OK, so I confess I woke myself up at 3:45 a.m. to watch the royal wedding, and I thoroughly enjoyed it. Who doesn't like a good fairy tale? But in order to savor the spectacle, I had to temporarily suppress my discomfort in the face of such opulence. Behind the fairy tale is some of the most obscene wealth inequality in the world.
And it's not just England. Wealth inequality is at historic highs in the U.S. as well, with some estimates suggesting that 1 percent of Americans control nearly half the nation's wealth. Or to put it in starker terms, the bottom 20 percent of Americans hold a measly one-tenth of 1 percent of everything - -real estate, stocks, bonds, art, anything of value.
This feels wrong to me. And as it turns out, it feels wrong to a wide swath of Americans, regardless of party or income level. That's the somewhat surprising conclusion to come out of a new study by Michael Norton of Harvard Business School and Dan Ariely of Duke University. Norton and Ariely surveyed more than 5,000 Americans from 47 states, whose incomes and voting records were representative of the country in 2005. The researchers asked these Americans to estimate the actual distribution of wealth in the U.S. and devise an ideal wealth distribution.
In the first task, the researchers created three unlabeled pie charts showing different distributions of wealth. The first was a perfectly equal distribution -- that is, every one-fifth of the population controlling exactly one-fifth of the wealth. The second reflected the actual wealth distribution in the U.S. The third reflected the wealth distribution in Sweden, which falls between the U.S. and total equality. The respondents were asked to choose which "nation" they would prefer to live in, with the stipulation that they could end up anywhere in the distribution, "from the very richest to the very poorest."
Remember that the respondents were looking at unlabeled pie diagrams. Strikingly, the actual wealth distribution in the U.S. was seen as far less desirable than either the perfect distribution or Sweden's. Indeed, more than 9 of every 10 participants preferred Sweden's wealth distribution to that of the U.S. Just as importantly, this preference was shared equally by men and women, Bush voters and Kerry voters, and citizens of all income levels. Interestingly, respondents also showed a slight preference for Sweden over equal distribution, suggesting that Americans do prefer a little inequality in wealth.
The researchers wanted to drill down a bit more into Americans' preferences, so in the next task, they asked respondents to estimate the actual distribution of wealth in the U.S. -- and to "build a better America" by devising the ideal distribution. To do this, they indicated what percent of the nation's wealth each one-fifth of the population controlled -- and ought to control -- from the top one-fifth to the bottom one-fifth. So they could, in they wanted, give all of the nation's wealth to just the wealthiest one-fifth of Americans, or distribute it exactly evenly -- or anything in between.
The respondents clearly have a distorted grasp of wealth in America -- and they just as clearly want serious change. As reported in a forthcoming issue of the journal Perspectives on Psychological Science, they vastly underestimated the actual wealth inequality in the U.S., believing that the top one-fifth of Americans control 59 percent of the wealth, when in fact it's closer to 84 percent. What's more, their own ideal wealth distributions for the country are far more equitable than even their distorted perceptions of wealth in the U.S. The typical respondent would like to see the top one-fifth of American owning only 32 percent of the wealth. And here's the really interesting part: All the respondents -- including the wealthiest -- said they would redistribute the nation's wealth by moving a large amount of money from the very top to the bottom layers of society, suggesting concern for the nation's least fortunate. And all of the respondents -- even the poorest -- said they preferred some inequality to prfect equity.
All of this taken together suggests that there may actually be more consensus among Americans on an ideal for wealth distribution, one that's much fairer than the American reality today. With the highly polarized policy debates on taxes and safety nets currently heating up our politics, this shared norm is worth celebrating. Americans long ago rejected the monarchy as no more than a fairy tale.
This means only that the information is out there, not that there will be any action to change CEO compensation. The average compensation for CEOs of the top 400 companies from all sources now exceeds $11m annually.
In 1970 the ration of average CEO pay to that of the average worker was 45-1. Today it is about 348-1.
This would not be so bad if those making over $11m invested in job producing activity such as venture capitalism or bought goods and services made ion the US. That is not the case. The wealthy by and large invest in things which are guaranteed to return a profit on which they take a long term capital gain taxed at 15%.
While it might make us feel good to sock it to the rich, even if we taxed everyone making over $500k per year or more 100% over that $500k, and then went on to confiscate every bit of their wealth, we would still not plug the deficit or pay off our debt.
If we do not quickly find a way to re-patriate decent jobs sent overseas--which means incentivizing companies to do so--and adequately educate every single child in the US we will not only become like Yugoslavia politically, we will be Mexico economically.
Problem is, it wasn't money that "trickled down"
And the majority of Americans became Peons.
If wealthy business owners and shareholders want a stable, safe place base of operations and a healthy, educated workforce, then they either have to pay their workers enough that the workers can look after all their needs and pay their share of taxes OR they have to pay a much higher tax rate so that the state (state meaning any form of government) can provide education and health care and build and maintain the infrastructure business needs.
If the folks writing themselves big cheques don't want to pay living wages or taxes, then they are ruining their workforce, impoverishing and eliminating their customer base, undermining the infrastructure they depend on, and turning their country into a third world nation.
The smart capitalists can see this. That's why higher income people also picked the Swedish wealth distribution pie.
Because what you save in taxes and wages...you wind up having to spend on police and private security.
The smart affluent can see this....the reactionary rich...not so much.
But then, and even just a hundred years ago, workers could leave the horrible factory jobs behind, risk their lives on a crowded immigrant ship or immigrant train, and take a make-or-break chance on a homestead.
There's no place for today's oppressed to go.
Then see a proposed new version of the Homestead Act that would carry that process further forward and provide substantial second incomes.to most of us as a supplement to job income.
Excess wealth concentration is likely an unrecognized cause of the great depression, recessions and inflation, according to the late economist Robert Edmonds.
The time has come to end it as fast as is humanly possible.
FOr Conservatives it's a privilege, accorded through hard work, luck, life, pursuing their individual happiness.
For liberals its an entitlement, paid for by somebody else.
Very simple.