Sam Pizzigati / Campaign for America’s Future & Marlee Kokotovic / Nation of Change & Richard Eskow / Campaign for America’s Future & Paul Buchheit / NationofChange – 2017-11-24 20:05:36
What Is the True Cost of Inequality?
Americans, in effect, are each paying what amounts to an “inequality tax.”
Sam Pizzigati / Campaign for America’s Future
(November 22, 2017) — The 12 months that ended this past summer, suggests the just-released annual Global Wealth Report from the Swiss bank Credit Suisse, ought to be cause for celebration. The world has never been richer. Credit Suisse’s researchers have discerned “a significant increase in wealth across the globe.” Net worth worldwide has increased by a remarkable $16.7 trillion over just the past year.
So why aren’t people worldwide cheering? That “significant increase in wealth,” the new Credit Suisse numbers make clear, has benefited only a precious few. The top 1 percent globally now hold 50.1 percent of the world’s household wealth, up from 45.5 percent at the start of the century.
Within that top 1 percent, the really rich — deep pockets with at least $50 million in net worth — are clearly leading the way. Since 2000, Credit Suisse calculates, the wealth of this “ultra high net worth” cohort has multiplied “five-fold.”
About half of these ultras, 49 percent, reside today in the United States. Credit Suisse counts 72,000 of these ultra-rich Americans. Some context: China, the host to the world’s second-highest collection of $50 million-and-up personal fortunes, has only 18,100 ultras.
Some additional context: The United States hosts over 25,000 more ultra-rich individual fortunes than the nations with next nine highest ultra-rich totals combined.
How much of this enormous wealth at America’s economic summit trickles down to average Americans? Not much.
At first glance, that doesn’t appear to be the case. The average American adult, the Credit Suisse data show, boasts $388,585 in net worth. Only two other nations in the world — Switzerland and Australia — have higher net worth averages.
But wealth averages can be deceiving. They represent a nation’s total household net worth divided by the nation’s total number of adults. The more wealth a nation’s rich hold, the higher the average will be. A nation of one millionaire and nine other adults with no wealth at all would have an average individual net worth of $100,000.
So net worth averages can tell us next to nothing about the actual life experience of the typical person. To see how a nation’s most typical adults are doing, we need instead to calculate each nation’s median adult net worth. That means finding the net-worth level that represents the point at which half a nation’s adults have more wealth and half have less.
The new 2017 Credit Suisse Global Wealth Report helpfully calculates these medians. Switzerland and Australia again top the global list. The typical Swiss adult has a net worth of $229,000. The typical Australian, $195,400. And the typical American? A mere $55,876. Twenty nations in all have higher median adult net worths than the United States.
The True Cost of Inequality
Just how much is inequality costing ordinary Americans? Comparing the United States to other more egalitarian-minded developed nations can give us a vivid sense of the high toll that inequality exacts. Take, for instance, the example of Japan, one of the world’s most equal nations.
In their new Global Wealth Report, Credit Suisse’s researchers describe the 2017 Japanese economy as “still in the doldrums.” But ordinary Japanese households would almost certainly take their “doldrums” over the economic status quo in the United States any day of the week.
The numbers explain why. The United States has over 50 times more ultra-rich than Japan, and that enormous wealth at the top has the US average net worth towering over the average Japanese net worth, by a $388,586 to $225,057 margin. But Japan shares its household wealth far more equally than the United States. The typical Japanese adult holds $123,724 in net worth, much more than double the $55,876 US median adult net-worth figure.
Ordinary Americans, in effect, are each paying what amounts to an “inequality tax.” If we distributed our wealth as equally as the Japanese distribute theirs, the typical American would likely be somewhere around $100,000 richer.
Or take Australia, a nation that now sports almost the exact same average adult wealth as the United States. The average Aussie has a $402,603 net worth, just a bit above the average American’s $388,586. The net worth of the median — most typical — Australian? A stunning $195,417, four times the median adult net worth in the United States.
Australians used to see their nation as a relatively equal society. They don’t anymore. Rising inequality has become a major Australian political issue. But Australia remains far more equal a society than the United States. The top 1 percent in Australia only holds an estimated 15 percent of the nation’s wealth.
America’s top 1 percent, Federal Reserve researchers reported earlier this fall, now holds 38.6 percent.
Sam Pizzigati edits Too Much, the Institute for Policy Studies online monthly on excess and inequality. His latest book: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 (Seven Stories Press).
US Wealth Inequality Soaring
Bill Gates, Jeff Bezos and Warren Buffett
own more wealth than bottom half of US
Marlee Kokotovic / Nation of Change
(November 14, 2017) — These three men — Microsoft co-founder Bill Gates, Amazon boss Jeff Bezos, and veteran financier Warren Buffett — are the three richest men in the world. And they now own more wealth than the bottom 50 percent of the US population. Their net worth is over $248.5 billion combined.
