Teresa Tritch | The Rise of the Super Rich

Truthout has the full text of Teresa Tritch's recent NYT article: The Rise of the Super Rich.

Tax cuts are not the only policies widening the gap between the rich and other Americans. Earlier this year, President Bush signed into law a measure that will cut $39 billion over the next five years from domestic programs like Medicaid and food stamps, and $99.3 billion from 2006 to 2015.   

The president and the Republican Congress have also done harm to the finances of the poorest Americans - and to the notion of basic fairness - by not increasing the federal minimum wage - it has been $5.15 since 1997 While C.E.O. salaries have been soaring, the take-home pay of waitresses and janitors has been hit hard by inflation.

The Bush administration has also been trying, with mixed success so far, to pursue other policies that would have the effect of shifting money to the rich. The most ominous is its often-repeated desire to "address our long-term unfunded entitlement obligations." That's code for making tax cuts for the wealthy permanent while cutting Social Security, which has for 70 years been a major factor in keeping Americans financially secure in their old age.

Tritch also includes the following:

Thomas Piketty, of the École Normale Supérieure in Paris, and Emmanuel Saez of the University of California at Berkeley recently updated their groundbreaking study on income inequality (pdf), and their findings are striking.

    The new figures show that from 2003 to 2004, the latest year for which there is data, the richest Americans pulled far ahead of everyone else. In the space of that one year, real average income for the top 1 percent of households - those making more than $315,000 in 2004 - grew by nearly 17 percent. For the remaining 99 percent, the average gain was less than 3 percent, and that probably makes things look better than they really are, since other data, most notably from the Census Bureau, indicate that the average is bolstered by large gains among the top 20 percent of households. In all, the top 1 percent of households enjoyed 36 percent of all income gains in 2004, on top of an already stunning 30 percent in 2003.

    Some of the gains at the top reflect capitalism's robust reward for the founders of companies like Microsoft, Google and Dell. But most of it is due to the unprecedented largesse being heaped on executives and professionals, in the form of salary, bonuses and stock options. A recent study done for the Business Roundtable (pdf), a lobbying group for chief executives, shows that median executive pay at 350 large public companies was $6.8 million in 2005. According to the Wall Street Journal, that's 179 times the pay of the average American worker. The study is intended to rebut much higher estimates made by other researchers, but it does little to quell the sense that executive pay is out of whack. As the Journal's Alan Murray pointed out recently, the study's calculation of executive pay is widely criticized as an understatement because, as a measurement of the median, it is largely unaffected by the eight or nine-digit pay packages that have dominated the headlines of late.

    Rich people are also being made richer, recent government data shows, by strong returns on investment income. In 2003, the latest year for which figures are available, the top 1 percent of households owned 57.5 percent of corporate wealth, generally dividends and capital gains, up from 53.4 percent a year earlier.

    The Center on Budget and Policy Priorities, a Washington think tank, compared the latest data from Mr. Piketty and Mr. Saez to comprehensive reports on income trends from the Congressional Budget Office. Every way it sliced the data, it found a striking share of total income concentrated at the top (pdf) of the income ladder as of 2004.

• The top 10 percent of households had 46 percent of the nation's income, their biggest share in all but two of the last 70 years.
  
  
• The top 1 percent of households had 19.5 percent (see graph).
  
  
• The top one-tenth of 1 percent of households actually received nearly half of the increased share going to the top 1 percent.

    These disparities seem large, and they are. (Though the latest available data is from 2004, there are virtually no signs that the basic trend has changed since then.) The top 1 percent held a bigger share of total income than at any time since 1929, except for 1999 and 2000 during the tech stock bubble. But what makes today's disparities particularly brutal is that unlike the last bull market of the late 1990's - when a proverbial rising tide was lifting all boats - the rich have been the only winners lately. According to an analysis by Goldman Sachs, for most American households - the bottom 60 percent - average income grew by less than 20 percent from 1979 to 2004, with virtually all of those gains occurring from the mid- to late 1990's. Before and since, real incomes for that group have basically flatlined.

    The best-off Americans are not only winning by an extraordinary margin right now. They are the only ones who are winning at all.

    The result has been, as Andrew Hacker, a political science professor at Queens College, has observed in a recent article in the New York Review of Books, "more billionaires, more millionaires and more six-figure families."

    As income has become more concentrated at the top, overall wealth has also become more skewed. According to the latest installation of a survey (pdf) that the Federal Reserve has conducted every three years since 1989, the wealthiest 1 percent of Americans accounted for 33.4 percent of total net worth in 2004, compared to 30.1 percent in 1989. Over the same period, the other Americans in the top 10 percent saw their share of the nation's net worth basically stagnate, at about 36 percent, while the bottom 50 percent accounted for just 2.5 percent of the wealth in 2004, compared to 3.0 percent in 1989.

Comments

[Phred]

This is what progressives should do: calm reasonable denunciations of finance cap. and the ostentatiously wealthy supported by facts, stats, demographics (with maybe some satire on the side). Not the endless re-combinations of Derrida or Lacan or Osiris forbid greek or german metaphysics (tho Plato's chestnut condemning governments controlled by wealthy oligarchs might be recalled). The uber-wealthy have taken over. IN some sense one either reverts to anarcho-captialism to survive or one opposes it, without necessarily joining sides with the usual type of academic, PC marxist.

[Cyberspacekid]

Why should Michael Eisner walk away with a billion dollars when he left Walt Disney? I could have done a better job running the company with one arm tied behind my back and a Chinese secretary who spoke no english, and would have felt guilty asking for a million a year! It's ridiculous to think one man is so important to a companys success. (Here's a novel idea, why not give the writers who actually create the product at the film studio's, more money as there the one's that really make it all happen anyway.) Also I was flabbergasted when I read Citicorp had one lawyer on retainer for 42 million a year. Untill that is I learned he was a friend of the CEO.