Monday, October 27, 2008

Maybe, we need some spreading of the wealth...

I was out of the news cycle yesterday, but reading the Times this morning, I found some truth and candor from Sen. McCain - a rapidly dwindling commodity... Apparently Sen. McCain has publicly stated that he and President Bush do share a 'common philosophy'.

This is what Sen. Obama had to say and I think he is spot on:

It's a philosophy that says we should give more and more to folks at the top, to millionaires and billionaires, to the wealthiest among us, and that somehow it's all going to trickle down on the rest of us.

It's a philosophy that justifies spending $10 billion a month in Iraq while the Iraqi government sits on a huge surplus and our economy is in crisis.

Of course, McCain is also the individual who defined "middle class" as making as much as $5,000,000 per year. Yes, that is five million dollars. This sure is an interesting but useless philosophy as far as the common man/woman is concerned.

What is wrong with spreading some of that wealth around - pdf report highlighting income disparities? If one looks to the chart below (from the report), it is clear that the only thing that has remained stagnant was the ‘average wage incomes’. The disparity is so extreme that the axes scales have to be logarithmic such that the report could compare on the same page the disparities between CEO pay and the meager handouts that common working men/women take home. And, they have the audacity to say spreading the wealth around is a bad thing...

1 comment:

LVTfan said...

Spreading the Wealth

When we listen to one party complaining that the other's candidates want to "spread the wealth," it behooves us to pay attention to how concentrated wealth is. In 2004, it looked like this:

* Top 1% of wealthholders: 33.38% of the net worth
* Next 9% of wealthholders: 36.12% of the net worth
* Other 90% of wealthholders: 30.50% of the net worth [source]

I'll venture the guess that most of those who turn out at the campaign rallies and boo when the words "spread the wealth" are said fall into the bottom 90%. We can split out the bottom 50% and the next 40%:

* Bottom 50% of wealthholders: 2.54% of the net worth
* Next 40% of wealthholders: 27.95% of the net worth [source]

We can look at income for the same groups (note that this is different from looking at a ranking of households by income level)

* Top 1% of wealthholders: 13.62% of the income
* Next 9% of wealthholders: 22.56% of the income
* Other 90% of wealthholders: 63.83% of the income

We can split out the bottom 50% and the next 40%:

* Bottom 50% of wealthholders: 23.80% of the income
* Next 40% of wealthholders: 40.03% of the income

The preceding data come from the Federal Reserve Board's triennial Survey of Consumer Finances. That study suggests that the concentration of wealth may actually be understated in their data.

You might look at the line in the tables (line 19) which reports "business equity," which represents privately held companies and what we fondly refer to as "small businesses." (it represents about 20% of aggregate net worth.)

* Bottom 50% of wealthholders: 0.3% of the business equity
* Next 40% of wealthholders: 9.2% of the business equity
* Next 5% of wealthholders: 5.7% of the business equity
* Next 4% of wealthholders: 22.4% of the business equity
* Top 1% of wealthholders: 62.3% of the business equity

The forces which have concentrated that wealth so narrowly are not the benign workings of free market capitalism, and those who turn out to loudly boo on cue the concept of spreading the wealth are not net beneficiaries of our current system. Wages are low, and most of us struggle.

It need not be this way, and I don't think that the party talking about spreading the wealth knows how to do it justly or well, and that the party deriding the idea has serious concern for the interests of the bottom 95% of us. What wonders me is that so few of us and so few of our talking heads seem to know or care.

A bit of reading and study of Henry George's ideas about what is rightly private property and what is rightly the common property of the community as a whole would do wonders: start with Progress and Poverty or Social Problems. Or explore We can have the society we say we are.