Sunday, February 27, 2011

The Hoarding of America—Part I

Wealth, income and power belong to an elite group of people in this country—basically, just 1% of the population—and the general public does not seem aware of this. If they were, they would know that the media rants against immigrants, unions, socialists and other relatively powerless groups are nothing more than a distraction to keep us from noticing what is really going on.

This is the first of a two-part blog. Part I is about who owns this country and how much they own. Part II discusses how they have ensured that they can keep their disproportionate piece of the American pie without sharing with anybody. My kindergarten teacher, Mrs. Fowler, might have made this greedy segment of our population stand in the corner for this type of behavior. The U.S. government and general public seem to be far more tolerant.

I have never been math inclined, so attempting to understand financial information is a challenge for me. I’m a writer, not a mathematician. However, on the positive side, if I can interpret the following information so that I can understand it, then anyone should be able to grasp what’s going on. So here goes.

The gap between the rich and the poor in this country has widened, according to The concentration of privately held wealth is at its highest peak since 1929, the year the stock market crashed and ushered in the Great Depression.

The average American today is working longer, harder and smarter than a generation ago, but taking home, after adjusting for inflation, less in wages than workers in the early 1970s, according to the 15th annual report, Executive Excess 2008: How Average Taxpayers Subsidize Runaway Pay, co-authored by the Institute for Policy Studies and United for a Fair Economy. At the same time, the report adds, wealthy Americans are earning much more. In 2007, CEOs in the United States took home an average of $10.5 million, 344 times the take-home for typical American workers. Thirty years ago, CEOs averaged only 30 to 40 times the average American-worker paycheck.

So while the average person is earning less and less, the wealthy are earning more and more. And they are amassing that wealth with less actual work. According to an article in the July 24, 2010 New York Times, for the rich, most income does not come from working. In 2008, only 19% of the income reported by 13,480 individuals or families making over $10 million came from income.
    So what percentage of our population falls into the category of, well, let’s use the unofficial term of Filthy Rich? According to an article by G. William Domhoff on the University of California at Santa Cruz website, in 2007:
    • The top 1% of households owned 34.6% of all privately held wealth. (Wealth is defined as every asset you own minus your debt.)
    • The next 19% of households (managerial, professional and small business level) owned 50.5% of all privately held wealth.
    • That means that 20% of the people in this country own 85% of the wealth, leaving 15% for the bottom 80% of the population—the average Joe or Jane who works for a living.
    • If you consider another term, “financial wealth,”—which is the value of everything you own minus your home—the top 1% of households actually had a 42.7% share of this country’s wealth. (see charts below)
    Charts are based on data published by E. N. Wolff for the 
    Levy Economics Institute of Bard College in 2004, 2007 and 2010.

    Based on the above statistics, we can conclude that most of the wealth in this country is held by a very small group of people. Domhoff went into even more detail, defining what the top-10% households own by types of financial wealth:
    • The top 1% of households own 38.3% of all privately held stock, 60.6% of financial securities and 62.4% of business equity.
    • The top 10% own 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate.
    • Since "financial wealth" controls income-producing assets, we can say that just 10% of this nation's citizens own the United States of America—and the odds are against you being one of them.
    So what can we conclude from all this information? The top 20% of our population is doing quite well, while the rest of us are worried about finding or keeping jobs, and if we will ever be able to retire. In the meantime, Congress and the states are cutting the safety net programs—that would benefit most of us—to balance their budgets, while ignoring the more equitable source of income: closing the tax and legal loopholes that benefit the bloated rich.

    In Part II of this blog, I will explain how this concentration of wealth came into being and what we can do to get some of our fair share of it back again.


    1. why is it?
      that a 3% tax increase for the wealthy is considered "socialism" and
      an 8% wage cut for the middle class is "doing your part."