By Luke Brinker
In December 2002, the right-wing opinion page of the Wall Street Journal ran an infamous editorial deriding the unfair existence of the “non-taxpaying class.” These “lucky duckies,” as the editorial staff dubbed them, benefited from a tax system skewed to the advantage of the poor. Thanks to deductions and credits, the poor often pay no federal income tax. Echoing the Journal’s “lucky ducky” line, conservative polemicist Erick Erickson this fall unsuccessfully attempted to counter Occupy Wall Street’s “We Are the 99 Percent” message with a “We Are the 53 Percent” campaign, referring to the portion of Americans who pay federal income taxes.
Poor people may not pay income taxes to Uncle Sam, but they do pay payroll taxes (temporarily set at 4.2 percent each for employees and employers, and normally set at 6.2 percent). They also pay state and local sales taxes, and because the poor spend a much higher proportion of their income on consuming basic goods than do the better-off, taxes eat up a considerable amount of their wages.
Unfazed by the demolition of their 2002 editorial, the Journal today published an op-ed by Andy Kessler arguing that the increasing availability of items that were once the exclusive province of the super-rich means that poverty isn’t as bad as egalitarians make it out to be. In fact, Kessler asserts, there’s very little the rich have that isn’t available to everybody else:
It used to be so cool to be wealthy—an elite education, exclusive mobile communications, a private screening room, a table at Annabel’s on London’s Berkeley Square. Now it’s hard to swing a cat without hitting yet another diatribe against income inequality. People sleep in tents to protest that others are too damn wealthy.
Yes, some people have more than others. Yet as far as millionaires and billionaires are concerned, they’re experiencing a horrifying revolution: consumption equality. For the most part, the wealthy bust their tail, work 60-80 hour weeks building some game-changing product for the mass market, but at the end of the day they can’t enjoy much that the middle class doesn’t also enjoy. Where’s the fairness? What does Google founder Larry Page have that you don’t have?
Luxury suite at the Super Bowl? Why bother? You can recline at home in your massaging lounger and flip on the ultra-thin, high-def, 55-inch LCD TV you got for $700—and not only have a better view from two dozen cameras plus Skycam and fun commercials, but you can hit the pause button to take a nature break. Or you can stream the game to your four-ounce Android phone while mixing up some chip dip. Media technology has advanced to the point that things worth watching only make economic sense when broadcast to millions, not to 80,000 or just a handful of the rich.
The greedy tycoon played by Michael Douglas had a two-pound, $3,995 Motorola phone in the original “Wall Street” movie. Mobile phones for the elite—how 1987. Now 8-year-olds have cellphones to arrange play dates.
I haven’t the slightest idea whether Kessler was born into poverty or privilege, but this much information I do possess: Kessler is a 1980 graduate of Cornell University. After working for AT&T, he went on to investment firm Morgan Stanley and eventually co-founded Velocity Capital Management, a hedge fund. If Kessler’s tale is indeed one of upward mobility from a modest upbringing, his is an increasingly rare story, as this chart shows:
It goes without saying that, born poor or affluent, a former hedge fund manager likely has little inkling of what it’s like to be poor in America today. Is it better to be poor in 2012 than it was prior to the middle of the 20th century? Undoubtedly. That’s because of more generous social welfare provisions – unemployment assistance, student aid, Medicare, Medicaid, Social Security, and so on. This does not excuse complacency on the part of the Wall Street Journal-reading affluent, however. While Kessler’s argument seems to offer the Journal’s readers the comforting assurance that those at the bottom really aren’t doing so, er, poorly, after all. But Kessler ignores the fact that to be poor is to be priced out of the kind of elite education he enjoyed. It is to attend a public school with a lower local property tax base and, therefore, poorer-quality resources. It is to have dramatically higher rates of poor health and obesity (the latter largely thanks to special interest subsidies that make unhealthy food products like soda and potato chips cheaper). It is to be disenfranchised from a money-soaked political system in which policymakers respond to the interests of the rich, not the rest. It is to have one’s unfortunate situation in life cavalierly explained away by former hedge fund presidents like Andy Kessler.
Although the disastrous consumerist ethos of Kessler may say that it isn’t so bad to be “poor,” a more critical examination of the topic puts the lie to his armchair sociology.