It's Official: America Is an Oligarchy | The Nation
By: John Nichols (The Nation)
S E E D E D C O N T E N T
It's Official: America Is an Oligarchy
The Congressional Budget Office confirms that the rich exponentially increased their share of America's wealth over the past 30 years.
By John Nichols
There's plenty of talk in the American media about the expansion of oligarchy in Russia and other authoritarian states. But there's no need to look offshore. Oligarchy is an American phenomenon, and it's expanding at an exponential rate, while income inequality is surging. That's according to the most official of official sources when it comes to economic issues: the Congressional Budget.
In a new study of trends in the distribution of family wealth from 1989 to 2019, the CBO finds:
Wealth became less equally distributed over the 30-year period. The share of total wealth held by families in the top 10 percent of the distribution increased from 63 percent in 1989 to 72 percent in 2019, and the share of total wealth held by families in the top 1 percent of the distribution increased from 27 percent to 34 percent over the same period.… By contrast, the share of total wealth held by families in the bottom half of the distribution declined over that period, from 4 percent to 2 percent.
Pause and consider that last fact. Working-class Americans held a greater share of the nation's wealth at the end of Ronald Reagan's "trickle-down economics" presidency in the late 1980s than they do today. Now, pause and consider this fact: Wealth inequality is substantially more severe for people of color. "In 2019, White families' median wealth was 6.5 times that of Black families, 5.5 times that of Hispanic families, and 2.7 times that of Asian and other families," according to the CBO.
Finally, pause and consider one more fact: The CBO report studies the period right before the coronavirus pandemic hit. But we know that the pandemic has delivered a bonanza for the billionaire class. In May of this year, Chuck Collins, a senior scholar at the Institute for Policy Studies who directs the IPS Program on Inequality and the Common Good, reported: "As the U.S. crosses the grim milestone of 1 million deaths from Covid-19, U.S. billionaires have seen their combined wealth rise over $1.7 trillion, a gain of over 58 percent during the pandemic."
Collins, who keeps tabs on spiking billionaire wealth, has reminded us, "The $5 trillion in wealth now held by 745 billionaires is two-thirds more than the $3 trillion in wealth held by the bottom 50 percent of U.S. households estimated by the Federal Reserve Board."
These are good times for American oligarchs, as the CBO report confirms. While studies may vary with regards to the precise details of inequality in the United States, the bottom line is undebatable. "Both family wealth and family income are skewed toward the top of the income distribution," explain the economic researchers. "The families in the highest quintile of the income distribution receive disproportionate shares of total family income and hold disproportionate shares of total family wealth."
For Senator Bernie Sanders, the Vermont independent who made inequality a central focus of his presidential bids, the CBO report strengthens the argument for an Ultra-Millionaire Tax that would impose a 2 percent annual tax for wealth over $50 million, along with a 3 percent tax for wealth over $1 billion. That could narrow the gap between rich and poor, says the senator, who during the pandemic proposed a Make Billionaires Pay Act to claw back some of the wealth piled up by the wealthiest Americans when everyone else was engaged in "shared sacrifice."
"This report confirms what we already know: The very rich are getting much, much richer while the middle class is falling further and further behind, and being forced to take on outrageous levels of debt," argues Sanders.
The obscene level of income and wealth inequality in America is a profoundly moral issue that we cannot continue to ignore or sweep under the rug. A society cannot sustain itself when so few have so much while so many have so little. In the richest country on Earth, the time is long overdue for us to create a government and an economy that works for all of us, not just the 1 percent.
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Perhaps that is why they are in the highest quintile of the income distribution.
I think the disproportionate is compared to what it used to be. This level of income inequality has been created in the last half century.
How and by who?
Not a surprise, this is American where the rich get richer.
Zuckerberg wasn’t rich, nor Musk, Gates, Buffet, Bezos. I could go on, the highly intelligent with motivation and great ideas get rich.
The worthless takers are now trying to legislate their wealth away through government theft and give it to them because they lack the intelligence to earn it themselves.
U.S. Billionaires Got 62 percent Richer During Pandemic. They’re Now Up $1.8 Trillion.
The comment wasn't on who or how they got rich, the fact is that the rich got richer, pretty simple, George.
BTW, which one are you in your comment?
And .... many of the poor get richer. Seems you did pretty good for yourself there Kavika .... you pretty much came from nothing didn’t you?
Nice comfy retirement for you and yours now right?
I'm not the subject of the article, Sparty.
That said, the Rich get Richer is the subject, and if you look at the facts it is accurate.
Yep, and on the topic of getting richer, so do the poor.
An excellent observation for learning more about the topic of getting richer.
Yes. And Supply Side Economics guarantees the outcome.
