What the World Would Be Like Without the 1%

The media mentions the Occupy movement in the same breath as the Arab Spring activists when they talk about important events in 2011. However, the two don't seem to have much in common beyond the ability to draw crowds to public places.

The Arab Spring has a very clear objective: out with the old dictators, in with a democratic government. The Occupy movement does not seem to have any objectives other than turning city parks into campgrounds. Their closest thing to a demand is an aversion to income inequality, but even that seems to stop at 'We don't like it!' rather than an actionable plan for how to change it. If the Occupy movement wants to occupy anything other than thin air in 2012, they need to figure out what they want and how they want to get there.

There are two ways to reduce income inequality. Do something about the poor or do something about the rich. The Occupy movement seems to favor the latter without being clear about what they seek to accomplish.

Let us imagine a world without the top 1%. We would have to do without the innovators such as Bill Gates, Steve Jobs and many more. Microsoft and Apple employ about 150,000 people and provide many products that we use daily. Neither would exist without Gates and Jobs.

We would have to do without large successful companies like GE unless you believe that such organizations fall fully formed from the sky and don't require someone with vision and a steady hand to keep them from falling apart. GE employs about 300,000 people and provides many products that make our standard of living possible. The CEO of GE, Jeff Immelt, made around $10 million in 2011. That's about $30 per job. GE's employees are probably not the only ones who think this is money well spent.

We would have to do without people who spend many years of their lives to acquire specialized skills, including most of the medical profession, attorneys, bankers, etc. One might argue that attorneys and bankers are not very valuable, but an Apple or a Microsoft could not exist without patents, access to financing, the ability to issue stock or debt, the ability to do international transactions, etc. None of these things work without bankers and attorneys. We would also have to do without your favorite actors, authors, musicians, and athletes.

Does this sound like a world you want to live in?

If income inequality needs to be addressed, a better approach may be to boost the income of the poor. Of course this will cost something, which is especially problematic in times of serious budget deficits. Nevertheless, a small broad-based tax hike to redistribute more wealth to the poor is a better solution than to punish those who make the greatest contributions to our quality of life.

Such a tax increase may be palatable if the wealth transfer is not just a hand out.  Perhaps something like Roosevelt's Civilian Conservation Corps, the organization that employed millions to built the national park infrastructure that we all enjoy today, could do the job.

Whatever the solution, the Occupy movement needs to come up with clear and actionable objectives if they want to be more than a bunch of kids hanging out in public spaces.

The views and opinions expressed in this article are those of the author and do not reflect the official opinion or position of the National Association of Personal Financial Advisors (NAPFA).

About the author

Marc Schindler, CFP®
Marc Schindler, CFP®

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