End Wealth Supremacy
15 years after the collapse of Lehman Brothers, Wall Street is as predatory as ever. But a more democratic economy could be rising all around us.
We all know that the recession has hit families hard, but even mainstream newspapers and magazines have finally caught onto the fact that American household incomes have been stagnant for decades. The Federal Reserve recently reported that the median household income has fallen more than 6% since 2001 (adjusted for inflation). And yet … the economy has grown most of that time.
In fact, were American national income in 2010 distributed to people and households in the same proportions as it was in 2001, the median household income would now be 6% higher than in 2001, not 6% lower. In other words, there’s been enough growth to compensate for the rising number of households, and then some. If the realonomy grew with the economy, we’d all be fine.
Where has all the money gone? Again the answer is no surprise. It’s gone to the very rich. Not the merely rich. The very rich.
Even the merely rich have seen stagnant or declining incomes since the turn of the century. Federal Reserve data show that the 10% of households in America are actually slightly poorer than they were ten years ago. Even the top 1% have seen only minor gains since 2001. For real income growth, you have to look to the top 0.1% or 0.01%.
There the gains have been substantial. The incomes of the top 0.01% don’t show up in surveys, but they do show up in tax data. The World Top Incomes Database (WTID) uses IRS data to compute average real incomes for tax-filing households. Figures are available for all households, the top 10 percent, the top 1 percent, and even the top 0.01% of households.
These data show that for the top 0.01 percent of tax filing households — that’s the top 1 in 10,000 — incomes rose an average of 29% between 2001 and 2010. These households account for just 30,000 of so people. It’s these lucky 30,000 who’ve garnered nearly all of the growth in the US economy over the past ten years.
Americans argue endlessly about fair levels of taxation, government spending, and whether or not it’s right to tax the rich for being rich. Meanwhile daylight robbery goes on right under our noses every day. When it comes down to weighing what’s fair to 30,000 people versus what’s fair to 300,000,000 people, the 30,000 should have a very high bar to prove their case.
Today’s America, however, seems more intent on protecting the right of 30,000 very rich people to earn even more than on ensuring the right of 300,000,000 people to decent jobs government services. That’s pathological. Until America gets over its fixation on promoting the desires of the wealthy for even more wealth, the country’s moral and physical decay will continue. I’m not holding my breath.
