I just finished watching The One Percent documentary from Jamie Johnson, the great grandson of the founder of Johnson & Johnson.
This movie reflects on the 1% richest people in the USA and the divide between the rich and the poor. It has very valuable content, including the interview with the grand daughter of Warren Buffet. The press reaction includes this wall street journal's article:
The Wall Street Journal: The Rich Man's Michael Moore
Jamie did a good job of trying to catch 2 different point of views on this subject - those of his father's financial analyst and also Steve Forbes as well as economist Milton Friedman. He also interviews other folks with a more penchant for socialist solutions such as the those in favor of the death tax. Although he wasn't able to interview Warren Buffet, Buffet is one of those in favor of the death tax, but one thing that should be mention is Buffet's big profits from it as illustrated here:
The “Oracle of Omaha’s” wealth has come from making wise investments in three different business activities. First, he’s made substantial investments in major corporations that he believes will appreciate; second, he operates a huge casualty and life insurance business which provides massive reserves of cheap capital to support his other two investing activities; and third, he purchases family owned businesses at fire sale prices. The last two practices are directly dependent on the death tax, and it’s unlikely that Mr. Buffett would be the world’s second richest man without it.
Things are rarely as they seen and we must always force ourselves to go beyond the obvious.
What I find clearly missing though is an interview with advocates of sound money. He should have interviewed congressman Ron Paul and perhaps other folks at mises.org such as Robert P. Murphy, Lew Rockwell and Thomas Woods jr. The greatest divider between the rich and the poor is the monetary system that we have since 1913 with a central bank. Since 1971 when Nixon untied the dollar to gold on the international market, printing money out of thin air allowed this divide to accelerate. This allowed the federal government to grow even faster and is the fundamental cause of this divide.
Here's how can I illustrate quickly why paper money is a great divider:
The rich have more assets than the poor, either in real estate, businesses, stocks or royalties. These assets grows with inflation while the debt - if any - on which they are based diminishes in value with inflation.
The poor on the other hand have mostly wages that will be slow to adjust to catch up with inflation and usually only once a year. Those wages only catch up to inflation while plain saving money is no longer the viable solution. Indeed, since the interest rate are artificially lower by the mean of central banking intervention, and in addition the income on those savings are taxed, the mass avoids saving most of the time. What was in the 19th century simple as piling up cash (which was good as gold) or gold itself in order to save for the future requires investing in stocks or other securities that are highly susceptible to the booms and bust imposed by the artificially lowered interest rates as we have seen with the housing market in the first decade of this century. We could go on with this but this is just to give you a rapid look at what this means.
Of course, the taxation system, being extremely complex, again will advantage the rich over the poor as they can hire the specialists that will navigate the tax code while the poor and middle class have barely any options at all. Since the government is more likely to redistribute that tax money in a very inefficient way, overall the rich gain and the poor and middle class loses. To top it off, when the government is allowed to come up with regulations, this opens the door for some large companies to contribute financially in political parties so to influence those regulations in a way that will limit competition, again benefiting the already rich.