The Billionaire Bonanza report stated: “Our wealthiest 400 now have more wealth combined than the bottom 64 percent of the US population, an estimated 80 million households or 204 million people.” That’s more people than the population of Canada and Mexico combined.
IPS’s Chuck Collins and Josh Hoxie know it is not a “natural phenomenon” how the rich got rich at the expense of the rest of the population. They say it’s the result of “unfair economic policies that benefit those at the top at the expense of those at the bottom.”
This IPS report, Billionaire Bonanza, says “All combined, households in the bottom one percent have a combined negative net worth of $196 billion. For comparison, the top one percent, a category holding the exact same number of people, have positive $33.4 trillion in combined net worth.”
It is said that President Donald Trump’s current tax plan must not pass as the inequality gap between the top one percent and the rest of the US population would increase dramatically. He is attempting to scrap estate tax and income taxes for top earners, which only benefits the super rich and powerful.
WEALTH INEQUALITY in AMERICA
The Truth Exposed on How Wealthy the Elite Really Are
Why We Need to Confront the Billionaires’ Paradise
It’s time to “strike back” — not against
wealthy individuals, but against oligarchy itself
Richard Eskow / Campaign for America’s Future
The concentrated wealth of the global plutocracy is the dark matter of the world economy: it is rarely glimpsed and difficult to measure, yet it reshapes everything around it.
(November 14, 2017) — Two recent reports — the UBS/PwC report on the “new Gilded Age” of the international billionaire class, and the “Paradise Papers” released by the International Consortium of Investigative Journalists (ICIJ) reveal ways corporations and the ultra-wealthy avoid taxes. In doing so, they offer a glimpse into this darkness.
Together, these releases tell us a lot about the wealthy few who run the world.
We now know that the British royal family has been less than open with the people they rule, who preserve their dubious privilege to monarchy. And we have learned that, by investing in a Lithuanian shopping center as an end run around taxes, U2’s Bono may have finally found what he’s looking for.
But these reports also help us see how much we still don’t know about the powerful few. In an era when, according to the Institute for Policy Studies, only three Americans — Bill Gates, Jeff Bezos, and Warren Buffett — own more wealth than half of our entire population, we need to do more to understand — and confront — the super-concentration of resources.
The Swiss bank UBS and the American accounting firm PriceWaterhouseCoopers weren’t looking to write an exposÃ© when they prepared their annual “Billionaires Insights” report for 2017. On the contrary. So-called “very high net worth individuals” are the financial industry’s most sought-after clients. The report is entitled, without any apparent irony, “New value creators gain momentum.”
And gain momentum these billionaires did. As the report notes, “Globally, the total wealth of billionaires rose by +17% in 2016, up from USD $5.1 trillion to USD6.0 trillion.”
Did your net worth grow by 17 percent last year? Unless you’re one of the world’s 1,542 billionaires, chances are it didn’t.
The US Wealth Gap
In the United States, wealth for most households grew at a much slower rate, while racial disparities in wealth persist in middle-class households.
Analyses from economists Thomas Piketty, Emmanuel Saez, and Gabriel Zucman show a dramatic gain in income for the very wealthy — and no one else — in recent decades. In a useful explainer, David Leonhardt of the New York Times concluded:
Yes, the upper-middle class has done better than the middle class or the poor, but the huge gaps are between the super-rich and everyone else. The basic problem is that most families used to receive something approaching their fair share of economic growth, and they don’t anymore.
Meanwhile, the Federal Reserve reports that millions of Americans continue to struggle. 30 percent of adults, roughly 73 million people, are finding it difficult to make ends meet or are barely getting by. Just under one-fourth of all adults said they could not pay all their bills for the current month. 44 percent said they could not cover an emergency expense of $400, and one-fourth of all adults reported that they had to forgo medical treatment during the past year because of the cost.
A Second Gilded Age
As of last report, America’s ten wealthiest men — they are all men — are collectively worth more than $633 billion. The combined wealth of these 10 men has risen by nearly $116 billion since the start of this year alone.
The explosive growth of billionaire wealth, at a time when the middle class is dying and millions of Americans are struggling, has implications for democracy as well as the economy.
The work of political scientists Martin Gilens and Benjamin Page has shown that the preferences of the majority have very little effect on government policy, while the political wishes of the wealthy few are far more likely to become reality.
As history teaches us, centralized wealth often leads to political oligarchy. Our country is no exception. Expand this oligarchical effect across the globe, and you get a sense of the global reach of the billionaire class. As Oxfam international reported earlier this year, just eight men possess as much of the world’s wealth as half the global population.
