country's modern institutions too often work for the upper crust of Mexican society and against everyone else. That's why the wife of Mexico's current president can spend her time living in a condo owned by a company that contracts with her husband's government, while the reporter who broke that story loses a job and has to fight a lawsuit.

America generally has enjoyed strong civic institutions, but trust in them is declining. Mexico's political history should be a warning about what happens when the levers of government are controlled by aristocratic elites—not that we'd ever have a presidential election in this country between two candidates who could be described like that, right?

Frum's whole piece is worth reading—though libertarians might take issue with the subtext of his article, which has more to do with American immigration policy than comparative politics. He's previously defended Donald Trump's hardline immigration policies—in today's article, he says Trump "touched upon an important truth" last year when Trump first thrust himself into the Republican nomination circus by saying many Mexican immigrants were criminals, rapists and drug dealers ("and some, I assume, are good people," Trump infamously concluded).

In a round-about way, I suspect Frum is engaging in a bit of signaling here. He seems to be making a point about the extent to which Mexican immigrants can fit into American society and whether they possibly weaken its less-corrupt institutions. You'll have to draw your own conclusions about that.

Regardless, Mexico and the United States offer a useful comparative illustration about the influence of cronyism and corruption on the long-term economic prospects of a nation.

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  1. (which is not Cinco de Mayo but is actually celebrated today, September 16

    Keep your hands off my cultural approbation.

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  2. This article sounds familiar…as if Mexico has been wallowing for centuries in the type of corruption that elites in the U.S. are trying to emulate.

  3. Boomer, you really need to step up your alt text game.

    1. Boehm’s nickname is “Boomer”?

      Did you just coin that, or was there a vote? There should be a vote, you know.

      He apparently seems to be trying to imitate Robby’s troll-tactics =

      He wites abot about state government, pensions, licensing, regulations, civil liberties and anything else that strikes him in the moment.

      I guess the “strikes him”=”boomer” connection makes for a decent temporary nickname.

      1. I was trying to push “Broheim” earlier, but I couldn’t get any traction. I guess when Crusty types, people watch in horror.

        1. As though if I need a consensus to come up with a nickname. Broheim works. He looks like he is a member of the Cobra Kai dojo, and so far I have resisted the urge to only type Karate Kid quotes on his posts. For now.

          1. Jesus H Crusty!

            Leave it to you to post a link that gets blocked by my firewall as “adult/sexually explicit” — true story.

            You’re lucky I’m the network admin and own the firewall policy rules.

          2. As though if I need a consensus to come up with a nickname

            There’s also the baptism of fire, the running of the gauntlet of thorns, the obligatory tattooing, and the Oath of Fealty to the Kochtopus (PBUH). Are we supposed to just abandon ALL protocol all of a sudden?

            1. I don’t play by your rules, Square.

              1. But without rules, we’d just be anarchists!? (glances disapprovingly at seat nikki used to occupy)

                1. +1 letting your toddler pick dinner every night.

                  1. Feel free to live your life constrained by patriarchal societal rules. I will continue to live my life leaping over your boundaries of good taste, self-respect and nicknaming.

                    And of course making decisions for your children is wrong. I do not have a child, but if I did that little fucker would be making all its own decisions. That is until it turned four, when I would I set it loose to fend for itself on the mean streets of Reality, USA.

                    1. Reality, USA is Libertopia. Call it what it is, Block Insane Yomamma!

          3. Maybe it will help come up with a nickname; but I had a buddy with the same last name.

            Boehm rhymes with blame.

          1. You’re not trying.

            “in order to reach God, man has to go through hell first.” (see also Steve Miller)

            Or through H&R.

  4. What Mexico needs is to open up its southern border to immigration instead of putting immigrants in jail or deporting them. Then they need to call up Merkel and see if she could send a few million Middle Eastern immigrants over to Mexico. Because if there is anything I learned reading Reason its more immigration=more economic growth. Also when Trump wins all the Hollyweird progs can come live down there and they can have a big kumbaya moment and show all the deplorables back in the USA how things should be done.
    Lena Dunham can lead the parade in a bikini with all of the young Muslim men following behind her.

