By Kenneth J. Theisen
Capitalism is a great system, if you happen to be one of the capitalists. Here are a few facts that I discovered while researching other articles for this site. I think they seriously call in to question the legitimacy of the government and the economic system in the U.S. but I will let the facts speak for themselves.
In the United States at the end of 2001, the top 1% of the population controlled 38% of the nation’s wealth. The top 10% owned 71% of the wealth. The bottom 40% owned less than 1% of the nation’s wealth.
By Kenneth J. Theisen
Capitalism is a great system, if you happen to be one of the capitalists. Here are a few facts that I discovered while researching other articles for this site. I think they seriously call in to question the legitimacy of the government and the economic system in the U.S. but I will let the facts speak for themselves.
In the United States at the end of 2001, the top 1% of the population controlled 38% of the nation’s wealth. The top 10% owned 71% of the wealth. The bottom 40% owned less than 1% of the nation’s wealth.
During the Bush administration’s reign the richest 1 percent of Americans received about $491 billion in tax breaks between 2001 and 2008.
According to Larry Summers, in the last 29 years,”…those in top one percent have gained about $600 billion (in income per year). Those in the bottom 80 percent have lost about $600 billion.” Summers is one of Obama’s economic advisors and hardly an anti-capitalist. Summers calculated that this overall transfer of wealth averaged out to an additional $500,000 per year in earnings for those in the top one percent, and an $8,000 loss every year for those in the bottom 80 percent.
According to the IRS the nation’s top 400 taxpayers reported a total of $85.6 billion in income on their federal income-tax returns for 2005, an average of $213.9 million apiece. Keep in mind that this is one year’s adjusted gross income. (It doesn’t include tax-exempt income from state and local government bonds.) The top 1 percent of Americans received 21.2 percent of all personal income in 2005, while the bottom 50 percent of Americans got 12.8 percent of all 2005 income.
In 2007, the average compensation for the top 25 hedge fund managers was $892 million. That is almost .9 billion dollars each for moving money and investments around and producing no actual useful goods. (Compare this to a full-time minimum wage worker who will earn a bit more than $12,000 per year before taxes.) The wealth these managers accumulate comes at the direct expense of the productive base of society. The word parasitism comes to my mind. Despite their huge incomes, these managers also get special tax breaks that enable them to pay less income tax. Fund managers are allowed to treat a substantial portion of their compensation as capital gains, meaning they are taxed at 15% rather than the 35% rate that applies to ordinary income, such as wages and salary. The Bush regime has been trying to lower capital gains taxes to give them an even bigger break.
The huge fortunes are partly the outcome of speculative buyouts and takeovers of manufacturing and other companies that produce real goods and services, which are then overloaded with debt, downsized and carved up, at the cost of countless millions of jobs. Some of the money was also invested in exotic financial instruments or collateralized debt obligations and investments created as a result of home mortgages sold by banks and other home mortgage lenders. Of course we all know what happened then when the housing bubble burst.
In 2006, CEOs of large, privately held US companies averaged $10.8 million in total compensation or more than 364 times the pay of the average American worker. The average CEO earns in a day what an average US worker takes home in a year. From 1990 to 2005, CEOs’ pay increased almost 300% (adjusted for inflation), while production workers gained a mere 4.3%.
In 2001, the top 1% of the wealthiest individuals owned 33.5% of all stocks owned by Americans thus giving them control of the largest companies.
But life is not always gravy for those at the top. The rich often have to suffer great hardships. It turns out that most yacht clubs in the U.S. have a waiting list for joining. Some of the wait lists are years long and you usually also have to wait for a slip to dock your yacht. Imagine buying a multi-million dollar yacht and then having no place to dock it, or not being able to join the local yacht club. Those who purchase mega-size yachts have to wait years for their yachts to be built because of the demand for such yachts. I practically wept at discovering this problem of the rich.
President-elect Obama must sympathize with this suffering. While he was running for office and needed the votes of the less than rich Americans he said he would increase taxes on those making more than $250,000 per year. But after his election his aides said Obama’s economic plan that he will institute after he is inaugurated will not include candidate Obama’s tax increases. Obama also seems to be backing off on repealing any of Bush tax cuts to the rich any time soon, if ever.
When Obama was asked about when tax hikes for the rich might go into effect he said, “Whether that’s done through repeal, or whether that’s done because the Bush tax cuts are not renewed (they do not expire until 2011), is something that my economic team will be providing me a recommendation on.”
With people like the new White House Chief of Staff Emanuel (a former investment banker) advising Obama, the rich have nothing to worry about, except which yacht club will have a slip for them. I am sure Obama will take care of them. Maybe we can give a few billion federal dollars to yacht clubs so that they can expand their harbors.