The rich, thanks to government handouts, are getting richer at everyone else’s expense. At least that’s what David Cay Johnston claims in the book Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and StickYou with the Bill).
“This enormous growth of incomes at the top is not the result of market forces — there’s some market forces — but it’s largely the result of all these rules nobody knows about,” he tells Dan and Aaron in this clip.
The problem starts with government subsidies, says Johnston, a Pulitzer Prize-winning journalist. States are spending around $70 billion on government subsidies, he estimates. That doesn’t include the hundreds of billions more doled out in federal subsidies.
“Is that capitalism?,” he complains. “Go compete in a competitive arena. Don’t go to Washington and say ‘give me money’ either by saying ‘I don’t have to pay taxes’ or forcing other people to pay taxes that go to me. Go earn your money in the marketplace.”
The wealth gap in America is outpacing much of the world. “Income inequality in the United States has soared … with 1 percent controlling 24 percent of American income in 2007,” New York Times columnist Nicholas Kristof recently wrote. Kristof notes that’s worse than “historically unstable countries like Nicaragua, Venezuela and Guyana.”
What’s even more striking is that many of these unfair advantages are given to the biggest political contributors. The Wall Street bailouts are a perfect example.
“There’s been a massive turnover of money to people who didn’t have to face the consequences of the market,” Johnston says. “Goldman Sachs got its bad bets paid off at 100 cents on the dollar. I’ve never seen the government do that for me.”
If the trend continues the next crisis could be a lot worse than 2008 and 2009, Johnston warns. (See: U.S. May Be Headed for Downward Spiral, Says Pulitzer Prize-Winning Journalist)
Posted Nov 19, 2010 02:18pm EST by Peter Gorenstein
Source: Yahoo Finance