    Yes I’ve started drinking.

    1. Tell me more about your policy recommendations.

      1. Money is evil so instead we should base our currency off of hugs. For small transactions a side hug is fine for large transactions a full frontal contact hug should be required.

    2. It is funny that all the “I’m going to leave the country if Trump wins” types never seem to pledge that they’ll move to Mexico….

      1. Imagine Lena Dunham trying to explain third wave feminism to macho Mexican men at the Cantina. In Mexico men are still men. Now where is that bottle of tequila I’ve been saving, I’m gonna eat the worm this time.

    3. Lena Dunham can lead the parade in a bikini with all of the young Muslim men following behind her.

      Yes I’ve started drinking.

      Drunk or knurd?

      1. I’m sober enough to realize your a fucking nerd! 😉 ANd drunk enough to use emojis.

  5. Say what you will about our neighbors south of the future wall, at least you can bribe their cops. Unlike in the states where they arrest you, seize your assets or lay fines against you without ever having to actually charge you, there you can at least pay them off to not toss you in jail. That’s kind of nice.

    1. I live on the Southern border its nice when you don’t forget to stop by the ATM before going across the border or when they don’t want something else… My ass is still sore from the last time I visited Mexico…

    2. For many years I have espoused the idea that Mexico is much more Democratic than the US.

      In Mexico if you have a problem, say a title problem on a car deal, no problem. Simply hand the government worker title clerk 2 US dollars and the problem goes away. *

      In the US only the rich can bribe a government employee and it gets hand waved away.

      *Actual event that I experienced.

  6. The porous border with the USA and its welfare and illegal worker exploitation system plus billions per year from remittance payments have been keeping the lid on a popular revolt against Mexico’s corrupt government and economy.

    That lid may be lifted one of these years and the kleptocracy should think about preparations.

  7. This article raises important points that should be be the subject of a long investigation by the NY Times. Oh, wait, the Times is now largely owned by a Mexican crony capitalist. Never mind.

  8. Democrats should call for Mexico to become the 51st state its a win-win. With Mexico’s electoral points they would win every election and in exchange the US can pay for their welfare without the need for the poor illegal immigrants to actually work.

  9. He’s previously defended Donald Trump’s hardline immigration policies

    Speaking of journalistic heresies…. Foreign Affairs has a story about “Stuff Trump Gets Right“. I

    1. Let me guess, sticking to Eastern European models?

      1. When Donald Trump, the Republican presidential candidate, criticized NATO in a number of interviews earlier this year, he was challenging the foundations of the United States’ military strategy. His attack on Washington’s conventional wisdom has unsettled the U.S. security establishment no less than it has the foreign governments that depend on it, and has drawn criticism from across the political spectrum.

        Trump, however, is right. U.S. policy toward its allies really is “obsolete,” as Trump termed NATO. The United States remains remarkably secure and faces no serious?let alone existential?threat akin to that formerly posed by the Soviet Union, the enemy that most U.S. alliances were formed to oppose. Moreover, Washington’s Asian and European allies are prosperous and industrialized states that are more than capable of protecting themselves.

        Unfortunately, U.S. strategy currently appears to endorse the idea that whatever is, must forever be. But the fact that Washington has defended countries for decades does not mean that it should continue doing so indefinitely, whatever the costs. Alliances should be a means to an end rather than an end in themselves, and in this case, that end should be to increase U.S. security.

        That’s all you get unless you register (free) and get your 2 articles a month.

        1. Washington’s conventional wisdom has unsettled the U.S. security establishment no less than it has the foreign governments that depend on it

          Change you can believe in?

          1. The piece is short (*there’s not much else that Trump ‘gets right’); and it ends with this

            Trump got the policy details wrong when he criticized Washington’s stance toward its allies. But he raised important issues long ignored by his most vociferous critics.

