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ACCELERATING WEALTH OF THE SUPERRICH – BOTH HERE AND GLOABALLY (PART I)

November 7, 2014

ACCELERATING WEALTH OF THE SUPERRICH – BOTH HERE AND GLOBALLY (PART I)

Politicians will go to any length to reinterpret facts to suit the interests of their backers, aka those who give them big campaign contributions (which in my day we called bribes), backers who expect to show a profit on their “investment.” I will in this essay nonetheless set out the facts surrounding the acceleration of yet more wealth to the superrich and political hacks can interpolate and interpret such facts as they wish, subject to the old Irish senator’s rule that, “You are entitled to your opinion on the law, but you are not entitled to your opinion on the facts,” a rule politicians now routinely ignore in the service of their funding sources.

The information I am about to set forth and discuss is from the 2014 Global Wealth Databook (GWD), a product of the Swiss bank Credit Suisse as excerpted in Nation of Change. It tells of how we have a reverse transfer of wealth from the poor to the rich both here and globally and how the easy flow of wealth to the privileged few is dividing the world into two classes – the rich and the poor.

Of course this division of wealth in favor of the already rich is hardly anything new and is treated at length by Piketty leading to his scary r > g formula describing a situation that if unchecked, will (per Piketty) inevitably lead to destruction of capitalism itself. We already know that the rich are gaining more wealth at a pace faster than that of any other class. What is scary today is that such a pace of relative gain is accelerating and everywhere, not just here, perhaps another unexpected consequence of globalization. Apparently greed as well as toys and clothing are both imported and exported, not to pretend there was not greed before in the countries whose labor we are now exploiting with the help of the political classes in such countries, who themselves are becoming rich on the backs of their own countrymen and, as outsourced, our countrymen as well.

Things have changed since the end of Bush’s Great Recession. Our one per centers in America have averaged $5 million in wealth gains over just the past three years while our upper middle class is left in the dust. The global one per centers during the same period have increased their aggregate wealth from $100 trillion to $127 trillion, and it’s not just measured by the last three years. Get this measure of relative wealth in order to get some perspective: EACH YEAR SINCE THE GREAT RECESSION, AMERICA’S RICHEST 1% HAVE MADE MORE THAN THE COST OF ALL U.S.SOCIAL PROGRAMS COMBINED!  (And this is while some Republicans are complaining that Social Security is too costly)! What!

What’s worse is that such rapidly accumulating wealth in the hands of the one per centers is doing nothing but just sit there, accumulating more wealth for the rentiers (as Piketty calls them). Depending upon whose estimate you believe, the 1 per centers took in anywhere from $2.3 trillion to $5.7 trillion per year and even if you use the smaller estimate money made from money in the coffers of the superrich comes out to more than the total for Social Security ($860 billion, Medicare ($524 billion), Medicaid ($304 billion), and the $286 billion we spend for food stamps, WIC (Women, Infants and Children), Child Nutrition, Supplemental Security Income, Temporary Assistance for Needy Families, and Housing. Thus the superrich, who are adding trillions of dollars annually to their troves, make more money in one year than all of our social safety net costs – and have the gall to complain about how the poor are overcompensated and how their own taxes are too high. What?

This situation of rapidly accelerating accumulation of the wealth to the already unbelievably superrich would be more bearable if such accumulations were reinvested back into the economy in repair and renewal of our infrastructure, programs making higher education available to all and other such reinvestments in our country and our people, but instead it just sits there in low-risk investments, the stock market and real estate. To the rentiers’ argument that such accumulation is necessary for entrepreneurship, a recent study proves that to be propaganda. The fact is that less than 1 per cent of all entrepreneurs come from very rich or very poor backgrounds. They come from the middle class. The rentiers just sit there and clip coupons, watching their annual gains in wealth soar while such huge pools of capital are excluded from beneficial use in our economy or (via taxes) in programs designed to advance the health, education and welfare of America’s citizens (the best investments money can buy).

Thus seen, what good is it for the rich to prosper (especially at an accelerated rate) when such huge profits are largely cordoned off from our economy where they could be of enormous benefit to the rest of us? Why should the rest of us care if the superrich pull in an extra trillion or two in the last taxable year, and why (except for “campaign contributions”) should even our politicians care to keep a few people unbelievably rich in an otherwise democratic society (or what’s left of it)?

Perhaps the largest question should be why our policymakers continue to favor policies that keep this bizarre and glaring mismatch of wealth-sharing on the front burner under the pretext that it is “good policy.” It is not good policy, the majority is not ruling, and unless our political class has a change of heart and requires the rentier class to share what the political class is handing over to them in return for “campaign contributions,” then (per Piketty), the whole system of capitalism will ultimately crash.

We the poor and middle class who are trying to save the capitalist system from its own internal contradictions have always assumed that we would have to fight the Marxist and nihilist factions whose mission is to destroy it. We were wrong. In an economic irony history will note, our chief opponents to date are the capitalists themselves, who show no interest in saving their own system.

I will discuss in Part II how corporate America spends its money by the explosion in stock buybacks and the increased dividends to shareholders and bonuses to executives that result with little to no positive effect on our economy, how we need a financial transaction tax in these days where annual trading in derivatives as of 2008 has surpassed $1.14 quadrillion (a number, like the concept of eternity, humans cannot understand, and good luck on a bailout if that market crashes) etc. Stay tuned.   GERALD    E

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