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Breakfast at Tiffany's is so passé; let's do Cartier in Shanghai to celebrate! (photo: Stuck in Customs via Flickr)
A recent paper shows the complete victory of the rich in the class war. If you had any doubt, consider these facts. In 1983, the 838,900 households comprising the top 1% in wealth held $6.6 trillion in financial assets (constant 2007 dollars). In 2007, the 1,161,200 households in the top 1% held $19.9 trillion. The average for each household went from $7,870,000 to $17,116,000.
To put this in perspective, in 1983, the middle quintile, the 16,779,000 households 10% on either side of the middle, held $261.7 billion, an average of $15,600 per household. That rose to $603 billion in 2007, when there were 23,224,000 households in that quintile. Each household in the middle quintile had an average of $26,000 in financial wealth. If just half of the gains to the top 20% were divided evenly among the other 80% of 2007 households, their average wealth would rise $157,776.
This and other equally astonishing facts appear in a paper written by Edward Wolff (pdf). Tables 3 and 4. Wolff’s paper is discussed in detail by William Domhoff here, with better charts. Financial assets include all assets other than home equity.
Wolff provides some estimates on the impact on wealth of the Great Crash as of July 1, 2009. His rough guess is that the impact on the very rich was substantially less than on the other groups, and that as a result, the share of wealth of the top 1% went up from 34.6% of total wealth to 37.1%. The number of households with zero or negative net worth went from 18.6% to 24.1%. That is because housing prices made up the biggest part of the wealth of the bottom four quintiles, so the losses on housing value had a huge impact. The stock market has risen further since, and housing prices have continued to decline, so it’s fair to guess that if he repeated his calculations as of today, the rich would have advanced further.
An additional source of problems for average households was the rise in their debt. For the middle three quintiles, the debt to equity ratio rose from 37% to 46% in 2007, and the debt to income ratio rose from 67% in 1983 to an astounding 157% in 2007. Wolff points to facts suggesting that the increase in debt was to finance normal consumption expenditures, and was not the result of some kind of spending binge.
One form of class war is the struggle over the allocation of the gains created by society. The rich won that struggle.
It was not an accident. It didn’t have to be that way, and it doesn’t have to be that way going forward. Nevertheless, President Obama and his economics team are trying to put the old system back in place: low taxes on the rich, speculation, unregulated shadow banking, light-touch regulation of exotic securities, malleable regulators, the whole plan of the rich.
Why would anyone except the rich support that?
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Sound like that whole “trickle down scheme” was just me getting peed on.
CBl2′s diary which provides the link Jane put out about Obama’s history ‘should’ be read by all who support Obama.
We needed a *study* for that?
How much did that study cost the non rich?
How much was the last bailout :-)
I read that. Was actually more info than I have ever seen on him.
Of course; jane is an excellent researcher.
The only way to have a more even income & wealth distribution is to have the USG weigh in on the side of the others. Instead we have the opposite.
The study is one of several on-going efforts to get an idea of the overall wealth distribution in the US. The author is at the Levy Institute of Economics at Bard College in New York; this is his personal work. There is a journal on the subject, the Review of Income and Wealth. Domhoff has a long history of writing about the disparities in wealth in the US and what it means for our democracy.
What democracy?
An economics professor from UC Berkeley, Emanuel Saez, made (PDF, my comments here) a similar observation last year, which is that the economic crisis didn’t have the usual effect of an economic crisis. That effect is to lessen the difference between rich and poor. Instead, he wrote, things are proceeding along as they were.
But, but I voted like I was rich! /s
And thus it were ever so.
Thinking, no doubt, that rich is as rich votes?
And they needed a study to figure that out? I could have saved them a lot of money.
It is our country but only if we are willing to take it back from the kleptocrats now stealing it.
Chomsky was interviewed by Amy Goodman on democracynow last week. He asserted that it was the communists who worked tirelessly for the New Deal programs. As there is no longer any left in the U.S., like the commies of the 1930s, it is unlikely anything progressive will get done nationally.
“Why would anyone except the rich support that?”
I had a friend, fell down from a high wire, barely conscious he asked what happened”; – You fell I said, – I don’t fall he replied before he expired, bless his soul.