            The United States’ alliances are expensive. Defending prosperous, populous, industrialized nations around the world transfers wealth from U.S. taxpayers to their counterparts overseas. In effect, the Pentagon has become the federal government’s largest source of foreign aid, turning security assistance into a form of international welfare […]

            Disturbed by Trump’s statements, a gaggle of European officials went to the DNC … seeking reassurance from Hillary Clinton… which they received. Vice President Joe Biden and others went out of their way to tell the Europeans not to worry?the United States would always subsidize, protect, and even coddle them if necessary.

            That is the wrong message to send. Washington had little choice but to protect allied countries after World War II. But that justification disappeared long ago. Instead of turning the U.S. military into a mercenary force by charging for its services, as proposed by Trump, Washington should drop the commitments no longer necessary for U.S. security. Doing so would not only save the United States money, but make it safer as well.

            The author is a Cato fellow

            1. Shocker = the whole thing is available @ Catos website

  10. Well, if they hadn’t of taken Trump’s idea of a wall on their southern border and run with it…

    1. Since most “Mexican” immigration now is actually Central Americans passing through, you could argue that Trump has already built a wall to keep out immigrants and gotten Mexico to pay for it.

  11. Ah, so their revolution failed because, unlike ours, it was dominated by wealthy landowners who profited from a system of racially stratified oppression.

    1. They can’t be racists, they’re people of color. Well, ok, a lot of Latin Americans are of European descent and are as white as the whitest Americans, but… I’m thinking of something…

      1. They speak Spanish, therefore they’re a minority.

    2. I think you can actually draw parallels between Mexico and the antebellum South in a way. The South was very aristocratic and feudal in comparison to the North, and it’s wealth was highly dependent on owning and exploiting slaves, and highly concentrated in the hands of a few elite slaveowners. And as a result, industrial development was much slower than it was in the north.

      1. There’s something to that, but post-Revolution Mexico’s peasants were never treated as appallingly as the antebellum South’s slaves could be (particularly in the Deep South), and the Mexican aristocracy was never as educated or pro-social or pro-republic as the South’s. The main problems facing Mexico’s peasants was banditry, economy and land reform. Unjust treatment by Mexican conservatives was much lower on the list than for slaves in the Deep South, for example.

        1. True, I did not mean to suggest there was an exact equivalence. By post-Revolution do you mean post-Independence or after the Mexican Revolution of the early 1900s?

          What do you mean by pro-social? And it is true that the southern aristocracy were more consistently in favor of a republic, but obviously one with very limited franchise (in addition to women and black men being barred from voting, Southern states often had significant barriers for white men).

          I agree with the last point, although I think a couple of those things are related to treatment by the ruling aristocracy.

          1. Post-independence. My bad. And by “pro-social” I just meant that Southern elites were more likely to identify with and act altruistically towards their country than Mexican elites, who were more likely to simply enrich themselves and their kin.

      2. I think that’s true. Many of Latin America’s problems can probably be explained by the fact that they were colonized by the Spanish and therefore inherited Spain’s views on government and justice and the relationship between the citizen and the state as well as their social and cultural traditions. But just as the Confederacy was attempting to emulate an old-fashioned land-owning aristocratic tradition already being abandoned in Europe due to capitalism and modernity, Latin America became more Spanish than the Spanish hanging onto the caudillo system, a throwback to the knights or warlords who constituted the local government. (Heck, what are the Mexican cartels but the local caudillo?) What Latin America really needs is a Magna Carta and a John Locke and a Rights of Man, but that’s true for most of the rest of the world, too.

        1. What Latin America really needs is a Magna Carta and a John Locke and a Rights of Man, but that’s true for most of the rest of the world, too.

          Well, they can use ours. It’s not like we’re using them. And if we were, it’s not like you can use them up. So, as many as want are free to plagiarise….

          1. At the end of the day, being the cultural descendants of the British makes all the difference.

      1. Did any country not not have such a system in its past?

      2. I’ve always found it somewhat amusing that the Mexicans on Univision don’t look anything like the Mexicans hanging out on my corner looking for day work.

