The U.S. economy is a hot topic in the 2022 midterm election. Candidates, analysts, and voters all seem to agree that the economy will be a deciding factor.
Ultimately, this raises the question – what is the U.S. Government realistically able to do where economic policy and development are concerned, and how do we as a nation combat rapid inflation?
A popular argument perpetuated by Republicans is that wild Democratic spending and an anti-business/anti-American policy are why the United States is currently experiencing unprecedented inflation.
On paper, this math may seem to add up. Booming GDP (Gross Domestic Product) + change in party majority from Republican to Democrat = economic instability, but the reality is the U.S. economy is far more complex than that.
This article is not meant to defend or support either the Republican or Democratic parties but to look into a systemic issue intentionally manipulated by politics.
Considering the state of our capitalistic society, we should be asking ourselves, why are corporations making never seen profits while middle-class Americans are struggling the way they are?
The top 10% of Americans (approximately 3.4 million people) currently own roughly 84% of the U.S. Stock Market.
That means if the US Stock Market is worth approximately $26 trillion, or to put it another way, 26,000 billion dollars, 10% of America’s wealthiest citizens own nearly $22 trillion of the stock market’s available value.
Regardless of the answer, every middle-class American should be asking themselves the question – is it not an awkward coincidence that the rapid inflation the United States has experienced only began to occur after Democrats won the Administration, along with the House and Senate, and began calling for universal taxation on the wealthiest in the United States?
In 2018, only one American had $100 billion or more. However, in 2022, eight American billionaires have approximately $100 billion dollars or more, with Jeff Bezos and Elon Musk having a combined net worth of $400 billion alone.
Currently, 8 Americans are estimated to be worth more than $1 trillion alone. Yet, inflation is rampant, and the middle class is primarily left to carry our Nation’s financial burden.
These facts are staggering.
In a traditional capitalistic economy, the flow or circulation of cash primarily occurs in the middle class. While the wealthiest people have personal valuations that far surpass anyone in the middle class, their fortune is mainly in the form of theoretical valuation held by the value of the stock they have in a company or companies (Technically, this value is only theoretical and traditionally cannot be taxed).
The middle-class, however, actually has the most “cash in hand,” An economy can only work because the middle-class circulates the greatest amount of actual (tangible) money.
In a thriving economy, the balance between the middle and upper class rests on this relationship between the theoretical purchasing power the rich have through their stock evaluations and the raw purchasing power that people in the middle class have by purchasing the products and services offered by the companies the wealthy have.
An economy is built on the middle-class, while economic “value” only needs constant rising market potential to give off the appearance of growth.
Historically, this balanced was preserved by competition. In a competitive capitalistic society, the prices of goods and services provided by the rich have naturally been regulated by competition between one business/corporation and another (the same can be said about work conditions).
However, suppose several businesses/corporations decide to work together to manufacture or coordinate the price of goods. In that case, they are able to control the flow of products and services within a country.
They can dominate a market entirely, and, as a result, they are given unrestricted power. This is called an oligarchy, unlike a monopoly, when one person buys all the other companies.
In the past, the U.S. Government historically stepped in when these forms of market domination occurred. For example, during the Presidency of William Howard Taft, the U.S. Government forced the company Standard Oil to split because its owner, J. P. Rockefeller, bought out all of his competition and effectively had complete control over the oil market.
While there are many advantages to a capitalistic society, a massive negative of this form of economic structure is how easily outside forces can manipulate the market.
The average family in the United States makes approximately $70,000 annually of actual money in hand. So, theoretically, when multiplied by the millions of American families in the United States, anyone can determine the raw purchasing power of the middle class.
Alternatively, while an individual such as Elon Musk has a net worth evaluation of $230 billion, most of his wealth is theoretical – tied to the shares he holds in the various companies he owns.
Unlike a middle-class family with a fixed income of $70,000 cash in hand, a billionaire can use their stocks’ theoretical value to gain loans from banks, which effectively gives them an infinite amount of potential cash at their disposal for their business ventures.
While regular Americans are required to spend within their means, after an individual acquires a certain amount of wealth, they can effectively access an infinite source of wealth, thus giving them an advantage that most Americans, indeed those in the middle class, do not have.
Because 84% of stocks are owned by 10% of people in the United States, the rich in the United States have acquired so much control over the stock market that they are able to fix the rates of certain stocks effectively and with it, giving themselves infinite equity for future business endeavors.
Beyond this, because most of America’s wealthiest citizens have value in the form of stocks and use bank loans to pay for new business ventures, they can use these loans as “debt” to receive tax breaks for the money they have and the companies they own.
This then brings up the issue of tax brackets.
Many Republicans argue that the Government has no business taking away “peoples’ hard-earned money,” and they say they have just as much responsibility as politicians to protect the rich as they do the middle class.
While this is a valid and fair argument, it is misleading.
For example, Elon Musk has reported that his tax bracket is 53%. While it seems extreme that the government would take more than half of a person’s income, it does not work like this.
A person like Elon Musk is in a tax bracket of 53% because of the numerous tax breaks and reductions someone like Elon Musk has access to.
Often the tax brackets of the rich are as high as they are, so, after all of their write-offs, they are required to contribute at least something to the government.
During the era of Franklin Delano Roosevelt (1930s-40s), the tax rate on the wealthiest people in the United States was 90%. During the era of Ronald Reagan (1980s), the tax rate on the wealthiest was 70%.
Therefore, the wealthiest people in America, during an era where they are more prosperous than ever, are paying fewer taxes today than they were during the 1980s.
Again these tax rates are not designed to take 90% of someone’s “hard-earned” money. They are designed so that a person worth $230 billion dollars does not pay less than someone making $70,000 after they get a tax break for buying a $200 million private jet.
The priorities of the wealthiest Americans are not necessarily the priorities of the Nation as a whole.
For the middle class to thrive, the economy must be stable. For the rich to thrive, they need control of the market and theoretical economic potential.
Because a fair number of elected officials are currently “fighting” for a universal tax rate on the rich (a tax rate that cannot be affected by tax breaks or write-offs), along with a tax on stock value, not just cash value, middle-class Americans must ask the questions –
Is it not at all strange that at a time when these proposals could become a reality, the economy, which is controlled primarily by the wealthiest Americans, has begun to experience rapid inflation that only appears to be affecting the middle class?
When 10% of people own 84% of the system, do they not have the power to wreak havoc on the middle class (the majority of people in the United States) to upset the political balance in our country to protect their own self-interests?
And, how many of our elected officials’ wealth puts them into the top 10%?