Oops. That should be “my comments here.
Take progressives as a whole, at least the ones who are concerned enough to do anything, and that still doesn’t add up to a lot of people. That’s part of the problem – it’s as though the majority of America assumes that one way or another, influencing government to make society better isn’t worth the trouble.
masaccio -
Thanks for compiling these figures. Since you brought up quintiles, I have a little question, though.
There are a bunch of “thinkers” out there gratuitously “debunking” the quintile “myth”, precisely to pretend that income gaps are somehow irrelevant. Of course they are full of it – but I like to understand the opposition argument before I tackle it, and frankly I can’t understand their “logic.” It’s all very complicated (as most bullshit is). Again, not because I think they’re right, but I’d like to wrap my mind around it.
I’m sure you’re familiar with this fatuousness – can you help a guy out with a counterargument that would be substantive against their assertions?
Or are they just “out there” and can be safely ignored? (They seem to have a lot of people echoing their crap, however.)
Speaking for myself, I’m a moderate. My professional career was Wall St. economist. I am more left now (having seen what transpired in the decade since my retirement), but I am definitely NOT in the position of the U.S. commies in the 1930s. And I count as progressive! WOW! Unless you have some group committed to the far left, nothing left will get done. The right controls all the handles of power.
Yeah, man, I’m a bootstrapping, self made man and I ain’t got to help nobody else because they can hep themselves too. you commie pinko socialists can keep your hands offa my stack, jack. You wealth redistributors can just move along now. I got friends in high places.
“it’s as though the majority of America assumes that one way or another, influencing government to make society better isn’t worth the trouble.” ; yeah, reflective of the ‘I got mine’ weltanschauung.
Express their arguments in your words and you will probably solve your problem. Or provide links so someone can do it for you.
LOL, I’m more left now because everyone went all lizard brain right after 9/11. I didn’t know law and order was such a liberal stance.
The Bush administration argued that one good reason to let the markets run was that everyone could benefit if everyone would buy stock. That was done in the context of “reforming Social Security”. This study, and the pioneering work of Piketty and Saez, what a foolish argument that was. Of course, it was debunked at the time for this and other reasons.
For sure.
Hell, I didn’t ever like my parents, but I realized I stood on their shoulders. They sacrificed plenty for me, and I benefited plenty from that. Humans are herd animals (I’m one of the least; about as much as a human loner as you will find short of hermits) and no one is self-made.
corollary to I got Mine is Don’t Take More.
If you are “middle class” and you already feel taxed to the hilt. And someone comes along saying they want “rich” people to pay more taxes, well, it isn’t rocket science for the “rich” people to come along and tell the “middle class” hey! they’re robbing “us” blind!!!!
Some people ignore reality. These figures speak for themselves.
Everyone in the U.S. seemed to go lizard brain after 9/11 except those of us who were in Manhattan on 9/11.
My reply?
Most people say to me “it’s complicated” when their hands are on my wallet.
Middle class taxes are, conveniently, called “payroll” taxes, one of the most regressive. Add to that the mandate for crappy “private” medical insurance, and you have the teabaggers to a T.
Excellent post. The truth, however, will be hard to find elsewhere, for we live in the best of all worlds now that neo-liberalism and triangulation are firmly entrenched. These numbers are the real content of “hope and change,” I fear.
Yep. I had to slowly piece by piece, little chewable bites, explain to Mr. GOP Forevah how and why habeus corpus is an effing good idea.
You mean the teabaggers’ complaint?
Because they are BRAIN WASHED!! They have been feed a steady diet of lies and hate by the Radical Right Talk Radio… Why because most of the media is owned by them!! Bad deregulation… Bring back the “Fairness Doctrine for the airwaves” We DO own them don’t we?????
anything like Portnoy’s?
((Petro!))
What is amazing is that many middle class people buy that argument from the rich people.
Well, I’m certainly with you on that. I just wish I could get down in the dirt with them over it. It’s probably pointless…
(and thanks eCAHNomics & dosido for your responses as well.)
Obama is redistributing wealth.
From the poor and non-wealthy to the wealthy.
“Change” in our pockets is what he will leave us with.
