Thursday, July 30, 2009

July 30,2009/2

Income inequality? New taxes? Opportunity?
I think there's a connection between the widening spread in income distribution and the growth of financial services as a percentage of GDP. When I was a kid, Wall Street was there, but it wasn't the center of the known universe. When I started working in New York in 1959, as a curatorial assistant in the European Paintings Department of the Metropolitan Museum of Art, I made roughly $6000 a year. And so did all my contemporaries, no matter what they did, whether they worked in publishing, fashion, the law, stock brokerage, art dealing. When I moved to Lehman Brothers in 1961, I started at $6250. But as time went on, and I rose in the firm, becoming a partner in 1967, I soon started making more than the CEOs of a number of my corporate clients - which made no sense at all. Then of course I left Lehman, went to Burnham, left Burnham, "consulted" for a while, and then in 1980 started writing and back down the financial slope I tumbled, passing a great many people with whom I'd been tight as a young man, and who were suddenly cashing in. A number of them were discovering how much they loved money, and the more they made, the more they loved it, which effecively ruined the dynamic of friendships that, twenty years ago, I would have bet on as lasting to the grave. It's like the verses in that great Bob Dylan song:

"With haunted hearts through the heat and cold,
We never thought we could ever get old.
We thought we could sit forever in fun
But our chances really was a million to one.

As easy it was to tell black from white,
It was all that easy to tell wrong from right.
And our choices were few and the thought never hit
That the one road we traveled would ever shatter and split."

Well, split it did - and as the paths further diverged some kind of social conscience replaced the wallet as my principal center of feeling. Go to downtown or central Brooklyn, walk to the bus, look around: see if you can help saying to yourself, "These people have nothing. What must their day be like?" It's not my fault, I know, but I can't help experiencing a brief shiver of guilt.

Well, there's one thing we need to face. The income and wealth inequality of the past thirty years has been built on a foundation of subsidy. Capital begets capital because Uncle Sam facilitates the birthing. Sooner or later, the only way to redress an imbalance that is moral as well as financial will be through a system of graduated taxation, both as to income and investment returns - but this will only work if the ruling premise is to tax AS rich what IS rich by the standards of today.

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