Where or to who will those "wealth" taxes go?
Who do you think? If you lack the the ability and or luck to earn it on your own, vote for someone who will redistribute it to you.
Democrats are in control of the House, the Senate and the Executive branch. How do you figure a bunch of rich dudes, they say they hate, are in control?
I wonder what will result eventually from the rich getting richer and the poor getting poorer. As Bob Dylan wrote: "When you ain't got nothing, you got nothing to lose. You're invisible now." And when you have nothing and you're invisible, bad things can happen. Is that where America is heading? Is that.....
The United States has spent over $40 trillion on imported goods and services just over the last 20 years. That's $40 trillion that wasn't distributed in the US economy. And the trade imbalance has persisted since the late 1970s.
Any income and wealth that could have been distributed to the middle class of the United States left the country. While the rich got richer in the United States, the middle class in the United States was buying from foreign suppliers and improving lives of people around the world. 'Free trade' sacrificed any prosperity for the American middle class to create trade partnerships. That's how the rule based world order was intended to work.
So, what did everyone think 'free trade' would accomplish? The rising income and wealth inequality in the United States really does coincide with the decline in the United States' ability to produce what it needs. Yes, the rich in the United States have gotten richer. But the middle class around the world has gotten richer, too.
The America middle class has been sold out. That's the bottom line.
What you're saying is that it would have been and would be better if America produced and grew all the needs of the people rather than import anything. Then I wonder if those needs would be affordable by the poor, and America has its share of poor, doesn't it?
Isn't it interesting that policy makers use industrialization of poor countries as the preferred means of improving living standards? Apparently manufacturing and production reduces poverty since that has been the focus of economic assistance and development in poor countries. Or have the experts been wrong for decades?
Dependence upon imports doesn't allow a country to address poverty within its own population. Imports do not add to a country's income. Dependence upon imports means less money is available for distribution as wages and income. So, dependence upon imports creates poverty.
If the United States depends upon imports from South Korea, as an example, then the jobs and wages are in South Korea and not in the United States. The South Koreans obtain the income while Americans only have an outlay. The South Koreans generate profit that addresses the standard of living in South Korea. That profit is provided by Americans buying what South Korea exports. Consumers always pay for the resources, wages, and profits needed to produce the goods they buy. Consumption takes money to buy things; consumption does not make money for the consumer.
Nationalizing poverty will only work if there is a national income. A country can redistribute national income to mitigate poverty. But without a national income, the country can only redistribute debt to mitigate poverty. So, poverty will persist (and likely increase) as a country uses debt to mitigate poverty.
Already being done bigly. Social spending it the only line item in the US budget that has gone up, by a significant percentage of the budget, through recent decades.
Economists have long understood this maldistribution of wealth to be a destabilizing factor in the larger economy. It limits growth at current levels, but extreme inequality can lead to economic disaster. It’s widely considered to be a major cause of the Great Depression.
Trends in Income Inequality and its Impact on Economic Growth
Redistribution does not address the problem of a more equitable initial distribution. If the economy is functioning properly then there would not be such a large distortion in the initial distribution of income. Increasing income (and wealth) inequality is symptomatic of an economy that is not functioning properly.
IMO the increasing disparity in distribution of income and wealth in the United States is an artifact of globalization. Globalization has distorted the economy of the United States. Redistribution will not address the distortions caused by globalization that has resulted in increasingly inequitable initial distribution of income. Redistribution can, indeed, address the existing disparity in income and wealth but will do nothing to address an economy that is not functioning properly.
An economy that is not functioning properly will experience declining growth. That, too, is an artifact of globalization. Dependence upon imports does not contribute to economic growth. We know that less developed countries experience lower economic growth because those countries are dependent upon imports. And we also know that economists advocating redistribution also advocate economic development in poor countries by introducing industrialization. Industrializing poor countries is a means of redistribution from richer countries. But that method of globalization redistributes income and wealth from the middle class of those richer countries which increases income disparities in those richer countries. Developing countries are not going to be producing luxury goods; they will be producing middle class goods. Globalization has always been intended to establish a global middle class that experiences a more equitable initial distribution of income globally. Redistribution of income and wealth in the United States (and richer countries) would unbalance the intended purpose of globalization which ultimately would further distort the economy of the United States.
As long as globalization remains the policy imperative, income and wealth of the very rich in the United States would need to be redistributed to poorer countries and not to the middle class of the United States.
"Working-class Americans held a greater share of the nation's wealth at the end of Ronald Reagan's "trickle-down economics" presidency in the late 1980s than they do today."
...because they had meaningful jobs that added value? Well, until somebody sold the concept of 'Save money, live better'.
Yep, we have seen the enemy and he is us