Taking from the Poor to Give to the Rich: The Top 20% Percent of Americans Own 85% of All Wealth and the Top 400 Wealthiest Earn $345 Million Per Year
March 7, 2010
In several previous commentaries, I have criticized our system of income taxation as being fatally flawed. The primary flaw is that for the people at the top of the economic pyramid, income is usually only a tiny component of their increasing wealth. Generally, the vast majority of new wealth for the ultra-wealthy comes from the appreciation of assets, which are never (and can never) be taxed by an income-based system of taxation.
The ultimate result of an income-tax system is that wealth is relentlessly transferred out of the hands of the poor and middle class -- and into the hands of the ultra-wealthy. I have previously illustrated the net result of decades of income taxation in the United States, through some horrifying demographic data.
The top 20% of wealthiest Americans hold an obscene 85% of all wealth. Put another way, the “little people” who comprise the bottom 80% of U.S. society hold only a pitiful 15% of U.S. wealth -- the most lop-sided wealth distribution among all Western societies. However, while that data is bad enough, it gets much worse when we focus upon the top 1% of wealthiest Americans. These pseudo-aristocrats hold 35% of all wealth and 56% of all stocks held by Americans.
Put another way, as the Wall Street Oligarchs crow about the “amazing rally” in U.S. equity markets, 56 cents of every dollar of profit goes to just 1% of Americans. Meanwhile, the “little people,” the 80% of Americans on the bottom hold less than 15% of all stocks -- meaning that this Wall Street-manufactured “rally” is doing nothing to alleviate the economic suffering of the vast majority of Americans.
However, some new, economic data out of the U.S. has left me completely flabbergasted. While I was well aware of the Bush-era tax hand-outs to the wealthy, I did not truly understand the magnitude of that windfall. The numbers are totally shocking.
In 1995, during the Clinton-era, the top-400 wealthiest Americans 'earned' an average of $50/million per year in income, while paying an effective tax rate of 30% on those earnings. In 2007, a mere 12 years later, the effective tax rate for the “400” had fallen by 45%, thanks to the Bush hand-outs.
What is even more shocking (and despicable), however, was the rise in incomes of the “400.” In just 12 years, their average incomes rose from $50 million/year to $345 million/year -- a nearly 700% rise in incomes in just 12 years, or an average wage-hike of well over 50% per year. What makes this all the more despicable is that during this same period of time, the U.S. government (and Canada's government, as well) have been doing everything in their power to prevent the “little people” from getting any wage increases, at all.
In aggregate terms, this unequivocal decision to “take from the poor to give to the rich” has produced a wealth schism which literally has not been seen in our societies in over 70 years.
As you can see in the chart above, it is “deja vu all over again” as the share of increases in income for those Americans at the top is now at virtually the same level it was in 1929 -- just before the Great Depression began. While it would be inaccurate to say the Great Depression was “caused” by this grossly disproportionate schism in incomes, I will remind readers of one of my favorite quotations, from Greek philosopher, Plutarch -- nearly two thousand years ago:
An imbalance between rich and poor is the oldest and most fatal ailment of all Republics.
Thus, while the obscene plundering of America's wealth by the top 1% (courtesy of the Bush regime) did not cause the second “Greater Depression” in the United States, it will certainly make it much, much worse.
It goes without saying that the top 1% of Americans do not “earn” over 60% of all pay-raises in the U.S. Rather, this massive wealth-grab has been enabled by a society which has willingly submitted to what is nothing less than “economic rape.” Indeed, unlike real “rape victims,” we literally “asked for it.”
How could “the little people” (who now wield little, real power in our societies) be responsible for having most of our wealth stolen from us? Apart from the fact we continue to submit to a system of taxation which (inevitably) robs-from-the-poor to give-to-the-rich, we willingly endorsed the destruction of trade unions in our societies -- swallowing the economic propaganda fed to us by the corporate media-empire, like the moldy tripe that it was. Unions are corrupt.” “Unions are greedy.” “Unions cause inflated wages for their members -- which hurts our economy.”
Let me be perfectly clear here: I am not defending unions as “bastions of economic purity.” Having worked in four different unions while I was working my way through seven years of university, I saw (first-hand) all the flaws exhibited by these organizations. Yes, there is “corruption.” Yes, there is “greed.” Yes, unions do result in higher wages for their members than if they were not in a union. However, the issue here is perspective.
Power corrupts. Absolute power corrupts absolutely.” This tautology applies to all members of our society, and as these words of wisdom make explicitly clear, they are more applicable to those on top (i.e. those who come closest to “absolute power”), who are corrupted the most.
Is there any other group of people in the world more corrupt than the Wall Street Oligarchs? In previous commentaries, I pointed out how these Oligarchs are the most-ruthless and most-hypocritical people on the planet.
