In my last diary I talked about the plight of individuals who lose their incomes or are poverty-stricken. I want to turn now to rich people—their numbers are much fewer, but they control most of the money in the U.S.
The national condition of many people with little money and a few people with a lot of money is called, as you know, income inequality. You’ve seen the data many times on this site: income inequality has been growing sharply in recent years.
In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%. .
Author: G. William Domhoff
Severe income inequality, it turns out, not only makes life difficult for those on the low end of the income spectrum, but also creates bad conditions for a nation as a whole.
Richard Wilkinson and Kate Pickett report:
In societies where income differences between rich and poor are smaller, the statistics show that community life is stronger and levels of trust are higher. There is also less violence, including lower homicide rates; physical and mental health tends to be better and life expectancy is higher. In fact, most of the problems related to relative deprivation are reduced: prison populations are smaller, teenage birth rates are lower, educational scores tend to be higher, there is less obesity and more social mobility. What is surprising is how big these differences are. Mental illness is three times more common in more unequal countries than in the most equal, obesity rates are twice as high, rates of imprisonment eight times higher, and teenage births increase tenfold.
Source: The Spirit Level: Why More Equal Societies Almost Always Do Better (Bloomsbury).
Boston College’s Center on Wealth and Philanthropy has completed a study of the happiness of very wealthy people, and part of it has been reported by
The study is titled “The Joys and Dilemmas of Wealth,” but given that the joys tend to be self-evident, it focuses primarily on the dilemmas. The respondents turn out to be a generally dissatisfied lot, whose money has contributed to deep anxieties involving love, work, and family. Indeed, they are frequently dissatisfied even with their sizable fortunes. Most of them still do not consider themselves financially secure; for that, they say, they would require on average one-quarter more wealth than they currently possess. (Remember: this is a population with assets in the tens of millions of dollars and above.) One respondent, the heir to an enormous fortune, says that what matters most to him is his Christianity, and that his greatest aspiration is “to love the Lord, my family, and my friends.” He also reports that he wouldn’t feel financially secure until he had $1 billion in the bank.
So we find that substantial income inequality creates the ghastly state of poverty along with many social ills that make life disagreeable for those at all income levels. In addition, the high income levels of the very rich do not generally make them feel secure. (One wonders whether one-quarter more wealth would actually create feelings of security, or whether this belief is an illusion that accompanies and rationalizes an obsessive drive for more and more monetary wealth.)
Trickle-down economics will not solve these problems. The wealthy will never be satisfied with more wealth, and if anything trickles down it will not be enough to raise the poor to a more level playing field. Barbara Ehrenreich explains well the approach we need:
…any serious government attempt to get the economy going again—and I leave aside the unserious attempts like bank bailouts and other corporate welfare projects—has to start at the bottom. Obama is promising to generate three million new jobs in ‘shovel ready’ projects, and let’s hope they’re not all jobs for young men with strong backs. Until those jobs kick in, and in case they leave out the elderly, the single moms and the downsized desk-workers, we’re going to need an economic policy centered on the poor: more money for food stamps, for Medicaid, unemployment insurance, and, yes, cash assistance along the lines of what welfare once was, so that when people come tumbling down they don’t end up six feet under. For those who think ‘welfare’ sounds too radical, we could just call it a ‘right to life’ program, only one in which the objects of concern have already been born.
This diary does not touch directly on the concepts of Modern Monetary Theory, though if government economists adopted those concepts, the resolution of problems discussed here would be simpler.
The link to my earlier diary referred to above is
To learn more about the concepts of Modern Monetary Theory, please follow or join us at Money and Public Purpose, a dKos group promoting MMT.
Thank you for reading and reccing.