Have the GOP and the Über-wealthy set up the whole world for another Great Depression? Should we expect a World War to follow?
Or, do we have time to make our societies more egalitarian, and more anti-poverty, and more stable? Graphic from BusinessWeek:
Opportunity to move up, economically, is stifled when so much wealth blocks access to the top economic rungs.
These figures come out of a clever analysis by economists Emmanuel Saez of the University of California at Berkeley and Gabriel Zucman of the London School of Economics, who is a visiting professor at Berkeley. The Internal Revenue Service asks about income, not wealth, which is the market value of real estate, stocks, bonds, and other assets. Saez and Zucman were able to deduce wealth by exploiting IRS data going back to when the federal income tax was instituted in 1913. They figured out how much property different strata of society owned by looking at the income that was generated by that property, such as dividends and capital gains. To simplify, if a family reported $1 million in rental income one year and the market rate of return on rental properties was 10 percent, then Saez and Zucman concluded that the family must have owned property worth $10 million.
The message for strivers is that if you want to be very, very rich, start out very rich. The threshold for being in the top 0.1 percent of tax filers in 2012 was wealth of about $20 million. To be in the top 0.01 percent—that’s the 1 Percent club’s 1 Percent club—required net worth of $100 million. Of course, even $100 million is a pittance to Bill Gates, whose net worth, according to the Bloomberg Billionaires Index, is nearly 800 times that.
It will require great creativity to work our way out of this maldistribution without some sort of catastrophe.
- “The World’s 85 richest are now worth as much as the 3.5 billion poorest,” BusinessWeek
- Robert Reich at Salon: “The 4 biggest right-wing lies about income inequality”