      3. I thought it was interesting how they had a category for people of Indian descent who acted sufficiently white to warrant being treated as such. I see that still in Mexico now, where people are perceived as being of paler skin if they are of socially higher class, even if they are just as dark as the Indians. Blew my mind to have people insisting that this or that person was pale and that was dark, when I could see plain as day they were all the same colour. Then I caught on that their perception of skin tone is somehow contaminated by the perceived’s social standing. And yes, it was unambiguous they were talking about skin colour and not some metaphor I just misunderstood.

  12. That’s overly simplistic. The last Revolution Mexico had, in the early 20th century, is the one most relevant to current economic policy and it swept away the old order of Mexico. So much so, that the Catholic Church was not allowed to teach or worship in public and the old guard was stripped of privilege and largely stripped of land, as well. The real problem is that Mexico’s revolutions were never as classically liberal as one might prefer; particularly the one which placed PRI in power led to great amounts of nationalization a and was considered the most radical revolution of its time until Tsarist Russia went kaput.

    So no: Mexico wasn’t like us, neither in their revolution nor in be reaction to the revolution. Arguably, it never had a political culture to sustain the positive trends we’ve had as regards economic and social Liberty.

    1. PRI is a member of Socialist International?

    2. The PRI took power in 1929, which is more than a decade after the Russian Revolution

      1. And the Mensheviks were dominant in the first post-Russian Revolution parliament. So what? The point being that the forces behind the Mexican Revolution were socialist or populist, not classically liberal and certainly not old guard Catholic conservative types.

        1. The Bolsheviks were routed the Mensheviks and Stalin had taken over well before 1929. In fact Lenin finished them off in the early 1920s. Maybe an incidental detail but figured I’d point it out.

  13. So does this signify Frum has finally completed his transformation to socialist?

  14. Ha ha ha. Libertarians complaining about Mexican cronyism and giving a free pass to the U.S. supply side oligarchy, in the name of “fighting socialism.” Irony rarely gets better.

    1. US = rich developed country = doing something right.

      Mexico = poor developing country,100 years or so behind = doing something wrong.

      Presumably something along those lines would be the logic behind that “free pass” you refer to.

      1. “Rich developed country”
        The period of greatest all-class growth and proportionality (optimized socioeconomics) was 1950-1980. In 1975, the 1% class owned roughly 25% of all wealth. Very healthy. After 35 years of supply-side policies, the 1% class now owns 45% of all wealth. And growing. Profoundly sick. And the once-vibrant middle-class (68% of all GDP) continues to suffer. In 1975, our broad 60% middle-class had historically low debt, historically high savings, and could maintain a suburban home on 1.2 incomes. Today, our 60% middle has historically high debt, historically low savings, and requires a 1.8 income household just to scrape by. All this while a tiny number at the top continue to accelerate wealth and income growth at a record pace. This wasn’t accidental, or a result of “free markets at work.” This was designed by a corrupted system in which those same few at the top (yes, oligarchs, or plutocrats, or perhaps the new American aristocracy) make 100% of our nation’s fiscal policy, for their net benefit, not the benefit of the broad middle class. At the foundation of this deep and gross injustice is K Street, PACs, Citizens United style corruptions, ALEC, revolving doors, and other means of a few special interests peddling their influence, at the expense of the common good. Heck, you would skew a few fiscal policy votes, as well, if you were promised a $1.7M lobbying job after leaving office. http://www.represent.us.

        1. What were these supply side policies that did this?

          1. Thirty-five years of disproportionate class-wealth and class-income-growth is not an “accident.” It’s a result of policy. At the top of this failed policy list is taxation. Truman-Eisenhower tax policy (softened a bit by Kennedy, but not much) created a true progressive system. The more you made, the higher your tax rate. No exceptions. Yes, there were abundant credits for high-social impact (like infrastructure investment, etc.), but the net result was that the highest earners had the highest tax rates. This policy did NOT stifle innovation of business development (as supply-side proponents argue). There remained massive liquidity at the top (the 0.1% investment-banking class) and all classes prospered. The main thing to remember here is that, from 1950-1980, Cap Gains, Dividends, and “Carried” Interest were all taxed at high rates, not at today’s post-1980 “supply side” tax rates.

