It is Wealth Inequality, Stupid!
In the last 25 years global wealth inequality has increased to historic levels. Recent articles suggest that we have returned to 1920s era levels. Basic history knowledge informs us what happened at the end of the 1920s in October 1929.
The last 40 years has been very good to the top 1%, .01% and the .00025% of the U.S households both in terms of wealth accumulation and income. In an insightful column in the Washington Post, Christopher Ingraham pointed out the staggering shift from the middle class to the top elite since 1980. The richest 400 Americans – .00025% of the population – increased their share of the nation’s wealth from less than 1% to more than 3%.
Another way of saying this is that the top .00025% percent of the population own more than the bottom 150 million Americans, which is the bottom 60%. This bottom 60% saw their share of the wealth decline from 5.5% in the early 1980s to 2% today.
Part of this is due to the different increases in household income. In constant 2016 dollars, the income of the bottom 10% actually declined from 1965 to 2016. The top 10% saw their household income increase by 80%.
Time congruent to this is the dramatic increase in the use of money in politics. The wealthy donate a disproportionate amount of total money given to politicians. These politicians then listen to the rich. This is a key reason why there has been no legislative changes made to improve the economics for the bottom 50% of the population; they have little influence on legislation. So, the rich continue to get richer.
This is not simply a U.S. situation, though the inequality is greater in the U.S. than other major countries. Here is the current amount of wealth controlled by the top 10% of each country:
- U.S. 76%
- Russia 70%
- China 68%
- France 54%
- Great Britain 51%
- Brazil 56%
- Germany 40%
- Japan 42%
All of these numbers are much higher than they were in the 1970s.
The reason for the title of this column is that much of the media punditry has looked at events going on in the world and have drawn general conclusions. Some of these are that nationalism is on the increase, populism is on the increase and many people want to “go back” to a time when it all felt better. This is why “Make America Great Again” was such an effective tag line for Trump. The good old days. The 30 years after WWII. Well, in countries all around the world, that time period had much lower levels of inequality than today.
If you really look and really listen, much of what is happening today can be directly traced back to a strong sense of unfairness felt by the lower 50% of the populations of many countries of the current wealth inequality. It is that fact that is triggering what many deem nationalistic demonstrations.
In early 2016 I was asked to forecast and frame the election that year. I called it the wealth inequality election. It turned out to be exactly that. The two figures who surprised everyone were Sanders and Trump. In practically every speech Bernie Sanders used the word “revolution”. Trump consistently campaigned as an outsider populist. [Obviously he has not been a populist since becoming president]. In history, whenever there becomes a time when wealth inequality grew to similar levels prevalent today, there was revolution and populist movements. That, as much as anything else, was the reason the 2016 election turned out the way it did.
Media pundits here in the states have cited the Yellow Jackets in France as having been launched because of an increase in the gasoline tax. That people will demonstrate to keep the government from taxing gasoline. Well yes, it was an increased tax on gasoline, but it was really the straw that broke the camel’s back on the widely-held belief that the French economy is oriented toward the rich.
In my last column I suggested that, should wealth inequality not be dealt with at the government level, there could well be more and more Yellow Jacket movements starting around the globe. What the wealthy and their paid for politicians need to truly understand is that the wealth inequality now present is perhaps the most significant threat to them as it is putting stress on the social and economic fabric.
Just think back to the recent government shut-down. Yes, it was unnecessary. Yes, it was over something stupid. What the real news was how many people, federal government workers and those that relied on them, were living so close to the edge, that missing just one paycheck put them and their families totally at risk. Foodbanks for our government workers! That isn’t America. What was America was how people stepped up to help fellow citizens in need.
This is America! The land of equality and justice for all is an American creed. We now live in a society created by American greed.
This historical level of wealth inequality won’t be tenable in the long-term, in America or elsewhere.