How the top 1% could ruin the World’s Economy?

740 Park Avenue is home to more billionaires than any other building in the USA. Most of the residents of this building are earning fortunes worth tens of millions of dollars a year and live in lavish, luxurious apartments worth millions of dollars. However, several of these billionaires are not just using their money to live comfortable lives but to buy influence in the White house in order to benefit themselves. They follow the view of Ayn Rand that there should be no taxes on business because it punishes the workers achievements and lose much of their profits. However, there are huge problems with this view, especially with American Fiscal Cliff looming, which describes the effects of a sudden increase in taxes and a drop in government spending. This would inevitably lead to a recession in America, and at this very moment, the Republicans and Democrats are attempting to create a package to try and avoid the consequences of the Fiscal Cliff.

Ayn Rand was a Russian born American writer. She published many books in the USA including ‘The Fountain Head’ and ‘Atlas Shrugged’, the latter well known for its strong objectivist views on society. These views state there should not be any government intervention or coercion in the forms of taxes. The government’s only role is to protect people from theft, violence and fraud. They should let the economy have laissez-faire capitalist approach because, so it is argued, this increases entrepreneurship and thus, increases individuals ability and willingness to make profit, given the liberalisation of free market forces. This view is controversial because it expects the government to be able to provide these protection services without it receiving any money from tax revenues, which cannot work. Furthermore, without the government, many public goods and services would probably not even be provided or consumed at the right amounts such as education or public transport.

This economic belief is held amongst many of the rich, who live in 740 Park Avenue. One of the residents is David Koch, who is currently worth around $31 billion. He co-owns Koch Industries with his brother Charles, and is the most involved lobbyist in America. In 2008, he spent $20 million lobbying in Washington and, in the next 2 years, the Koch Brothers spent $20.5 million dollars trying to influence federal policy for their own good. One politician, who has been paid by Koch or other objectivist lobbyists, is Paul Ryan, the vice-presidential running mate of Mitt Romney. The Republicans have also been paid incredible amounts of money; George Bush raised $1 million dollars for his election campaign in just a 20 minute meeting with Stephen A. Schwarzman, and later that year, Bush passed a tax cut for hedge fund managers which included Schwarzman. On the most part, the rich lobby for tax cuts and for drops in regulation of their business. They follow Ayn Rand’s view from ‘Atlas Shrugged’ to support their arguments and to influence others to create pro-objectivist groups such as the TEA party movement, which many of the 0.001% fund.

The Fiscal Cliff is getting ever nearer. At midnight on 31st December, automatic regarding taxes increases and government spending cuts will take place. For example, the temporary payroll tax cuts will expire, resulting in a 2% tax increase for workers. Furthermore, the spending cuts agreed on as part of a ‘debt ceiling’ package will go into effect. These spending cuts and tax increases will harshly damage economic growth, workers will have less disposable income and many public services provided by the government will not run as efficiently or at such levels as they used to. This, and other factors, will lead the country into recession, owing to a lack of economic activity. A recession in America would greatly affect the rest of the world. Thus, the saying, ‘When America sneezes, the world catches a cold.’ Just as in 1929, there will be great depressions around the world mainly because of the American Fiscal Cliff.

This is how the top 1% can affect and ruin the World economy. Just with their money, they can buy influence in the most important places and can change the world. It is quite scary to think that all you need is money to become so powerful in this modern world economy.

Contributed by Alan Hutcheson

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