The author of the UBS/PwC report commented that “We are now two years into the peak of the second Gilded Age,” with levels of inequality not seen since 1905. He also says that “this is something billionaires are concerned about,” leading to fears that the world’s population could “strike back.”
It’s a rational fear.
How They Hide
The report lists some of the ways the billionaire class spends its money. Art collections, sports clubs, and philanthropy all rate a mention. Recent political events in the US demonstrate that they’re also using their power to further enrich themselves and keep the majority from “striking back.”
One thing the wealthy are apparently not doing with their money is paying much in taxes. The ICIJ’s Panama Papers revealed that many people are using illegal means to avoiding taxation.
The Paradise Papers reveal something equally important: how billionaires and corporations can evade taxation — and public scrutiny of their wealth — through legal means. These documents were obtained from Appleby, one of the world’s leading law firms specializing in offshore accounts.
The New York Times recently profiled two billionaire political donors, one Democratic and one Republican, in an article about the papers that also cited an Appleby publication on the ultra-wealthy’s problem of “motivating children with means.”
The Appleby brochure includes the picture of a small boy in a three-piece suit; apparently that counts as cute to the super-rich. Another handout shows “a handsome couple” rushing to board a private jet, while another is captioned “wealth seeks out safe harbors.”
Appleby clients include prominent Democrats like Penny Pritzker, Commerce Secretary under President Obama, George Soros, and the aforementioned donor, James Simons. They also include prominent Republicans like Sheldon Adelson, Carl Icahn, and billionaire Robert Mercer, who used some of the money he saved avoiding taxes to set Steve Bannon up with a media empire.
When it comes to disseminating their ideas, it’s striking how many hard-core conservatives don’t trust the “free market” to get the job done.
Sen. Bernie Sanders has called for an investigation into the papers, noting that corporations such as Wells Fargo, Citigroup, Apple, and Nike are implicated in the documents.
Offshore havens do more than just help clients evade taxes. They also help them avoid responsibility. As the Times reports, “another offshore firmâ€¦ advertises that it helps clients ‘preserve wealth from the ravages of litigation, political tumult and divorce.'”
Pop stars also availed themselves of Appleby’s services, including the aforementioned Bono, who took advantage of Malta’s generous tax rates for foreign investors when he funneled money into that Lithuanian shopping center.
But then, the self-satisfied singer has a long history of giving high-minded speeches while failing to deliver for the poor, either personally or politically.
In his book The Frontman, author Harry Browne writes that Bono’s politics are “broadly â€¦ conservative” and can be seen as “fundamentally non-threatening to the elites that have wreaked havoc on the world.” To Browne, Bono is “a slick mix of traditional missionary and commercial colonialism, in which the poor world exists as a task for the rich world to complete.”
A Veneer of Conscience
In an oligarchical world, figures like Bono matter. They provide the singer’s “friends,” who range from Bill Clinton to George W. Bush to Jesse Helms, with a veneer of conscience. They inoculate members of the global elite from the guilt that is rightfully theirs.
Speaking of “frontmen”: the papers also show that Britain’s Prince Charles invested millions of pounds offshore. His estate insisted that the investment, which may have indirectly benefited from the prince’s environmental campaigns, be kept secret. The Queen also invested heavily in offshore companies, including one that has been criticized for exploiting poor families.
The Royals insisted that they obtain no tax advantage from these investments, which suggests that the public face of Britain’s government may well have been trying to hide its wealth from Britain’s people.
The authors of the UBS report probably didn’t intend these words to sound as ominous as they do:
Billionaires are leveraging their networks. They have always worked with groups of peers for business, investment and philanthropic ends. But they are using them more, for example to access significant funding outside the capital markets. Better connectivity is helping them to work together more effectively.
They are undoubtedly correct. Americans need look no further than Donald Trump’s cabinet and circle of advisers, where billionaires gather to plot everyone else’s future while the rest of the Republican Party dutifully falls in line. Treasury Secretary Steve Mnuchin, Commerce Secretary Wilbur Ross, and Chief Economic Advisor Gary Cohn were among those implicated by the Paradise Papers.
The effect of billionaire “networks” may also be found in the Democratic Party’s struggle to develop a platform that reflects the needs of working Americans without alienating very many high-net-worth donors. Hint: It can’t be done.
Concentrated wealth tends to be amoral, and the ultra-wealthy are growing more powerful all the time. And since small businesses usually can’t afford the services of firms like Appleby, legalized tax evasion increases inequality among both individuals and businesses.
How can the United States and the world respond before it’s too late? Economists like Piketty and Zucman have called for a global wealth tax, although that would be difficult to enforce.
