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If inequality continues to grow at current rate, richest Americans will own 100% of US wealth in 33 years


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#1
wjfox

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Is America heading for a socialist revolution? Or a collapse of some kind?

 

Something has to give, at some point. This kind of hyper-inequality simply isn't sustainable.

 

Title is somewhat click-baity, but the basic point is essentially true – unless major political reforms occur, the rich will continue to hoover up the vast majority of wealth.

 

---

 

If inequality continues to grow at current rate, richest Americans will own 100% of US wealth in 33 years

 

August 5, 2019

 

“However you slice it, the rich have been getting richer. Lots richer.”

If wealth inequality in the United States continues to soar at its current rate, the top 10 percent of Americans could own 100 percent of the nation’s net worth by 2052.

That’s according to an analysis by Dallas Morning News finance columnist Scott Burns, who wrote Sunday that the wealthiest Americans “will truly ‘have it all’ just 33 years from now.”

“If they continue to gain share at that rate, they’ll have the remaining 22.8 percent of net worth held by the other 90 percent in just 12 more surveys, give or take an upheaval or two.”
—Scott Burns, Dallas Morning News

“However you slice it, the rich have been getting richer. Lots richer,” wrote Burns, citing Federal Reserve data. “Here are the basics. From 2013 to 2016, the top 10 percent of households increased their share of total wealth from an amazing 75.3 percent to a stunning 77.2 percent. That’s a share gain of 1.87 percent in just three years.”

 

https://www.rawstory...6hrP-D0.twitter


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#2
eacao

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Is America heading for a socialist revolution? Or a collapse of some kind?

 

Something has to give, at some point. This kind of hyper-inequality simply isn't sustainable.

 

Title is somewhat click-baity, but the basic point is essentially true – unless major political reforms occur, the rich will continue to hoover up the vast majority of wealth.

 

---

 

If inequality continues to grow at current rate, richest Americans will own 100% of US wealth in 33 years

 

August 5, 2019

 

“However you slice it, the rich have been getting richer. Lots richer.”

If wealth inequality in the United States continues to soar at its current rate, the top 10 percent of Americans could own 100 percent of the nation’s net worth by 2052.

That’s according to an analysis by Dallas Morning News finance columnist Scott Burns, who wrote Sunday that the wealthiest Americans “will truly ‘have it all’ just 33 years from now.”

“If they continue to gain share at that rate, they’ll have the remaining 22.8 percent of net worth held by the other 90 percent in just 12 more surveys, give or take an upheaval or two.”
—Scott Burns, Dallas Morning News

“However you slice it, the rich have been getting richer. Lots richer,” wrote Burns, citing Federal Reserve data. “Here are the basics. From 2013 to 2016, the top 10 percent of households increased their share of total wealth from an amazing 75.3 percent to a stunning 77.2 percent. That’s a share gain of 1.87 percent in just three years.”

 

https://www.rawstory...6hrP-D0.twitter

 

Can you explain why it's inherently bad people get richer at different rates? 

 

can anyone?


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#3
PhoenixRu

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Can you explain why it's inherently bad people get richer at different rates? 

 

can anyone?

 

Inherently bad people have an important advantage: they can do inherently bad (but very profitable) things that are unacceptable and impossible to repeat by the majority.


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#4
Erowind

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Can you explain why it's inherently bad people get richer at different rates?

can anyone?
The argument being presented isn't saying it's bad for different people to get richer at different rates. It's saying that it's bad for the richest in society to consistently outpace everyone else year over year. Don't take this the wrong way, but your question doesn't address the central point.

I think being rich at the expense of others is inherently evil to begin with because exploitation of humans for profit is bad. I can explain why capitalists used to be called robber barrons and how wage labour is just an evolution of slavery not an abolition of it of you're curious. There's also an argument to be made about how capitalist economies force oligarchic relationships which are no less authoritarian than dictatorships.

With that out of the way though. Outside of my radical leftist perspective history shows what happens when wealth stratification takes place. Inequality and monopoly go hand in hand as shown historically by the gilded age. Monopoly is bad because regardless of merit small economic actors cannot compete with monopolies. They will get muscled out through sheer economic force. If capital were a rational mediator of the economy it would choose the most merited people, products and research to fund. Sadly capital isn't rational, it seeks profit to a fault where instead of seeking merit it gradually accumulates in more and more concentrated pools of wealth until the hands that control those pools can maintain their positions without competing. Price fixing, price gouging, insider trading, artificial scarcity and flooding the market with a glut of product are some of many of the tools monopolies use. Monopolies also control government through lobbying (corruption) sometimes outright "regulating" competition out of existence. It doesn't matter if one is more merited, or their product functionally superior, if they face a monopoly they cannot compete.

