A Broad Concentration Of Wealth — And Benefits — At The Top
Posted By thestatedtruth.com on August 15, 2010
A major class struggle lies dead ahead!  The gap between the super-rich, the wealthy and “the rest of us” has widened, forming what is in essence two Americas. Economists Emmanuel Saez and Thomas Piketty have reported that the top 10% of earners took home about half of all income. According to Moody’s Analytics research, the top 5% of Americans by income are responsible for 37% of all consumer spending — about the same as the entire bottom 80% by income (39.5% of consumer outlays). “Our problem,” Alan Greenspan said, “is that we have a very distorted economy…. there has been a significant recovery in a limited area of the economy amongst high-income individuals, but “The rest of the economy, small business, small banks, and a very significant amount of the labor force, is in tragic long-term unemployment, and it is pulling the economy apart,” “The average of those two is what we are looking at, but they are fundamentally two separate types of economy.”
As total household income declines, the wealthiest Americans take home a larger piece of the national income pie.
Put the data together, and this reveals an increasing concentration of income and wealth at the top — and this small group increasingly dominates the U.S. economy. According to Moody’s Analytics research, the top 5% of Americans by income are responsible for 37% of all consumer spending — about the same as the entire bottom 80% by income (39.5% of consumer outlays).
This trend has led to the coining of a new word, plutonomy — an economy that’s dependent on the spending and investing of the wealthiest slice of citizenry for growth.
As a result, when the top 5% in income — those households earning $210,000 or more annually — rein in their discretionary spending, the U.S. economy suffers disproportionately. Indeed, the economy’s slump this summer can be tracked directly to a decline in the discretionary spending of the wealthiest Americans.
In the housing and stock market boom years of 2002 and 2007, the incomes of the bottom 99% of households by earnings grew by a meager 1.3% a year in inflation-adjusted terms, while the pockets of the top 1% grew 10% a year.
Over the past 25 years since 1985, the top 1%’s share of national income has doubled — in 2007, it netted 23% of the nation’s total income. The income of the wealthiest Americans — the top 0.1% — has tripled in that 25 year period. This wafer-thin slice of Americans now earn as much as the bottom 120 million wage earners.
The extremely wealthy are pulling away because their earnings come from capital, not labor. While wages have stagnated, returns on capital investments and speculations have soared. None other than former Federal Reserve Chairman Alan Greenspan recently described this yawning divide between those in the top slice of the economy who are doing very well and the 95% below them who are struggling.
“Our problem,” Greenspan said, “is that we have a very distorted economy in the sense that there has been a significant recovery in a limited area of the economy amongst high-income individuals who have just had $800 billion added to their 401(k)s and are spending it. Large banks and large corporations, as everyone’s pointing out, are in excellent shape.”
“The rest of the economy, small business, small banks, and a very significant amount of the labor force, which is in tragic long-term unemployment, that is pulling the economy apart,” noted Greenspan. “The average of those two is what we are looking at, but they are fundamentally two separate types of economy.”
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