The International Monetary Fund (IMF) argued that taxes on the western world’s 1 percent should be “significantly higher.” The Paradise Papers illustrate the importance of ending legalized tax evasion, and Zucman wrote an op-ed on the topic for the New York Times.
But it is hard to pass such measures in today’s political world. Here in the United States, there’s a strong chance Trump and Congress will cut taxes on billionaires and corporations instead. That’s what that happens when wealth becomes too concentrated and political power follows suit.
What We’re Looking For
The undemocratic and unequal state of our own country can no longer be hidden. These reports are informative, but so far we’ve only glimpsed the oligarchy’s reach and power.
This concentration of power must be investigated, and then it must be confronted — by a majority determined to take back the economy and democracy from the powerful few who have made it their plaything, before it’s too late.
It’s time to “strike back” — not against wealthy individuals, but against oligarchy itself.
Richard (RJ) Eskow is a writer, a former Wall Street executive and a radio journalist. He has experience in health insurance and economics, occupational health, risk management, finance, and IT.
Inequality Out of Control: The Average
1% Household Made over $2.5 Million in the Past Year
Paul Buchheit / NationofChange
(November 20, 2017) — Inequality, like a malignant tumor, is growing out of control, and the only response from Congress is to make it even worse. Those at the richest end of the nation seem to have lost all capacity for understanding the meaning and values of an interdependent society. They’ve convinced themselves that they deserve their passively accumulated windfalls, and that poorer people have only themselves to blame for their own misfortunes.
It’s Getting Uglier Every Year.
The average 1% household made nearly $2.6 million in the 12 months to mid-2017. Mostly from the stock market. Here’s how:
* The US increased its wealth by over $8.5 trillion (see Table 2-4, mid-2016 to mid-2017).
* The 1% took $3.27 trillion of that (38.3 percent: see Table 6-5).
* Each of 1.26 million households, on average, took nearly $2.6 million. In greater detail, the poor segment of the 1% averaged about $1.44 million for the year, the .1% averaged about $7.2 million, and the .01% (12,600 households) averaged nearly $65 million in just the past year.
This is the second year in a row that the average 1% household has taken over $2.5 million of our national wealth. The pattern has worsened every year since the recession, as the US stock market has more than TRIPLED in value, with about 90 percent of the $18 trillion dollar gain going to the richest 10% of Americans.
Despite all this, the super-rich are essentially blackmailing Congress into approving a 1%-pleasing tax bill by threatening to withhold their political payoffs.
Americans Dying, Congress Does Nothing
According to the Centers for Disease Control, there were over 60,000 drug overdose deaths last year, and according to the National Institutes of Health there are about 88,000 Americans dying each year from alcohol-related causes. The number of teenagers hospitalized for suicidal tendencies has doubled in the past ten years.
And yet Congress is considering a tax bill that would eventually cause many middle- and low-income American families to PAY MORE in income taxes.
The children of low-income Americans would be hit hardest. The Republican plan excludes 10 million children whose parents work for low wages â€” that’s about 1 in 7 of all US children in working families. To turn the screws a little more, rich families would benefit more than the poor. According to one source, “a family making $1 million would get 44 times more money from the government than a single mother earning the minimum wage.”
Americans Without Housing, Congress Does Nothing
From New York City down to New Orleans and out to San Francisco and up to Seattle, Americans are losing their homes as builders and landlords look for ways to make money off of high-paying customers.
More and more Americans cannot afford rent. There are only 12 rural counties in the whole country where a one-bedroom apartment is affordable for minimum-wage workers, based on the 30-percent-of-income standard. Between 2010 and 2016, according to Freddie Mac, the availability of low-income housing declined by over 60 percent.
How Can It Get Worse? Ask Congress
While underpaid American workers struggle with the basic needs of health and housing, households at the other end are each taking millions of dollars of our wealth, mostly from the surging stock market, tax-free until the stocks are cashed in.
Yet, unbelievably, Congress is considering the elimination of the alternative minimum tax, which is the only assurance that the nation’s numerous tax avoiders will pay for some of their plentiful benefits. And it’s considering the elimination of the estate tax, which will leave untaxed windfall fortunes in the hands of people who did NOTHING to earn them.
It’s a frightening thought, but with inequality ripping us apart, and with few of our national leaders willing or able to confront the problem, we may never again be an equitable and functional society. That appears to be just fine with the 1%.
Paul Buchheit is a college teacher with formal training in language development and cognitive science. He is the founder and developer of social justice and educational websites (UsAgainstGreed.org, RappingHistory.org, PayUpNow.org), and the editor and main author of American Wars: Illusions and Realities (Clarity Press). He can be reached at paul@UsAgainstGreed.org.
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