Will the baggers ever realize that their queen is a really a conservative-in-name-only? The highest state debt burden in the United States is a remarkable accomplishment for a half-term governor. Unless they are really looking for Decider Bush in Drag, they need to realize that leadership is more than repeating memorized platitudes.
Take a look at the Domhoff version of this paper, which is here. He explains the link between income and power. He is a certifiable liberal though; you’ve been warned.
This isn’t about Obama. This is the result of decades of republican misrule. I hope that it will change, but it won’t if people don’t even know about it.
I lived way downtown forever until recently, and 9/11 upset me. Is that so wrong.
Minorities and recent immigrants (legal and illegal) are suffering deeply because of the economy. Neither party is looking after them.
hey, are you picking on my private North Pole dancer?
Ah, perhaps you thought I was using a troll technique, with my question – sneaking in doubt in a thread. Trust me, that was not the case – it was a sincere question. I have no love for capitalism, believe you me. :)
And thanks for that link!
Uh, no? We’re talking about wanting to throw out the constitution after 9/11. That is/would be a mistake.
Well, both parties have abandoned the poor in general. Almost 50 million hungry.
That is a disturbing image.
I don’t think Americans have what it takes, or at least not the liberal ones.
[modnote: please no suggestions of violence! knitting needles or no]
@ Mod
It wasn’t all violent, but it absolutely was militant. There is a difference.
Militancy is uncouth in modern American liberalism.
It is an interesting phenomenon, but a meme that has been pushed, pushed, pushed along with that other favorite, trickle down economics. As if.
I think a lot of those who are barely clinging onto their middle class status these days still want to believe that they’re “rich,” and so they wish to identify with the obscenely wealthy… or something like that. Otherwise, it has never made any sense to me.
My observation of family and friends of the conservative persuasion is that they have been really fed the line of bull that they are more “entitled” than the poor, that they “work harder” than the lazy poor, and that they should never, ever have to pay taxes for any reason. And so these conservatives buy into it. Plus they’re being brainwashed by the rightwing media to totally victimize themselves and blame the poor and minorities for all of their woes.
Most of the “woes” that my conservative friends and family have are brought on by them living waaaaay beyond their means, overspending on junk, and then getting angry that they have to pay taxes. That’s simplifying it a bit, but that’s what I see in people I know.
Most of my leftie pals (the ones I know) tend to live within or below their means and are not so high-falutin, are willing to share, believe that a certain amount of taxation is necessary for the good of the country (albeit bitterly resent paying for wars, rather than, say roads and schools) and so on.
This study is no big surprise to me. The obscenely wealthy made out like bandits through various schemes. Plus it’s very clear that high end housing did not suffer the downfall that most mid to lower cost housing did. Most of the super wealthy can afford to sit tight on the property they own and wait for the values to go back up again, while those less wealthy are not in that position and lost a lot.
One also need only go to the high end shopping malls – you know: where Needless Mark Up is a poor cousin to even more expensive stores – and witness the non-working moms all out buy, buy, buying through the depth of crisis… hey, there were some great bargains to be had.
Yeah, the rich did extremely well in this crisis. The rest of us: not so much. Those at the higher end of the still middle class have had to tighten their belts and then bitch and moan endlessly about it.
It’s really the poor and the standard middle class that really got the shaft. But hey: who cares? Clearly, if we were god’s chosen, it wouldn’t have happened to us. Right? Right?????
True, but… they want to blame it all on minorities and such. I would like to make common cause with the tea party, but it’s hard to get a word in edgewise, and they’re not looking at the issues sensibly most of the time. More’s the pity.
At least the Republics keep us safe from having to worry about gays marrying while we’re worrying about keeping a job or paying bills.
Yes, what counts as progressive these days has also been further to the right by the pressure of the Overton window.
I believe that, in truth, the great moderating influence of middle class dreams and relative wealth and security of the 1950s through the 1970s has as much of a moderating influence on “progressives” or lefties or what was left over of the older “commies” as almost anything else. Couple that with the ongoing, very detailed and thorough strategy begun by Rove, Atwater, Pat Buchanon, etc, to demonize the left at all costs… and et voila: here we are. And redundantly I say: permanent republican majority achieved.
Garrison Keilor used to sing a little ditty on his show a couple of years ago: “we’re all republicans now…” Sorry to say that it’s mostly true.
