The Wealthy Forbes 400 Owns as Much
as the Non-Wealthy Non-Forbes 150,000,000
The net worth of the 400 notables is equal to the net worth of half of the U.S. population. This is the page on wealth posted at Inequality.org:
In 1962, the wealth of the richest one percent of U.S. households was roughly 125 times greater than that of the typical household. By 2004, it was 190 times (EPI, State of Working America 2006-07, Figure 5B).
(note: typical means median household)
The richest one percent of U.S. households now owns 34.3 percent of the nation's private wealth, more than the combined wealth of the bottom 90 percent. The top one percent also owns 36.9 percent of all corporate stock. (EPI, State of Working America 2006-07, Table 5.1 and Figure 5F).
The total inflation-adjusted net worth of the Forbes 400 rose from $470 billion in 1995 to $1.25 Trillion in 2006. (Arthur Kennickel, Federal Reserve Board, Currents and Undercurrents: Changes in the Distribution of Wealth, 1989-2004 (pdf) and Forbes Magazine.)
The U.S. Personal Savings Rate declined from 11.2 percent in 1982 to NEGATIVE 1.1 percent in 2006. (Bureau of Economic Analysis, National Income and Product Accounts, Table 2.1)
I should pre advise that the figures I cite are not strictly precise, but they are approximately precise and the general picture I draw is accurate.
I want to note the $1.25 trillion figure, the amount of wealth held by the Forbes 400, in the third paragraph. This amount, $1.25 trillion, is equal to 2.5% of the total net worth of the U.S., according to the report cited. In the 2006 report, Currents and Undercurrents, the Federal Reserve authors state that the bottom 50% of U.S. households (half of the 118 million households) own only 2.5% of the total national net worth of just over $50 trillion. Multiplying $50 trillion by 2.5% is $1.25 trillion, the same amount that the report claims that the Forbes 400 owns. Therefore, with a population of 300,000,000 citizens, one can make a case that the richest 400 individuals own the same amount as the poorest half, or 150,000,000 citizens. Pretty amazing. It reminds one of Russia under the Czars, or of the reasons for fighting the Revolutionary War. Thomas Paine where are you? The city of Oakland has over 350,000 people; 400 divided into 150,000,000 is 375,000. One rich Forbes individual owns an amount equal to the population of Oakland, if all of Oakland were in the bottom 50% of wealth holders. Plutocracy lives.
This nation should tax those extremely wealthy individuals and use that money to create millions of jobs for the unemployed and underemployed, it should create subsidies for employers to hire additional workers, and it should increase the wages of poorly paid workers, increase the Earned Income Tax Credit, and so on. We have done this before.
On page 255 of State of Working America, 2006/2007, the table “Changes in average wealth by wealth class, 1962 - 2004 (thousands of 2004 dollars)” the average wealth per household is listed at $430.5 (thousand). With 118 million households, the total net worth or wealth of the nation comes to over $50 Trillion. (118 xs 430.5 = 50,799). From 1962 to 2004 the median net worth of household wealth has increased by 73% while the average net worth has increased by 157%, an indication of the one-sided growth that advantaged the wealthiest sector of our society. The recent decrease in the housing market values will take down both median and average net worth values. In 1989 the household median net worth was $67,700. It had climbed to $77,900 by 2004, but much of that was unrealized gains in the housing values that increased, inflation adjusted, by 84% in ten years, 1995 to 2005. That bubble has popped. In any case, the health of the nation would be greatly improved by a public jobs program. As noted before, 35.6% of the workers are unemployed, underemployed or working for below poverty wages (see njfac.org for reference to BLS current figures).
Some readers may be unconvinced of my data, so I offer these additional supports. Here is a selection of quotes, a few from the Federal Reserve report, and another from Les Leopold reporting in the Huffington Post, August 19, 2009.
"For example, from 1992 to 2004 the wealth share of the least wealthy half of the population fell significantly to 2.5 percent of total wealth."
from the Abstract, page one, of Currents and Undercurrents: Changes in the Distribution of Wealth, 1989-2004, Arthur B. Kennickell, Senior Economist and Project Director, Survey of Consumer Finances.
Total net worth of nation, All Families, $50,250.6 billions. Total assets of 0 -50 percentile group, $1.278.6 billions (page 29). (2004)
same report, page 7, "following the pattern of growth in the top rank of the Forbes group, the proportion jumped to 2.5 percent in 1998, before falling off a bit in both 2001 and 2004. In 2005 the fraction was 2.0 percent." --- not the same amount as reported by extremeinequality.org.
same report, page 7, "For example, in 1989, 26.5 percent of families had net worth of less than $10,000; by 2004 the figure was 22.7 percent. Over the same period, the share of families with at least $500,000 in net worth rose from 10.8 percent to 17.7 percent." --- very positive news, but does it counter-weigh the fact of half owning 2.5%???
Why Warren Buffett Must Take Aim on Our Obscene Distribution of Wealth
August 19, 2009, Huffington Post, Les Leopold
This is the perfect time to call for a new progressive tax schemes on the superrich. In fact, if we had in place a fair system, there would be no deficit problem at all. Consider the fact that by 2008, the top 400 billionaires in the U.S. averaged $3.4 billion in assets each! Their total net worth was a whopping $1.56 trillion. That capital accumulated because, as a matter of policy, we encouraged income and wealth to concentrate at the very top of the income ladder. If we had kept in place the Eisenhower era tax system, the deficit Buffett worries so much about would nearly vanish.
The top marginal tax in 1980 when Reagan won the election was 70% on income over $400,000. Effectively the tax was much lower. Leopold has access to very current wealth data that I do not know about.
There is surprisingly little academic information about wealth and its effects. I have not read these books, but I’ll recommend them anyway. Top Heavy: The Increasing Inequality of Wealth in America and What Can Be Done About It, Second Edition, 2002, by Edward N. Wolff. Two books by Lisa A Keister, Wealth in America: Trends in Wealth Inequality, 2000, and Getting Rich: America’s New Rich and How They Got That Way, 2005. And the last unread recommendation is Who Rules America? Challenges to Corporate and Class Dominance by G. William Domhoff, 2009.
http://benL8.blogspot.com --- August 11, 2009