Federal Reserve Survey Shows Wealth Inequality Worsening
The wealth share of the top 3% climbed from 44.8% in 1989 to 51.8% in 2007 & 54.4% in 2013 http://t.co/xi2eS5479H
— Mark Price (@price_laborecon) September 5, 2014
Yet more evidence there is no “recovery” for most Americans. According to the Federal Reserve Survey of Consumer Finances the rich are siphoning off even more wealth from the country than they were previously. The top 3% now control over 54% of the wealth. Yes, a relative handful of people own more than half of all the wealth in the country.
The Fed also notes that the overall increase in income are not from gains by the middle and lower classes but the immensity of the wealthy’s gains dragging up the average. In other words, the rich in American are becoming so much richer that they are distorting the overall numbers for the country up despite the overwhelming majority of Americans seeing stagnant wage and personal wealth growth.
From David Dayen at Naked Capitalism:
Public opinion surveys consistently show pessimistic views of the economy for the broad mass of people. Growing numbers believe the Great Recession led to a permanent change in the economy, which is probably something less than true – with few exceptions, these wage and income trends have been consistent since the late 1970s. But the other questions in this Rutgers poll appear right on the mark. Almost eight in ten Americans knew somebody laid off between 2008-2012. For leading indicators like low unemployment, affordable higher education, and job and retirement security, the majority of Americans think they will never see positive progress for many years. Just 16 percent of respondents thought job and career opportunities would be better for the next generation, a figure nearly four times lower than from 1999.
And we can chalk this up to the wisdom of crowds, because the public happens to be right. It is harder to get a job out of college. It is harder to avoid the trap of underemployment. It is harder to prosper in the career you want. It is harder to save amid stagnant wages. It is harder to grow as an economy when the gains flow to the top. It is harder to secure enough reserves for a dignified retirement.
One of the reasons for the difficulty in creating growth in a highly concentrated financialized economy is that the rich are constrained by their own consumption limitations. This may seem odd given the obnoxious largesse often demonstrated by the rich but they can not buy enough goods and services with their concentrated wealth that a large middle class could do with its modest wealth – how many cars could Mitt Romney buy even with an elevator compared to millions of Americans buying just one? This not only leads to low growth it also promotes asset bubbles as the rich, having satiated their basic and luxury needs, take their remaining wealth and collectively pump it in financial markets.
Instead of paying out fair wages, the 1% invest in things like mortgage debt – which is a larger market thanks to them not paying out fair wages and forcing working class families to borrow more. The story does not end well unless you have bought enough members of Congress to get a bailout.
So the wealth gap has yawned further even as President Obama claimed that dealing with wealth inequality was the “defining issue of our time.” Now with lower estate taxes and higher wealth concentration America is developing the aristocracy generations of social justice activists have fought to prevent.
But so far, even though the American people have woken from the dream, they still seem willing to accept their serfdom. But what happens after the next crash?