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Some statistics on the wealth gap

Posted in politics

Michael Moore delivered this speech to the demonstrators in Wisconsin recently that I heard about from his e-mail newsletter. Regardless of what you think of the guy, it was an impassioned speech and I was touched by his emotion. (I didn’t watch the whole thing, but you can see it here if you’re interested.)

Anyway, the reason for my post here is actually to draw some attention to this provocative article he posted in that newsletter that describes the disparity in wealth in the US right now. I sent the link to my favourite lefty comedian Jimmy Dore in the hopes he might quote from it in a future episode of his political radio show on KPFK. (Update: He did indeed quote these statistics in a later episode, but it’s impossible to know if he got the idea from me!)

Some of my favourite highlights from that article are:

  • 400 people have as much wealth as half the US population;
  • the top 5% of US families saw their incomes rise by 73% between 1979 and 2008, while the lowest 20% saw a decrease of 4% and the remainder stayed mostly stagnant; and
  • in 2007, the richest 1% of US households owned more than 33% of the nation’s private wealth, which is more than the combined wealth of the bottom 90 percent.

Even if the statistics in this article were inflated by 100%, they’d still be pretty scary to me. They represent an unforeseen gap between the super-rich and the poor, and I haven’t seen any realistic solutions to address the issue. I’m not even convinced that tax reform would help very much, although generating more tax revenue from the super-rich would likely ease the burden of the enormous swath of citizens in the US who are in need of better health care, education and social programs.

I’m personally acquainted with several people whom I’d consider to be wealthy or at least extremely comfortable: one is a retired, successful entrepreneur worth probably $15M+; several are retirees who probably each hold assets in excess of $3M; and a number are physicians who make very good salaries. But that’s not the level of wealth I’m talking about here. It’s the extremely high-income families earning tens or hundreds of millions each year where I think the problem lies.

If there were a million multi-millionaires of the former ilk in the US (e.g. with $10M or less in the bank), I wouldn’t be surprised if trickle-down economics might actually work—there would likely be considerable liquidity, investment and entrepreneurship happening in that scenario. But I have trouble imagining that dozens of billionaires are of much constructive use to the economy at all, except inasmuch as the luxury goods and services sector is concerned. The extremely poor and even the middle class would have trouble accessing any benefits from that kind of wealth just sitting in the system, earning interest and paying dividends to the wealth-holders but generating no concrete products or services or value to society at large.

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