            1. Hmm those tax rates were meaningless since you could deduct anything and everything.

              The tax code is very progressive now…the top pays the highest effective ratest and 38 pct of revenue

              And the tax rate has gone up since 80s but yet it didn’t impact increase.

              Trying to compare the 50s to now is downright goofy.

              Also women and blacks weren’t exactly encouraged to work higher paying jobs

              1. Time to review tax code vs. payments. You have it backwards. The very top pays a lower effective tax rate than the 1%. Yes, of course, the percentage shown on the tax forms is higher, but what it actually paid is a far lower effective rate. But I’m not going to argue with you.

                Today’s tax code is progressive, until you get into the 0.2% and above. Then it becomes increasingly regressive on a NET / REAL basis. Sure, the top 1% pays 38% of all Fed tax, but when you look at the percentage of income vs. tax in the “three bins” (1%, 0.1%, and 0.01%), you see how the ultra-top pays a lopsidedly lower % of the total 1%-class payments. They (the 0.1% and especially the 0.01% should be paying a markedly higher EFFECTIVE rate, but they’re not. It’s lower. And it has been lower for 35 years, leading to today’s imbalances.

                You won’t find this level of important detail from the Tax Foundation (an ultra-conservative front-group for supply side interests, i.e, ultra-wealth.). You certainly won’t find it from all the ultra-wealth “think-tank” front-groups (Manhattan, Cato, Heritage, AEI, George Mason, etc.).

              2. Moreover, your assertion that the “tax rate has gone up since 80’s” is just wrong. Do some homework. http://www.taxpolicycenter.org…..ouseholds.

                Comparing today with the 50’s is EXACTLY what we need to do. Not culturally, but fiscally. This is what good policy DOES — it keeps all socioeconomic levels in healthy proportion. If policy doesn’t do it, nothing else will, and gross imbalance leads to a broken country (remember our first experiment with supply side policy in the 1920s, and how well that ended).

                My friend, we’ve not been this socioeconomically imbalanced since 1928, and bad policy (controlled by special interests) is the reason.

          2. After 1980, tax policy remained progressive ?except? at the very top, which has been paying a regressive tax rate for 35 years. CI, CG, and Divs are the predominant income of the ultra-wealthy, not the broad middle-class. At around the 0.2% income class, about half of all income is derived from CG, D, and CI. And at the 0.01% income class, about 95% of all income is derived from CG, D, and CI. No surprise that around the 0.3% income class, income tax rates turn regressive. Remember Soros’s 9% tax on $70M income? Remember Romney’s 13% tax on $25M? Fact is, the average 1%-er is paying around 28% marginal, while the average 0.01%-er is paying around 17%. In very rough terms, the ultra-wealthy (0.2% and above) are paying far too little share of the tax burden, the 2% are paying about the right amount, and the 70-98% are paying too much. Tax policy is the #1 reason that has caused a grossly disproportionate amount of wealth to trickle-up into a few hands, while decimating our middle-class.

            1. How did you determine what is the right amount?

            2. Our middle class isn’t decimated by any means.

              How does wealth trickle up due to lack of higher tax rates? That doesn’t make since seeing how they would have already had that wealth

              1. Determining the “right amount” isn’t the right question. The total objective amount, the total pie, is determined by global forces.

                Determining and sustaining a –healthy proportionality between classes– is the right question. We have a beautiful model for healthy all-class proportionality (1950-1980). We can have it again, but special interest policy is killing us. We can’t allow too much wealth to flow into too few hands, else we die as a nation.

                In 1975, the 1% owned 25% of all wealth. Today, the 1% possesses 45% of all wealth, and much of that wealth has been flowing into offshore/dark accounts at increasing levels. If you think (1) this is healthy, and (2) this was a result of “natural free market economics,” then I suggest you keep looking.

