Wealth Inequality in America

Amazing. Gripping. I watched at 2.5x using Enounce MySpeed.



And then I began thinking about what the guy says and what the charts show. And I realized there's something slightly--or, actually, majorly--wrong about what we see and hear.

The charts have to do with wealth distribution: that's "stuff owned" v. "stuff [including money] owed." But most of us think in terms of money, cash, and, most importantly, income and cash flow.

Indeed, the presenter himself seems to be thinking about these last matters (even though he says he is focused on wealth) when he says (4:59), "While the richest one percent take home almost a quarter of the national income today, in 1976 they took home only nine percent, meaning their share of income has nearly tripled in the last 30 years." Or, "I'm sure many of these wealthy people have worked very hard for their money, but do you really believe that the CEO is working 380 times harder than his average employee? . . . --Not his lowest-paid employee. Not the janitor. But the average earner in his company. . . . --The average worker needs to work more than a month to earn what the CEO makes in one hour."

As soon as we get into earnings, we are in a very different realm from wealth. Very different. And, in fact, we may be--but probably aren't (though, I think, we should be)--talking about income and cash flow . . . which topics raise additional issues like the relative benefits of working for pay (i.e., actually earning one's money) or "simply" "enjoying" the "benefits" of taking government largesse. . . . --Which raises questions both about government- (i.e., taxpayer-) dependent bankster recipients of government-sponsored corporate welfare . . . as well as those who earn $60,000 a year or less . . . and for whom government-sponsored personal welfare is also highly attractive. (On this latter topic, see Tyler Durden's article, Is This Why Americans Have Lost The Drive To 'Earn' More? which is based largely on statistics and graphs from a presentation by Gary D. Alexander, Secretary of Public Welfare of the Commonwealth of Pennsylvania. (Pay particular attention to the graph on p. 8 in this presentation about "The Welfare Cliff"; quite eye-opening.)

[Please understand, I agree with the presenter's implicit criticism of multi-hundred-times-the-average pay-scales for corporate CEOs. Such pay-scales seem absolutely crazy to me. But let us not implicitly criticize. Let's make the criticisms explicit. And let's do it thoughtfully and in a manner that makes our thinking stand out as valid.]

Beyond the confused statements above, I would want to criticize the presenter's implicit criticism and his wording here (at 5:13): "The top one percent own half the country's stocks, bonds and mutual funds. The bottom 50 percent of Americans own only half a percent of these investments, which means they aren't investing; they're just scraping by." --Really? You have to own stocks, bonds, and/or mutual funds so as not to "scrape by"? I beg to differ!

The presenter closes, "We certainly don't have to go all the way to socialism to find something that is fair for hard-working Americans. We don't even have to achieve what most of us consider might be ideal. . . ." Agreed.

But then the last sentence: "All we need to do is wake up and realize that the reality in this country is not at all what we think it is." --And I think: Really? What difference will that (i.e., "waking up and realizing the reality") make?

I wish I knew of a real solution to whatever real problem we are seeking to address.

Still. It is pretty amazing to see how little so many seem to own . . . and how much others own.

The question is, "Then what?"

Income inequality, taxes, and tax breaks

I keep hearing about how the gap between rich and poor keeps growing in the United States . . . and how the size of so many top executives' salaries in the United States have ballooned in recent years . . . even while average workers' wages have failed to keep up with inflation.

Typical information along these lines includes statements like these:

• From the New York Times, March 2007:
  

  The [latest] data . . . shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.

• Or this, from an excellent article by Professor G. William Domhoff of the University of California at Santa Cruz:
  

  The ratio of CEO pay to factory worker pay rose from 42:1 in 1960 to as high as 531:1 in 2000, at the height of the stock market bubble, when CEOs were cashing in big stock options. It was at 411:1 in 2005 and 344:1 in 2007, according to research by United for a Fair Economy. By way of comparison, the same ratio is about 25:1 in Europe.

  And,
  

  The rising concentration of income can be seen in a special New York Times analysis of an Internal Revenue Service report on income in 2004. Although overall income had grown by 27% since 1979, 33% of the gains went to the top 1%. Meanwhile, the bottom 60% were making less: about 95 cents for each dollar they made in 1979. The next 20% - those between the 60th and 80th rungs of the income ladder -- made $1.02 for each dollar they earned in 1979. Furthermore, the Times author concludes that only the top 5% made significant gains ($1.53 for each 1979 dollar). Most amazing of all, the top 0.1% -- that's one-tenth of one percent -- had more combined pre-tax income than the poorest 120 million people.

Clearly, we are looking at some rather astonishing inequality, here! And it would be wonderful if the people receiving the highest incomes would be willing to share some of their wealth with--i.e., give . . . or, shall we say, be charitable toward--those less fortunate than they.

Of course, our government is not particularly inclined to think in terms of charity. It prefers to speak in terms of rights and fairness and equality. And so we hear talk of the need to raise taxes on the wealthy. And we hear discussions about what to do with the Bush-era tax cuts.

What we don't hear is any kind of acknowledgment like this (from an editorial by Joel Belz in the latest World magazine):

In all the discussion about tax breaks for the rich, two fairly simple facts are really all you need to know.

Fact No. 1 is that only 3 percent of all the taxpayers in the United States pay more in income taxes than the other 97 percent combined. [That shouldn't be so surprising, when one considers the income disparities. --JAH] Fact No. 2 is that even if you taxed that 3 percent of our population at a rate of 100 percent of their income [not quite three times the current top rate--JAH], you wouldn't produce enough additional revenue to cover the deficits our federal government is now incurring each year.

Notice: We're talking about current deficits, here! We're not talking the federal budget. We're talking solely about the federal budget deficit. The federal government can't squeeze a whole lot more out of American citizens. And even if it could, it couldn't pay its debts.

Let's see. What is that called?

Oh, yes!

Bankruptcy.

And when national governments go bankrupt, what usually occurs?

Oh, yes!

Social upheaval . . . on a grand scale.

And what are our politicians talking about? Means for restructuring our nation's financial circumstances along the lines of Chapter 11 bankruptcies?

No.

Apparently, they would rather dig us further into a hole, so we can enjoy the kind of social upheaval Europe is enduring right now as people protest austerity measures . . . or, possibly, worse (all-out warfare with those to whom we owe money and are unable to pay)?