This Washington Post report card on “capitalism’s legitimacy crisis” is a few days old, but significant (and Part 1 of a series). It’s not income inequality here so much a wealth inequality. To hear Donald Trump tell it, he had no income for a number of years:
First, the data: The combined wealth of all households in the United States added up to $129.5 trillion in the first quarter of this year. The wealthiest 1 percent held 32.1 percent of the total, up from 23.4 percent in 1989. The top 10 percent of households owned $70 of every $100 in household wealth, up from $61 in 1989. The bottom half, whose share never exceeded 5 percent, now holds just 2 percent of household wealth in the United States.
Though wealth inequality has grown in other industrialized democracies too, the U.S. figures mark this country as an outlier. A 2018 study of 28 countries in the Organization of Economic Cooperation and Development found that, on average, the top 10 percent of households owns 52 percent of wealth, while the bottom 60 percent owns 12 percent. But in the United States the top 10 percent held 79.5 percent and the bottom 60 percent held 2.4 percent.
Wealth can be passed down through the generations, building on itself. For White people anyway, that was once more possible than it is today. For Blacks in America, well, ask Ta-Nehisi Coates.
People who are secure in their persons, jobs, and families have no need for demagogues, the Editorial Board argues. People who feel freedom’s just another word for nothing left to lose are ripe for the picking by hucksters. And here we are.
It is probably no coincidence the rich began getting so much richer as globalization exerted downward pressure on wages and deregulated financial innovation increased opportunities for capital gains. A side effect of low interest rates, engineered by the Federal Reserve with the goal of stimulating the broader economy, has been to reduce the costs and raise the benefits of speculation. Absent Fed action, workers and low-income people could have suffered even more from both the Great Recession and the pandemic. It is still remarkable — and concerning — that wealth inequality grew, during the pandemic, mainly due to soaring house and stock prices. Of $13.5 trillion in new household wealth added during 2020, more than 70 percent accrued to the top fifth of income earners, and about a third to the top 1 percent, according to the Wall Street Journal.
There is more to the billionaire space race than ego. Commercializing space was inevitable. But Branson, Bezos, and Musk (and the U.S. public) need reminding at every turn that they stand on the shoulders of American taxpayers and decades worth of government testing and perfecting rocket technology. People need to see there is something in capitalism for them. Billionaire joyrides are just rubbing their noses in it.
Something’s gotta give. The level of inequality represented in the graph above and Blue Origin launch this morning is unsustainable. Pitchforks are an old technology, but still affordable by people desperate enough to take them to the streets.