You make money from money? So what do you DO?
I understand the differences between rich and poor pretty well, I think. For the most part. But what I don’t understand is the difference between making money from money and making money from a job.
This is a distinction highlighted by Warren Buffett, billionaire and (apparently) stand up guy in his op-ed in the NY Times today. In his editorial, titled Stop Coddling the Super-Rich, Buffett calls for an immediate tax increase on households making over $1 million, of which there were 236,883 (in 2009), and an even greater tax increase on households making over $10 million, of which there are 8,274 (in 2009).
This is all well and good and I totally agree. I actually think we should lower the bar from $1 million. But calling for higher taxes doesn’t need to be unpacked. It just needs to happen.
What really needs to be addressed in this conversation, in my opinion, is this: How have those individuals who have become super-rich by manipulating money gotten super-rich? The distinction as Buffett calls it is between people ‘making money with money’ vs. people who ‘earn money from a job.’ This is certainly not an anti-wealth question. When companies like Apple make piles of cash, who can blame them? They make a product that a generation of consumers want to buy and as such they earn money beyond people’s wildest dreams. Good for them. Wealth is not the problem, but how it is made is.
Bridging this gap might save the country, by calming the animosity that many (myself included lately) feel when they see so much wealth amassed by what, in the opinion of many (myself included) does not count as work, i.e. does not add anything to the United States (except more wealth for wealth’s sake). I’ve heard over and over how much profit companies have been making in this recession, and how much money is out there, but if a corporation makes a dollar, and a trader trades that dollar, and no one ever sees it, is it even a real dollar?
I don’t want this opinion of mine to be correct. I want to think that the wealthy money-movers are bringing something of value to the country other than wealth for the wealthy. But it’s hard not to be frustrated to hear about the low tax rates for these folks, when these are the people who can most afford to pay a higher rate. And they can afford it. Much more so than the people I know.
The people I know, myself and my families and everyone in the social/cultural/economic spheres that I have ever inhabited, everyone has always worked a job, and gotten a paycheck for that job (or not gotten paid because it was volunteer work). This runs the gamut from farming and construction to desk-job at a clean energy policy shop to health-care to programming pacemakers. Jobs that work towards bringing something actual to the nation.
The people out there (a lot of them, it turns out) who don’t quote have jobs unquote, but who manipulate money and then get more money have always been around, and always been silently moving behind the scenes, getting coddled by the government. Now they are a part of the national conversation, and it’s important that we know what the hell they actually do and what it does for the country. I don’t like not understanding what this means, and thus feeling antagonistic towards these folks. But lately I have felt this way.
So please, reader, help me understand what making money from money means, and who it benefits. Why shouldn’t money made from money be taxed at higher rates? Why should the wealthy not pay payroll taxes? These people obviously can pay. This piece from Buffett is not unique. The rich can pay, so why won’t we ask them to?