Concentration of wealth isn’t in the top 1% it is in the top .05% to .01% or 1 to 5 in 10,000. According to an anonymous investment advisor to the wealth in this “Who Rules America” article:
the American dream of striking it rich is merely a well-marketed fantasy that keeps the bottom 99.5% hoping for better and prevents social and political instability. The odds of getting into that top 0.5% are very slim and the door is kept firmly shut by those within it.
Further he says:
Unlike those in the lower half of the top 1%, those in the top half and, particularly, top 0.1%, can often borrow for almost nothing, keep profits and production overseas, hold personal assets in tax havens, ride out down markets and economies, and influence legislation in the U.S. They have access to the very best in accounting firms, tax and other attorneys, numerous consultants, private wealth managers, a network of other wealthy and powerful friends, lucrative business opportunities, and many other benefits
The higher we go up into the top 0.5% the more likely it is that their wealth is in some way tied to the investment industry and borrowed money than from personally selling goods or services or labor as do most in the bottom 99.5%. They are much more likely to have built their net worth from stock options and capital gains in stocks and real estate and private business sales, not from income which is taxed at a much higher rate. These opportunities are largely unavailable to the bottom 99.5%.
Results of wealth concentration:
I find it questionable as to whether the majority in this group actually adds value or simply diverts value from the US economy and business into its pockets and the pockets of the uber-wealthy who hire them. They are, of course, doing nothing illegal.
I think it’s important to emphasize one of the dangers of wealth concentration: irresponsibility about the wider economic consequences of their actions by those at the top. Wall Street created the investment products that produced gross economic imbalances and the 2008 credit crisis.
They caused it and it paid well:
the collapse was primarily due to the failure of complex mortgage derivatives, CDS credit swaps, cheap Fed money, lax regulation, compromised ratings agencies, government involvement in the mortgage market, the end of the Glass-Steagall Act in 1999, and insufficient bank capital. Only Wall Street could put the economy at risk and it had an excellent reason to do so: profit. It made huge profits in the build-up to the credit crisis and huge profits when it sold itself as “too big to fail” and received massive government and Federal Reserve bailouts. Most 0f the serious economic damage the U.S. is struggling with today was done by the top 0.1% and they benefited greatly from it.
the bottom line is this: A highly complex and largely discrete set of laws and exemptions from laws has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules.
Another article at the same site cites research done by Edward Wolff, an economist. Median household wealth has dropped 36.1% since the peak of the housing bubble in 2007. By contrast, the wealth of the top 1% of households dropped just 11.1%.
Keep that in mind while considering this 2007 information:
The top 1% have 42.7% of all “Financial Wealth” or non-home wealth. The next 19% have 50.3% and EVERYONE else – the other 80% of Americans have only 7% of the financial wealth of this country. Not surprising considering I saw a recent stat that said 65% of American’s don’t even have $1,000 in savings.
Meanwhile, a survey of American’s believed the bottom 40% of American’s own 8% to 10% of the wealth – the truth – they only own 0.3%.
Is it any wonder the financial investment advisor above is so cynical?
Next time you hear a complaint about wealth re-distribution – what they are trying to say is that they redistributed the wealth into their own pockets, and you had better not try to take it back. In 1979 the top 1% had 20.5% of all financial wealth. By 1998 it was 38.1% or very nearly double. A lot of that was in stocks so there was a decline after the dot-com bubble burst, but it immediately began rising again, and with the latest data from 2007, we may find that when 2011 comes around it is right back up to 38% or so.
The rich control the message, the laws, the money and the power. And the message is “you might get rich” while laughing behind your back “so keep passing laws that put more and more money in our pockets”.