There’s a problem with how we talk about wealth in America, and it’s probably skewing our understanding of economics and sociology.
So much of the rhetoric of inequality has to do with the distinction between the top one percent of Americans and everyone else, the 99 percent.
According to Occupy Wall Street rhetoric and even President Barack Obama, the problem with America, or well, the policy in need of correction, is that in the last 30 years or so things have gotten a lot better for the one percent, and a lot worse for everyone else.
The one percent language is probably a pretty important development in American political discourse. No longer could we talk about the rich and those merely working on getting rich. The protest movement emphasized that the country was skewed to benefit the superrich. Everyone else was getting screwed.
But this language, while technically accurate, is highly misleading. It’s actually much, much worse than that. Most of the one percent are getting screwed, too.
The truth is that when we look into the numbers, things get a little more complicated. The definitions here are a little ambiguous, but depending on how we draw the line, the money looks like this: in 2009, the top one percent of taxpayers reported a minimum of $344,000 in annual household income. In terms of assets, one enters the one percent with about $1.5 million.
This is the floor of the one percent. The one percent includes the country’s super billionaires, of course, but it also includes, like, your dentist and the guy who owns the local auto salvage shop. It also includes a few of my friends and relatives. Such people are very successful, to be sure. If you’ve got $355,000 a year and $1.5 million in assets you’re doing pretty well, but is the whole American economy really rigged in your favor?
No, Derek Thompson explains over at the Atlantic, we’ve been talking about this all wrong:
An amazing chart from economist Amir Sufi, based on the work of Emmanuel Saez and Gabriel Zucman, shows that when you look inside the 1 percent, you see clearly that most of them aren’t growing their share of wealth at all. In fact, the gain in wealth share is all about the top 0.1 percent of the country. While nine-tenths of the top percentile hasn’t seen much change at all since 1960, the 0.01 percent has essentially quadrupled its share of the country’s wealth in half a century.
It turns out that wealth inequality isn’t about the 1 percent v. the 99 percent at all. It’s about the 0.1 percent v. the 99.9 percent (or, really, the 0.01 percent vs. the 99.99 percent, if you like). Long-story-short is that this group, comprised mostly of bankers and CEOs, is riding the stock market to pick up extraordinary investment income. And it’s this investment income, rather than ordinary earned income, that’s creating this extraordinary wealth gap.
Most of the one percent are suffering more or less the same fate as your average teacher or nurse or mechanic. Even as the country gets richer, most of this one percent has got about the same money as it always did. They really aren’t getting any richer either.
Stop talking about the one percent. The one percent is huge and includes lots and lots of very normal, hard working, successful people. And they’re not doing too well in this economy, either. The real financial rulers here are the top tenth of one percent. That’s like 300,000 people total.
There is actually a one percent, however, Thompson explains. Within the Fortunate 400, the annual list of the country’s richest people, there’s a lot of movement from year to year, as people gain and lose money from investments.
Thompson: “Between 1992 and 2008, 3,672 different taxpayers appeared on the Fortunate 400 list. Just one percent of the Fortunate 400—four households—appeared on the list all 17 years. Now there’s your real 1 percent.”
Four households. Really.
The country’s wealth distribution is incredibly skewed. Such a very small amount of American people have such a large chunk of American money that the country’s wealth is not “unequal,” it is lopsided in an almost unfathomable way. We have a wealth distribution worse than that of Czarist Russia.
Feed the Political AnimalDonate
Washington Monthly depends on donations from readers like you.