That and the fact that most citizens are a combination of too busy and too lazy (yeah: dissonance but think about it) to really follow what’s going on and do something about it.
and so: here we are.
As long as people are content to merely take out their frustrations and criticisms of a corrupt system through the internet nothing will be done. Until the people are motivated to get off their sofa’s and office chairs and put feet on the ground the downward spiral for the majority of Americans will continue. Barring any direct action of the “people” the system will eventually collapse under the weight of it’s internal contradictions and inequities.
har de har… well there is that, but it’s now the Democrats who are keeping all the little fetuses safe from abortion.
True. But there were quite a lot of marches against the war on the anniversary of the beginning of the war with Iraq, and you notice all the coverage that those marches got????
Oh yeah, that coverage got usurped by endless replays of a couple of thousand tea party people shrieking racist slogans at AA congressmen, etc.
Not to say that marching isn’t worthy; I still do it. But the rightwing media makes sure not to report on it.
The distribution of income is where the rubber hits the road. It will take a second Obama administration and two more Democratic administrations after that –we are talking 12 to 16 years — to undo the damage that has been done by 30 years of Republican dominance without another Great Depression.
Start with the media. Expose their duplicity and complicity. Educate the people that the corporate media has lost all legitimacy as a representative of an honest 4th Estate. Educate them that Katie Couric et al have nothing in common with the average American.
Educated progressives are on the whole in the top 10 percent of the income distribution(which means they consider themselves middle class because there are 9 percent of the population richer than they (we) are. That doesn’t make for a lot of people, and the bottom 90 percent do not understand that they are being screwed by the top half percent.
I hate to say: but dream on!! The Democrats ain’t into “fixing” any of this. We are truly home and hose if we’re “relying” Democrats. They got theirs; they aren’t into the voters or taking care of any of this mess. They’re too busy making out like the bandits that they are.
Ok. I can agree with you. But HOW do we do that?
The Obama Administration will never undo what the Bush Administration have done. They are continuing those policies in economics, the wars in Iraq and Afghanistan, in entitlements, and in justice. That may take another 12 to 16 years to complete, but to believe that these people will undo what has been done, when they clearly support it fully, is a fantasy.
More like we the people have looked at what it will take and don’t want to die . . . cuz that’s what it will take, at this time and place, nothing else CAN work.
Other than to sit back and let it all collapse upon itself like USSR did.
And Rome.
And all the other empires thru time when too much at the top means nothing for the masses.
Great post masacchio! Thanks, this is a bookmark for referencing.
There have been no changes to abortion law since the Republics were ousted. Were you expecting there to be?
Is it? I’m asking empirically.
I mean, influencing the government is done through specific systemic vectors. Are those vectors sufficiently gamed to actually make influencing the government not worth the trouble?
Look at the Public Option pledge, much as one can admire FDL for the attempt, and the early appearance of influence; what a colossal waste of time, money, and resources. What about everything that went into electing Barack Obama through a support and contribution network more diffuse than any other in modern American history; yet another colossal waste of time, money, and resources. What about TARP, unbelievable public outcry against, noted by Congressional staffers as 200-300 to 1 against it from people that were lighting up the switchboards? We still got it, and some bonus bird flips along the ride.
Even if vast competitive sums of money are able to be generated as a piecemeal challenger to entrenched interests; not a single one of those small-contributors has a seat at the table when the time for negotiation comes around. Their money is taken, pretty ads and signs are given in return, but nobody in the Capitol or the White House has them on speed-deal when it’s time to conduct the business of governance.
So again, is there any empirical evidence that influencing government is worth the trouble? What thing could a person possibly look at in the last two generations of citizens to show them that their engagement will bear any substantive result?
I’m asking seriously. Apathy isn’t a natural state. It is learned behavior.
Rather than first organizing “high profile” protests on the D.C. Mall, start with protests outside of the corporate headquarters of the major networks. They all promote the pretension that they are unbiased and “legitimate.” Expose them for the organs of propaganda that they have become. Let the people know there are alternatives to the indoctrination that poses as legitimate news or information. Break the legitimacy of the corporate media and the door is then a crack in the door for more far reaching actions.