                Just take the argument to the extreme. Tax progressively until you get to the top 2%, then levy no tax on everyone in the 1% and above. That would work great for about a year or two, and then we die. Just take a less extreme version of that argument over 50 years. We still die, just slower.

                1. ” Today, the 1% possesses 45% of all wealth, and much of that wealth has been flowing into offshore/dark accounts at increasing levels.”

                  Well then. Surely increasing their rates, to an amount that someone has to determine, will definitely solve this.

          3. Labor policies have also contributed to 35 years of gross socioeconomic imbalance. Things like NAFTA and tax inversions that disproportionately benefit the ultra-top, at the expense of the broad middle.

            Offshore / dark tax havens are another reason. Around 40% of Goldman’s business is managing the offshoring of wealth for their top 10,000 clients. It’s legal. And it’s estimated that 5-10% of all U.S. wealth now sits in dark offshore wealth havens, or somewhere between $20T and $50T. And that number is growing fast. It’s not just a U.S. problem, but a Western problem.

            Social Security and Medicare policy is another reason. Why does FICA tax stop after around $100k in income? Current FICA policy benefits ultra-high-incomes at the expense of the average middle-class. Some have proposed a reverse progressive FICA taxation system in which FICA starts to be taxed above the first $50,000 income, and rises to 7% by $150k, and then continues to be collected at 7% for ALL income levels, but restricted to regular income (wages, interest, rents, etc.), not CG or D.

            1. Social security stops there because it was sold as a retirement plan that you put into. Of course it isn’t really true

            2. Yawn. Your talking points are old. tbe middle class is declining upward; that is, not because people are sinking into the lower class but because they’re going upward.

              Much of your belief I. A stagnant middle class is owed to using metrics that overestimate inflation. Real income has gone up way more than your cherry picked stats suggest, in large part thanks to the free trade agreements you bitch about that have made everyone better off by leading to lower prices.

              Also, you’re 1% wealth ownership stats are meaningless. Most of that change is due to rising property prices, not changes in investment wealth distribution, which has been fairly stable. Mostly globalization and new tech industries are the cause of rising income inequality, but that’s not a bad thing, since everyone is better off. But you keep telling yourself people were better off in the 70s than today.

          4. Well-designed policy is dynamic (it is designed to adapt year-over-year) and does not attempt to “equally socialize” socioeconomic classes but acknowledges the natural existence of classes and assures that all classes are kept in a natural balance, which is called a “meritocracy.” This is why policy must maintain a healthy middle-class ? to reflect the broad center of natural human merit (see: power curve). We beautifully achieved this 1950-1980. Without a visceral understanding of common or communal empathy, this will probably make no sense to you.

            In a fiscally-rigged socioeconomy, like we’ve had since the early 1980s, one small class is programmed (by design) to grow profoundly faster than all others, causing gross social imbalance. This is called a “kleptocracy,” and it is immoral. It is killing this nation. If we don’t understand all this as a moral argument, we simply won’t understand it. Until we make deeper connections with our own personal ethical and empathic center, we will not understand the problem, but simply continue to demonize the “other.”

            Start with Adam Smith’s definition of the “vile maxim” ? which characterizes today’s neo-liberal supply side imbalances quite well. Smith would despise what, today, we call a “free market.”

            1. Agreed he would despise what we call a free market. However your tax the rich solution seems anything but making a free market. And who gets to determine this dynamic?

              You keep repeating the middle class is decimated…it isn’t true at all. And again the 50s and 60s are vastly different then today’s economy

              1. My friend, you’re not paying attention. The middle-class has been hollowing out since 1980. Debt, savings, etc.. it’s all worse than

                1. Hmm, the entire comment got cut off (??)
                  Anyway, nice chatting with you.
                  http://www.pewresearch.org/fac…..ince-1928/

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  15. What does Canada celebrate? The day they noticed they were independent?

    1. They celebrate Dominion Day, the anniversary of when the British North America Act federated three British colonies into a single four-province colony. Though, starting shortly after they got independence in 1982, they’ve been calling it Canada Day.

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