As for “greed,” the numbers above clearly demonstrate that the greed of the rich makes the (supposed) “greed” of the little people appear to be nothing but a pathetic joke, in comparison. However, that data merely represents the “tip of the iceberg.”
Notice how during the years when trade unions were their strongest (during the 1960's) -- and supposedly at their “greediest” point -- that the little people still didn't come close to getting their share of the income pie. The bottom 99% at their absolute best only obtained 65% of total wage increases, only 2/3 of their rightful share. Keep in mind that even that statistic is badly skewed by the fact that the wealthiest members of the bottom-99% (i.e. the rest of the top-20%) took home most of those wage-increases. Thus, when trade unions were at their absolute peak of power, they were able to extract only about half the wage increases which their members (i.e. the people) were rightfully entitled to.
Thanks to the apathy of the flocks of sheep who masquerade as “citizens” in our societies, unions in North America have been nearly destroyed, and the public sector unions are virtually the only unions which have been allowed to survive.
What is the attitude of the average American toward these public sector unions? They want to see them crushed, if not abolished, altogether. Having learned nothing from the last 40 years of their economic oppression, instead of looking to increase union-representation for themselves (as the first step in reversing this scenario), instead, these petty, ignorant people can only think of stripping away the same rights and benefits which these sheep willingly threw away for themselves.
Yes, U.S. public sector unions do much better for their members than for the non-union knuckle-draggers who did away with their own unions. However, as the economic data clearly indicates, the wages and benefits which public sector unions have obtained for their members are nothing but 'economic crumbs' compared to the obscene fortunes which the ultra-wealthy have plundered from American society.
Let me return to the final (faulty) accusation which has been directed at trade unions: that their “excessive” wage increases “hurts our economy.” The “evidence” which the propagandists use to supposedly justify this economic fiction dates back to the 1970's.
First, Nixon defaulted on the gold-obligations of the United States, taking the entire, global monetary system off of a “gold standard” -- for the first time in history -- meaning that none of the world's currencies were “backed” (officially) by any hard asset. This also allowed the banksters (for the first time in history) to engage in their dilutive, money-printing without any economic restraints.
Inflation immediately began to soar, and (along with concurrent political events) this led to the “Energy Crisis” of the 1970's -- where the newly-formed OPEC cartel announced they would no longer allow the United States to plunder all of their petroleum wealth at only a fraction of its real value.
There can be no questioning the legitimacy of OPEC's grievances, since the numbers are unequivocal. As I have often discussed in my commentaries on silver, it is a very basic truth of economics that any good which is “under-priced” will be “over-consumed.” If McDonald's announced that it would start selling “Big Mac's” for a penny apiece, we would all start eating hamburgers (or eating more of them) and cows would become “an endangered species.”
The obvious fact that we have a “supply crisis” in the crude oil market today is unequivocal proof that crude oil has been under-priced throughout most of the last several decades.
With the “spike” in the price of oil, an inflation-spiral began in our societies. I would ask all the union-bashers out there to please let me know which of the preceding events was the “fault” of trade unions? Nixon's gold default? The abolition of the gold standard? The reckless money-printing of the banksters? The plundering of Arab oil-wealth, which led to the formation of OPEC. Pardon my ignorance, but I fail to see how trade unions played any role at all, in the creation of the 1970's inflation-spiral.
However, once that spiral began, to the horror of the wealthy, all of our trade unions became “radical.” They made the “unreasonable” demand to their employers that if inflation was at a 10% annual rate that they wanted 10% raises for their members -- so that their members weren't being punished for Nixon's gold default, the abolition of the gold standard, the reckless money-printing of the banksters, and the formation of OPEC.
It was at this time that large corporations had finally managed to acquire a virtual monopoly over the “free press” of our societies. They immediately took advantage of this ability to control the “news” by re-writing history.
Suddenly, it was not Nixon's gold-default, the abolition of the gold standard, the reckless money-printing of the banksters, and the back-lash from Arab oil producers which had “caused” the inflation-spiral in the world's economies. Indeed, the propaganda-machine even changed the name of this economic phenomenon. It changed from an “inflation spiral” to a “wage-price spiral.”
In other words, instead of characterizing events truthfully; namely, that unions responded to the inflation created by our governments by seeking compensatory wage-increases, the propaganda which was sold to the sheep was that this entire “wage-price spiral” was caused by the 'evil' trade unions -- whose “crime” was that they did not believe their members should be getting poorer every year.
The rest, as they say, “is history.” The sheep turned on their own unions. They allowed our governments to “fix” the inflation problem they created by destroying our societies' trade unions. Concurrently, these same governments refused to shorten the work-week -- to reflect the beginnings of “structural unemployment” which had started to take hold in our labour markets.
