Looking deeper into Occupy Wall Street - 0 views
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Ihering Alcoforado on 12 Nov 11Looking deeper into Occupy Wall Street BY RAGHURAM RAJAN NOVEMBER 10, 2011 0 STORYPHOTOS ( 2 ) More Images » Raghuram Rajan is professor of finance at the Booth School of Business, University of Chicago, and author of Fault Lines: How Hidden Fractures Still Threaten the World Economy. Photograph by: Photo: Courtesy Project Syndicate CHICAGO - It is amazing how the "one-per-cent" epithet, a reference to the top one per cent of earners, has caught on in the United States and elsewhere in the developed world. In the United States, this one per cent includes all those with a 2006 household income of at least $386,000. In the popular narrative, the one per cent is thickly populated with unscrupulous corporate titans, greedy bankers and insider-trading hedge-fund managers. Some suggest that the answer to all of America's current problems is to tax the one per cent and redistribute to everyone else. Of course, underlying this narrative is the view that this income is ill-gotten, made possible by George W. Bush-era tax cuts, the broken corporate governance system and the conflict-of-interest-ridden financial system. The one per cent are not people who have earned money the hard way, by making real things, so there is no harm in taking it away from them. Clearly this caricature is based on some truth. For instance, corporations, especially in the financial sector, reward too many executives richly despite mediocre performance. But apart from tarring too many with the same brush, there is something deeply troubling about this narrative's reductionism. It ignores, for example, the fact that many of the truly rich are entrepreneurs. It likewise ignores the fact that many of the wealthy are sports stars and entertainers, and that their ranks include professionals such as doctors, lawyers, consultants, and even some of our favourite progressive economists. In other words, the rich today are more likely to be working than idle. But what migh