How Rich are the Superrich?
The top 400 of America's richest aristocrats hoard as much wealth as the bottom 155,000,000 people. - Michael Moore at a Madison, WI rally, March 5, 2011.
Sources:
Mother Jones, It's the Inequality Stupid, March/April, 2011.
It's appalling that on average an individual in the top 0.01% has 1,000 times the income as an individual in the bottom 90%.
ReplyDeleteBut I don't think you're interpreting the graph exactly correctly. The graphic shows income, not wealth. And the circles at right compare individual income, not aggregate income. Aggregate income would show numbers of people times individual income. This is the number that you would need to look at to say, "The [income of the] bottom 90% of Americans is the tiny blue ball."
Furthermore, the notion on comparing raw income is not very illuminating; it seems unlikely (and is certainly not demonstrated) that the top 0.01% actually consume all their wealth. We want to look at income to measure distribution of economic demand, and by extension differential economic privilege. To do so, we need to compare percent of income consumed, as well as percent of income consumed on non-necessities. The second measure would actually show a greater differential, as much of the bottom 90% actually cannot consume all necessities, especially if we include decent health care as a necessity. We also need to compare aggregate measures (non-necessity consumption multiplied by numbers of people) to show the possibilities for social improvement available to redistribution.
We must furthermore look at how the top levels, especially the top 0.01%, are actually allocating their income. There are four broad categories. First, direct consumption. While this category is the most emotionally appalling, it at least puts money back into the economy, which improves aggregate demand. Second, taxes. What percentage of very rich people's income is allocated to taxes? (An aggregate measure is especially important for this category.) Third, real investment (money eventually spent on illiquid corporate assets to actually improve productivity). Allocating money to real investment is the fundamental justification for the capitalist class's continued rule. Finally, financial investment, money allocated on liquid investments (that do not indirectly find their way to real, illiquid, investment). This category is the most pernicious, because it locks up aggregate demand with no corresponding improvements in productivity.
Rather than focusing on total amounts, I think we have to pay attention to how the capitalist ruling class is actually allocating their money. Real illiquid corporate assets are growing very slowly, and perhaps falling, while investment in liquid corporate assets (cash in banks held by both individuals and corporations, bank reserves, and corporate stocks and bonds on the secondary market (where purchase prices do not flow to the corporations) are increasing rapidly.
BB - Thanks for your elaboration. If I interpret your bottom line correctly, the desparity is worse than depicted in these graphs. Yes, for starters, wealth distribution is worse than income distribution*.
ReplyDeleteAlso important are the other components you describe, because they point to ways of rebalancing the mal-distribution. In the nearer-term we should focus on remedying the "financial investment" cagtegory of income allocation by the super-rich. Much of this is speculation that distorts prices in the economy. Some financial investment is technically a form of "gaming" as in gambling.(Congress exempted credit default swaps from state gaming laws in 2000 as part of the Commodity Futures Modernization Act).
thanks for your comment.
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* I did use the term "wealth" in my narrative as you point out, when the graphics are for "income".