I think the important thing is to increase taxes on the richest Americans. I like the idea of adding two or three brackets on top. Apparently the issue is tied up with this miserable recession: “Can’t raise taxes in a recession”…
No I wasn’t expecting it, but I sure disagree. What about what happened with HCR, Bart Stupack, etc? Agree that the law has not been changed, but what Dems did was unforgiveable.
And a corrupt and complicit corporate media has been an effective tutor.
Good ideas. I’m in! It is about the corporations at this point, I agree.
That would be great, and I couldn’t agree more, but I advise you not to hold your breath. Certainly it’s a good idea to push.
Can’t raises taxes during a war either. Taxes are not seen as the cost of a civil society but rather as an enemy of “freedom.”
We do not have a democracy in America. If we did we would have Single Payer Health Care. We have nothing close to a democracy. The health care bill has preserved in its entirety the charity/poverty paradigm. The charity/poverty paradigm is where the poor are kept poor and are only offered the bare minimum through “charity” provided by the good graces of the “charitable”. It’s a total scam on the people and a total mindF***. We must demand Single Payer and until we get it there is no sense in trying to control anything because this is the acid test and shows exactly who has the power in this country. When greed is given the right to control access to life sustaining necessities, we have our first problem still in front of us.
a contingent here in austin, tx as well.
the point being, who’s going to report it?
that comment was meant for eCAHN
The war on drugs, the Bush tax cuts, the war on unions, the war in Iraq and Afghanistan, the war on teachers and education, the war on social security and medicare, and the war on consumer protections have always been the battles waged against the poor and middle class. Do we really need a study to prove that and know the outcomes of GOP and Dem corporatist legislation for the last 40 years? We in the middle class know all too well the rich won and our children are going to be the ones who pay. I hate to be glib but every day looks more and more like a page out of a Dicken’s novel.
Question, who will the rich steal from once they’ve finished picking the public’s pocket?
The general public is pretty broke. They can still loot Social Security but once that’s gone who will the rich steal from?
Will they reach a point where they are content with what they have? I doubt it.
Because Ignorance is Strength
The masters of the financial universe, their utterly captured & complicit government, and their media hacks are blowing a 24/7/365 smokescreen to make sure that the entire country fails fourth grade arithmetic and ninth grade civics simultaneously.
It’s the most efficient manipulation of working people to vote against their interests…. until centrifugal force spins the system completely out of control.
You just noticed that? Then they say we should be more like Asians or other minority groups. I should remind those morons that we were enslaved as a people for a very long time. When that was over and Reconstruction didn’t quite have the desired effect (Grant hated the idea), we got 150 years of Jim Crow. During that time, when FDR passed the New Deal we were largely left out, so where Women but hey they believe White Women anyway that they should be first in line, which explains some of the angry Hillary supporters when it looked like she was not going to get the nomination…
Nationwide unemployment is 9%, so they say its higher.
In most of the major Inner Cities with high populations of Black and Brown people its 20+% and as high as 25% in places like New York.
Why this recession affected them more than anybody else and why I am tired of hearing people say why they did not squirrel away money when things were going good.
I think the reason is lack of progressive tax policies for last 50 years.
Lets assume common man does not enjoy a vacation and works throughout the year.
Wages: $7.25/min,wage per hour * 40 Hours * 52 Weeks/Year = $15080/Year
Cut from it Direct Taxes like Income Tax, State Taxes Social Security, Medicare Taxes. Not much. Left. Further cut from it in-direct taxes like utility taxes (could increase if the climate bill comes through), phone taxes, fuel taxes and insurance mandates(HCR bill gift to common man). Too little left. All of these taxes take a huge percentage of their income and leave little for food, clothing, shelter and education.
In my opinion this is why I dread all these reform (scam) bills with mandates and taxes on poor which will devastate the social fabric of our nation by putting these people literally on the streets or forcing them to avoid their responsibilities to their families. I can see how our tax policies will affect families peace & joy and could affect most vulnerable members of our society i.e. children, women and most importantly elderly.
Solution:
1. Progressive tax on social security with no income limits which can actually reduce tax rate on employees and employers which will enable them to do more hiring.
2. Bring back progressive taxes on overall income taxes we had till late 1960s.