Upper Class Angst

I recently shared an article on Facebook that summed up the anger that many feel.  The point of this series of three blogposts is not to discuss the article. I posted it to show the anger that is currently felt, and how this helps Trump.

Why are the upper class filled with angst? Before I answer that I need to define what I mean by upper class. I mean the entrepreneurial part of society--business owners of small to medium businesses, CEO and CFO's of medium business, upper middle management of large companies and so on. I am not including the stereotypical 1%, the powers that be, whatever you want to call them, as they are part of the problem, they are to a degree the cause of the angst.

The article blames taxes for the author's angst. This is fair. The 1% tend to structure their income in such a way to pay 20% of their income or so in personal taxes. But the upper class cannot always structure their income that way, so they pay the full brunt of the highest marginal rates if they have  enough income. But the main reason the entrepreneurial class is surviving angst is Walmart, Walgreens, Lowes, Staples and especially Amazon. Each of these mega corporations has devastated a whole industry of independent retailers.

No doubt you expect me to pick up my "occupy Wall Street" sign and rant away. You would be mistaken. If a local business cannot compete with Amazon on a level playing field, then it deserves to fail. But notice I said level playing field. Amazon until recently had a 5 to 10% price advantage right off the top because they used to not have to pay sales tax. Now they do. I think that the loss of this is going to have a negative impact on Amazon sales. There are still other ways these corporations cheat. While this is less true for the retailers I mentioned, the gimmicks used by corporations to "legally" move income from the US to lower tax areas are truly epic in scope, i.e. Apple has $200 billion in other countries.

One way corporations have an advantage is that they will approach nearby towns and say to each, we will build in one of your towns, and you will get the advantages of the store, the other town gets nothing. Like Monty Hall of the old game show they say, "Let's make a deal!" The two towns bid down their property taxes to a very low level. The other businesses, that now have to compete with Walmart, might actually see their taxes go up to pay to subsidize the competition. The towns know if they don't deal, the other town will. I would call this blackmail.

In addition the big companies squeeze their suppliers. "If you don't cut the price of your widget, China Widgets will." This cause more angst among the entrepreneurs in the Walmart supply chain. Most Walmart suppliers do not actually make much money from the business with Walmart, but unless they want to cut their sales by 50% they have to go along.

Big companies also can borrow money for 2 or 3 percent. They can get it even cheaper if they keep the loan maturity low. I pay 6%. Credit card as a way to raise capital? Donteventhinkaboutit.

So back to Trump. As a member of the 1% he has made his fortune negotiating with various principalities and powers to get the best deal. To the banker he has said, take your loan and ..... I did not sign the loan personally, so you are stuck, not me. I don't actually think that Trump will help business people, he is in too deep with the 1%. But the perception is that he will, and he will receive a lot of support from this class, but they will all deny it!

Soon I will talk about middle class angst and how that helps Trump.