Plenty of talk has gone into the rising income inequality that America has experienced since the early 1970s. But income is merely a wealth flow, and the truer measure of equality is the distribution of net worth and financial wealth (the wealth stock).
The historical change is clear: the bottom 80% have gotten considerably poorer both in financial wealth and in terms of total net worth:
This widening gap between the rich and everyone else is not a case of people being rewarded for their talents. Some income and wealth disparity is an inevitable effect of the market process. But the reality of today is more of a case of oligarchs harnessing the power of government bailouts, monetary policy, corporate subsidies, pork, quantitative easing, barriers to entry, favourable regulation, SuperPACs, Citizens United, lobbyists, market-rigging (etc, etc, etc) to get whatever they want.
azizonomics 
Pork’s well placed.
John,
you need to do an expose on the USA’s elite, just like this Greek journalist.
http://www.theage.com.au/world/greek-editor-arrested-after-publishing-list-of-alleged-tax-evaders-20121029-28fpn.html
How many more “Tax Offices” around the world, headed by bureaucrats who curry favour with Politicians and the elite, so as to ensure their tenure of post?
If someone like me is cynical about the Political process, the average person in the street who does not think twice about these issues is oblivious to the corruption going on.
I am all for one to encourage individuals to innovate, build wealth for themselves and family, but I think it is unfair when inter-generational wealth is accumulated to such a high degree, that it buys “power”.
No wonder systems break down, when wealth accumulates into the hands of a few. Provided they pay off Police, the army and other “security” they can go about their business unhindered, while the 99% struggle with daily lives.
Global “SNAP” (Food stamps packaged into a Credit Card) programmes where QE for the people is now necessary to get the economy kick started again.
Without it, the wealthy are doomed to suffer the fate of the “emmigres” of the French revolution.
The fact US union membership has steadily declined since the 1970’s is also a major part of it. Even Adam Smith understood that employees have very little bargaining power unless they bargain collectively.
Trade Unions are only necessary when we have mass employers either corporations in the private sector or governments in the public. If such big mass employers did not dominate there would be far more self-employed and independent people. Less centralization and a more equal socio-economic system.
John: another great invitation to stimulating argument! I’ll be back, but for now:
(1) You are one of a small minority who correctly recognize that wealth, not income, is “where it’s at”.
(2) Can you confirm that distribution inequalities and changes in total wealth are almost entirely a result of the financial component?
(3) Congratulations on (so far) avoiding the political “we must CLOSE the gap” and ignoring “how can we help the poor”!
Clarifying (3) above: it is politicians, NOT Aziz, who chant “Close the Gap!” (soak the rich) rather than advocate raising the poor out of poverty. [It is popular in hard times to exploit fear and envy, and easy to close the gap by punitive taxation of job-creators]. See Churchill’s (badly paraphrased) “The problem with capitalism is the uneven distribution of prosperity. The problem with socialism is the misery shared by all”. [Should have added “except the rulers”].
What about internet inequality in America?
I suppose Azizonomics is servered in the UK
Market watch is unavailable (technical difficulties AKA flooded servers)
http://www.marketwatch.com/dr/
I guess the internet IS fragile. Don’t put all of mankind’s knowledge in one place!
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Large levels of wealth inequality are by design. The state is steered by the ruling elites to create their hierarchical society. Democracy is a sham, both parties are owned by the same elites…if anyone thinks the ruling elites want equality and stability they are living in fantasy land.
Entertainment is just used as a distraction and is a multi billion dollar business. Look at the way people hooked on spectator sport, or films will passionately support their team, or celebrity actors. This phenomena is astonishing to observe. Why would any individual use money, energy and time to support a team which whether it wins or loses does not increase their own wealth or status. It is empty of any benefit to the individual…yet people will fanatically follow their team…..this is a form of madness generated by the ruling elite media and education systems. If these people were not so distracted or dumbed down, they might get together, think about their masters and how to bring them down. Drastic economic inequality will get worse in the future…people will be submissive and accepting because all resistance and opposition is infiltrated or dumbed down by the elites. They may even cull some of us justified via their malthusian ideologies. The message to the masses is be common, mediocre, ordinary…do not stick out, be a dumbed down follower, not a leader with an alternative.
Billionaire bankers own the world, its political and military systems and they are unlikely to just allow someone to topple them. They might even start to electronically chip us so we are always beholden to them…of course the chips will be presented as a ‘for our own good’, to protect the children…etc.
“Why would any individual use money, energy and time to support a team which whether it wins or loses does not increase their own wealth or status.”
Probably for some of the same reason that people follow blogs. 🙂
While there will always be wealth inequality, the main question we should ask is, “Why did the prosperity of the Western World & Japan not trickle down to the masses?”
For me, there is no one answer. But, at this time history, it is hard for me to ignore our debt-based money system combined with Keynesian economics as the main cause.
The debt based money system will always favor the people who get access to the money first. The more money you have, the more you are able to borrow and the lower the cost basis of the borrowed money wil be. This, in of it’s self is not an issue. But, when combined with Keynesian theories, this dynamic, takes on a “The rich get richer” theme.
The use of borrowed money “leverage” allows for the amplification of both profits and losses. Infact, this is, combined with the built in optimism of the human physcie, is why humans borrow money in the first place. Wether it is borrowing funds for education, to start a business or to invest, we humans, always believe that we will be able to pay back the loan, with interest and have a bag full of money left-over.
