Bill Knight column for Thurs., Fri., or Sat., Dec. 17, 18 or 19
“Over the last decade, a huge share of America’s income and wealth gains has flowed to the top 1/10th of the richest 1 percent – the wealthiest one out of a thousand households,” write co-authors Chuck Collins and Josh Hoxie. “The median American family has a net worth of $81,000. The Forbes 400 own more wealth than 36 million of these typical American families.”
It’s starting to resemble social rifts in developing nations.
“The top 1/1,000th of our population, an estimated 115,000 households, with a net worth starting at $20 million, owns more than 20 percent of U.S. household wealth,” says the report, which uses the Forbes 400 list and Federal Reserve data. “America’s 20 wealthiest people – a group that could fit comfortably in one single Gulfstream G650 luxury jet – now own more wealth than the bottom half of the American population combined, a total of 152 million people in 57 million households.”
The researchers, from the Institute for Policy Studies (IPS), added, “The level of U.S. wealth inequality has grown so lopsided that our classic wealth distributional pyramid now more resembles the shape of Seattle’s iconic Space Needle. The bulge at the top of our wealth ‘space needle’ reflects America’s wealthiest 0.1 percent.”
Collins said, “The United States is becoming, as the French economist Thomas Piketty warns, a hereditary aristocracy of wealth and power, [and] Josh and I believe that these statistics actually underestimate our current national levels of wealth concentration. The growing use of offshore tax havens and legal trusts has made the concealing of assets much more widespread than ever before.”
Economist James K. Galbraith agrees that inequality is worsening.
“There should be little disagreement about the actual state of inequality in the U.S., especially since the Census Bureau had been gathering data at least since the 1960s,” Galbraith said. “Economic inequality in the U.S. has been growing dramatically in the last 25 years or so. These are socially worrisome trends. These are facts. Many Democrats, let alone progressives and radicals, see inequality for precisely the serious problem that it is, but Republicans on the other hand prefer to ignore it completely.”
The division is perpetuated by money’s influence.
“We are operating under a rigged set of rules,” Collins said. “Wealth is power, so the greater wealth concentrates the greater power. You have a political system captured by the billionaires. You have pressure from the bottom and progressives to reverse the economic inequality – and at some point the tectonic plates are going to collide.”
In other countries, governments are trying to deal with such fragmentation.
“Canada and many European countries today have significantly less inequality than the United States because these nations have an array of policies that raise the floor, level the playing field, and reduce concentrations of wealth and power,” “Billionaire Bonanza” says.
Americans’ financial “floor” is sinking, but the answer isn’t to lower the “roof” for the rich, but to stabilize the whole structure. They offer some solutions like closing tax havens or loopholes that permit the wealthy to avoid sharing the costs of living in U.S. society. Another idea is to reduce the concentration of wealth through progressive taxation and taxing capital gains as ordinary income. Other suggestions are “raise-the-floor policies” that ensure a minimal social safety net and assist workers with higher minimum wages, paid sick leave, early childhood education, universal health insurance, and guaranteed minimum incomes, and “level-the-playing-field policies” that ensure consistent rules across society. It’s not fair, or logical, to have one set of tax rules for domestic businesses and another for transnational corporations. Likewise, campaign finance reform could level the playing field between voters of different income levels. Today, campaigns are led by a “wealth primary,” as rich campaign contributors’ donations shape the field before anyone votes.
Why should we care? The report lists dangers:
* High inequality makes people sick, undermining public health.
* Extreme inequalities of wealth rip communities apart with social divisions and distrust, leading to an erosion of social cohesion and solidarity
* Extreme inequality undermines the cherished value of equality of opportunity and social mobility.
* Too much inequality contributes to economic instability.
Also, as U.S. Supreme Court Justice Louis Brandeis is quoted as saying (according to the 1941 book “Mr. Justice Brandeis, Great American”): “We can have democracy in this country or we can have great wealth concentrated in the hands of a few, but we cannot have both.”
[PICTURED: Illustration from IPS' "Billionaire Bonanza" report.]