The top one percent in this country owns as much wealth as the bottom 90 percent combined. Making such an observation is not an endorsement of socialism; rather it is a criticism of capitalism- the astute will note that there is a difference. It is difficult to understand, in a democracy, how things reached this point. If this country represents “the people,” how is that the bottom 40 percent of the people only enjoy .2 percent of the wealth, and the bottom 60 percent own 4.7 percent of the wealth? This 60 percent represents a majority of the population, yet the top 1 percent owns 38.1 percent of the wealth and seemingly makes all the decisions.
Do pure capitalists really believe that the bottom 60 percent of this country are lazy, uninspired and content to rely on leftovers? Because that is the argument often presented. It is reasoned that the poor do not work hard, that they are addicted to drugs or alcohol, or that they would “play” the system to receive welfare handouts. Rarely considered is the idea that our economic system fosters a distribution of wealth intrinsic of this great disparity.
The connection to our corporations is a natural reflection of our economy. The wealthy are the ones that own the companies; they build their wealth through business equity and financial securities. Subsequent generations maintain their wealth through inheritance. It is easy to recognize that shareholder wealth is built at the expense of employee salaries. Yet, even with a majority of the population owning next to nothing, labor unions are decreasing, salaries are decreasing in light of inflation and health care costs, and American jobs are being forfeited to third-world countries. Why are the people not holding their legislators accountable? Why does every proposal to raise the minimum wage have to also offer financial considerations to the wealthy?
Shareholders seem willing to reward those responsible for protecting their wealth, and this is best illustrated through CEO salaries. This measure is usually calculated in relation to production worker pay. In 1960, CEOs were paid approximately 50 times that of production workers. In 1970 that number was about 80 times; in 1980, it was back to around 50 times. But then came the 1990s, where CEO pay reached 100 times that of production workers in 1990; 200 times in 1992; 300 times around 1997; over 500 times in 2000. Currently that number is at about 405-410 times the pay afforded to production workers.
Probably the most remarkable statistic is the amount of wealth according to races. The median wealth of white Americans in 2000 was $79,400 when you include home equity, and $22,566 without. Comparably, for Hispanics it was $9,750 and $1,850 respectively. And for black Americans, the numbers are an uncomfortable $7,500 and $1,166. People might be created equal, but it would be difficult to argue that people enjoy equal opportunity. Affirmative action may or may not be the answer, but it obvious that something is not working. The evidence is overwhelming. The data is also discouraging when one considers that the major source of wealth for all Americans is home equity. (Statistics from “Who Rules America,” by G. William Domhoff).
Another telling piece in the distribution of wealth is the amount that is passed along from generation to generation. Unfortunately, the story is the same. In a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans (the same 1 percent of Americans) receive $100,000 or more in inheritance. Another 1.1% receives $50,000 to $100,000. And 91.9% receive nothing (Kotlikoff & Gokhale, 2000).
Capitalism rewards the hard working, fortunate and wealthy. In the financial “survival of the fittest,” the winner is often those with the head start- not, notably, the hardest working. This truth is acknowledged by Warren Buffett and his wife in an ABC interview, “They (the Buffetts) believe their kids were born with the advantages of wealth, and grew up with great opportunities because of that. He says they had a gigantic head start, and that dynastic megawealth would further tilt the playing field in America, when we should be trying to make it more level."
Raw capitalism creates disparities in wealth- that is a fact. Before the enactment of income taxes, business owners like Rockefeller made $10 million a year, while his employees made $500 per year. The nation rebelled, and over time, progressive tax schedules were passed and labor unions were formed. Since then, things have improved, but this country still lacks equal opportunity as well as a moral distribution of wealth. I do not want socialism; I want a fair, vibrant society in which all Americans can enjoy the wealth of this very prosperous country. Leftovers would be just fine.