For those unfamiliar with this term, “structural unemployment” is unemployment which is permanently “structured” into our labour markets so that even at the peak of each business cycle, a growing number of people would never find employment.
This has been a basic dynamic of our economies since the birth of capitalism, and the original “work week”: seven days a week, twelve hours a day. Since technology always eliminates jobs faster than it creates new applications, every few decades it was necessary to shorten the work week -- otherwise a steadily growing number of workers would never find a job.
Our governments stopped this evolution, freezing our work week at the current five-day, forty-hour work-week, which has been a standard for more than half a century. At the same time that our unions were destroyed (the only protection for workers) our governments have allowed “structural employment” to reach its highest level in history.
Thus, in addition to workers having no protection, they also had all of their “job security” robbed from them, since unlike a generation earlier, where a worker could quit a job if he was unhappy -- and look for a new/better one; with millions of permanently unemployed workers ready/willing/able to take the jobs of existing workers and work for even lower wages, we effectively became a society of “slaves” totally dependent on pleasing our “masters” for our economic survival.
Even this level of economic oppression is not enough to sate the relentless greed of the ultra-wealthy. While the majority of us have been turned into slaves, we have not yet had all of our wealth stolen from us. That will take place as the U.S. Greater Depression unfolds.
The key difference between the first”Great Depression” and today's “sequel” is that in the 1930's, despite the economic hardship which the “little people” suffered, the vast majority managed to hang onto their homes. The Wall Street Oligarchs plan to correct that “mistake” this time around.
While roughly 10 million American homeowners have already lost their homes to the Oligarchs, this doesn't come close to meeting their “target.” Ideally, they would like all of the little people to lose their homes. Taking a quote from “The Bankers Manifesto of 1892”:
When through the process of law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of government, applied to a central power of imperial wealth under the control of the leading financiers [i.e. the banksters].
Thus, the “game plan” of the Wall Street Oligarchs was written well over a century ago; however, it has taken all this time for the Oligarchs to gain such complete control over the “levers of power” that they are now in a position to achieve their dreams.
Quite simply, they want to steal the homes of every American, while the iron-fist of a Fascist government keeps the masses from rising up against them: hence the need to invent “The War on Terror” in order to 'justify' the creation of the Homeland Security Department: the instrument of U.S. facism.
Thanks to “The Patriot Act,” Americans no longer have any “constitutional rights.” Instead, they have constitutional privileges which can be completely revoked simply by uttering the magic word “terrorism.” Should U.S. “terrorists” seek to oppose their political/economic oppression, in some meaningful sense, such “terrorists” will simply disappear -- without “wasting” a lot of time with formal charges or lawyers or even trials.
Meanwhile, the Obama regime has created a second U.S. housing-bubble (see “The U.S. Government's Zero-Downpayment Mortgages”). It has created a brand-new “sub-prime sector” -- except this time around, the U.S. government (i.e. U.S. taxpayers) is “guaranteeing” nearly 100% of all these loans, while the Oligarchs allow none of their own money to be put at risk in this second bubble.
And the “risks” are as obvious as they are numerous. Millions of already-foreclosed homes have been held off of the market, allowing the propaganda-machine to pretend that housing inventories are only half as large as they really are, which in turn, has allowed some momentary price stability. This is totally a mirage.
With the U.S. economy still plummeting downward (putting aside the totally fictional “GDP” numbers of the U.S. government), job losses are about to re-accelerate, interest rates can only go higher, millions of hopelessly-insolvent “option-ARM” mortgages are about to reset, and retiring baby-boomers need to dump trillions of dollars of real estate onto the market (to partially compensate for a $3 trillion short-fall in their pensions and their own lack of savings). And, at some point, the millions of homes which the Oligarchs have hidden from the market will show up in inventories. Indicating that this second “crash” has now begun, recent figures for the sale of both new and existing-homes have shown a sudden collapse.
And, at some point, the millions of homes which the Oligarchs have hidden from the market will show up in inventories. Indicating that this second “crash” has now begun, recent figures for the sale of both new and existing-homes have shown a sudden collapse.
There is a real “war” taking place today: an economic war, which has been instigated by the ultra-wealthy, prosecuted by the U.S. government, and directed at the American people. Having already robbed Americans of their political power through the establishment of the Wall Street-owned, two-party dictatorship, the Oligarchs now want to rob the people of their last vestiges of “economic power” -- in order to turn Americans into “serfs,” which they consider to be the only rightful place for the “little people.”
Given how we have meekly submitted to the plans of the Oligarchs, it becomes harder and harder each day to argue that we do not deserve to be serfs.
The Rise of the New Global Elite
Two separate economies are emerging from the economic crisis as the elite get richer and the middle class join the ranks of poor.