But, alas, the best laid plans of mice and men. Many times our grandiose plans, so well conceived at their inception, do not turn out well. In the real world, to pay-off the debts occured in one facet of our life, individuals, businesses and governments have to either sell assets, cut back expenditures (austerity) or default on the loan. This where Keynesian economics comes in.
To avoid the pain of poor decisions, Keynesians propose, through a variety of channels, to prop-up segments of the economy (smooth out the business cycle). There are many ways they propose how to implement this smoothing process, but, overwhelmingly they choose to make access to credit (borrowed money) cheaper and easier.
And who gets access to credit first? Who gets access to credit at lower rates? Who gets gets access to larger amount of credit?
PS I don’t hate the rich folk. I just call it like I see it. Don’t tell me that Goldman Sachs and their use of 40-1 leverage is doing any good for the economy. In a free market, these folks are broke! And thats a fact!
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If thousands of years of human history have taught us anything, it is that people will do literally EVERYTHING to obtain/secure wealth. Therefore, I would suppose that those times [in history] when this disparity is at tolerable levels, must be considered aberrant.
Imperialism within one’s own country – the elite are stripping the colony (the citizens).
The sword that malice puts into the hands of assailants would be powerless, if only baffling with bullshit did not seem so ostensibly impressive
https://mises.org/daily/6239/God-Protect-Us-from-Metaphors
I don’t know about you guys, but I am waiting for the next charismatic leader to appear that will focus the misery of the people on a segment of society. It appears a common theme throughout the ages. If someone can get political mileage out of targeting the extremely wealthy they will. But with donations driving Presidential races, how can you bite the hand that feeds you? That is why I am still scratching my head to determine how Hitler came to power. Who was backing him financially? I mean the early days, not when they could make money from their already gained political power.
Right now, the poor are given enough benefits and have sufficiently cheap outlets (TV, Internet, Music, cigarettes, booze, prescription drugs) to keep them relatively stable and calm, but as we see in Greece, when the State is bankrupt, elements of society (Human personalities are wide and varied across races, cultures) can get very vocal, and given enough momentum, violent.
I think that the human population will plateau and peak maybe in 30 years. The current generation x, Y, and 2.0 (0-10) will have maybe 1 child or less at most. As the elderly retire, and pass on, and their homes property etc passed down, there will be more wealth distributed to the lower percentiles. When Africans, Indians, Chinese in remote villages watch a portable TV and Satelite, and see how the West lives, why would they want to have the traditional life with 5 or more children?
We have mined a lot of minerals, that collective energy is stored in the scrap metals, plastics etc. We will find that the cost of cars and consumer goods will go down, and with declining populations, farming of fish, and other scientific breakthroughs, food will get cheaper.
The future of man in 100 years will be so Utopian, we can’t imagine today. There will be nothing to do but get married, have kids and start the whole cycle of plenty, concern, anxiety, contemplation, stability, plenty etc.
I watched a story the other day on Australian TV. A mother escaping domestic violence was living in a car and feeding & bathing her children at a 24 hour McDonalds (Washroom facilities as well). There is insufficient cheap housing (Rent of a 3 bedroom house in Melbourne is no less than $300 per week, and Government benefits no more than $300) Yet we have illegal immigrants housed on a Island with full facilities, and the illegal immigrants are protesting about conditions. They are lucky they are even being housed!
So income inequality in Australia is highly skewed too. At least in the USA you can live in a Trailer. In Australia we don’t have that option. It is either a house costing 10 times average annual salary, or renting at well below the poverty line or a car park in McDonalds.
Glad to see our Prime Minister Juliar Gillard is pair $500,000 plus full expenses and a Government house (More than the US President) and spent 25 Million dollars swooning foreign nations so we could get a seat at the UN Security council. Our Politicians are the new elite.
“The future of man in 100 years will be so Utopian, we can’t imagine today.”
Yeah, that’s what they said 100 years ago.
Hate to disappoint you, BR, but it ain’t getting any better than it is right now.
Buddy and Imp: It’s always interesting, if not practical, to speculate about 100 years in the future. Let’s first set some issues/questions, then look for alternatives*/answers. How about this for starters:
Medieval peasants had to be satisfied with survival, one day, one crop at a time. As productivity and civilization advanced, they began to seek improvement from year to year. As communication advanced, they began to compare their lot to their overseers’ and sometimes to neighbors’ or even foreigners’. Now that anyone can advocate and communicate anything, where are we headed?
* Memorize this universal “solvent”: SELECT THOSE ALTERNATIVES WHOSE PROBABLE CONSEQUENCES ARE PREFERABLE.
Paid $500,000 but has this accusation from the opposition, that she has a shady past.
http://www.theage.com.au/opinion/political-news/slush-fund-questions-nasty-politics-pm-20121031-28kcf.html
Her response: “How can the opposition assert that it is focusing on the nation’s interests and not nasty personal politics when it goes down this track?”
I think it is the Nations’ interest to know. How do we know she is not selling out the Nation’s interests if she had this “alleged” slip of moral values.
I am glad I have a squeaky clean ethical past, because opposition parties will spend valuable resources digging for dirt on me. My challenge to have a full tax audit of all members of parliament (Crimes discovered will result in immediate termination of their Seat) going back 10 years or more has been ignored!
I think we all know that the elite get to their positions of power using unsavoury and unethical means, whether it be taking advantage of a situation to another’s detriment or blatantly flouting the law. I guess it is human nature to have Gods and slaves.
When will the slaves rise up? They will not, because the Elite will throw enough manna to keep them sedated.
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