Picture a scenario. There are two men who desire to enter the grocery business. For the sake of the thought experiment we know man number 1 is remarkably merited. He understands logistics and shipping with cunning accuracy, has astonishing management skills and is able to calculate price margins expertly. Man number 1 is a grocery genius and given fair market conditions would make a very high profit compared to the average grocer. Now let's say man number 2 is merely mediocre at all these things. He knows enough to not lose money and is capable of making a comfortable but not great margin should he have a business. Okay, now say man number 2 starts with a 90% market dominance because he inherited a grocery monopoly and man 1 starts with one small local store. Say that there are also very few local stores left because most stores that don't belong to monopoly in the grocery sector are proportionally stratified. Say 90% man 2 grocers, 6% medium enterprise regional chains, and 4% local stores.

Let's be generous and say that man 1 manages to eat up the regional chains and some local stores making the sector split between 90% man 2, 8% man 1 and 2% local stores. Now say man 2 doesn't like the threat man 1 poses so he undercuts man 1s stores with such an impossibly low price to the point that man 2 is even temporarily losing money while starving man 1s buisiness that man 1 can't compete through no fault of his own. This is the face of monopoly and likewise wealth stratification. With wealth stratification there is room for abuse and those who do abuse are economically incentivized to do so. Man 2 despite being a chump of a grocer later gained 97% market dominance by eating up the liquidation of man 1s grocery business. This isn't even to mention how someone who is merited but truly impoverished cannot actualize on their merit because it is impossible for them to afford to enter the market to begin with let alone be crushed by a monopoly. Wealth stratification is an incoherent and irrational mediator of economic activity.
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#5
starspawn0

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Can you explain why it's inherently bad people get richer at different rates?



can anyone?


Sure.

There is kind of a standard comment one hears from the Right that preventing people from getting arbitrarily rich through "income redistribution" is basically taking away the incentive to do good work by the people most capable of doing it. And there is also the suggestion that attempts to change the wealth distribution are, in reality, motivated by jealousy and failure to appreciate some people really are just a lot, lot better than everyone else.

First of all, when you say something is "good" or "bad", no argument is required to defend it. I can just say that I think that it's bad, because it feels bad, and that's it. The reason to give an argument is maybe to connect it with some universal set of moral principles that a broader set of people would agree with. However, I've always been leery of applying that kind of deductive method to uncover "the good" or "the just". It's like what economists try to do to uncover human value comparisons (e.g. whether a person values A more than B), where they assume transitivity (if the person thinks A is better than B, and B is better than C; then they think A is better than C); and then later discover that humans don't always value things transitively -- the economist Noah Smith has discussed this on Twitter a few times, as I recall. In principle, if a person's values aren't transitive, then there is a value cycle in their "value comparison directed graph" (nodes are objects, and arrows point from lower to higher value) that can be exploited to drain them of $$$; however, that "proof" relies on yet another false assumption that a person's values are stable over time.
 
Explaining ones feelings reminds me of psychoanalysis.  Maybe Freud is to blame for the over-rationalized values we hear about today.  
 
 
Nonetheless, one argument for why the inequality is bad, that connects with a broad set of beliefs -- more widely shared than "it's unseemly for anybody to be that rich" -- is that in American society, money buys power. Not just any power, but political power. With more money, you can buy politicians and also buy more ad time -- and, as just about any politician will tell you, those ads do have a powerful effect on whether someone gets elected. Even Bernie Sanders, who got most of his ad money through small donations and used an army of volunteers to get his message out, has remarked about how great the influence of money is on politics.

Now, whether it's fair or not that someone gets more money to spend on luxuries is one thing; but most people (> 50%) would agree that it's bad that you can translate your out-sized wealth into deciding elections -- it feels undemocratic.

(And whether democracy is good or bad, is yet another question. Probably more than 50% of the population view it as "good".)

I could give other arguments, too -- but they would take a long digression into nature and nurture, so I will refrain.
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#6
funkervogt

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Is America heading for a socialist revolution? Or a collapse of some kind?

 

Something has to give, at some point. This kind of hyper-inequality simply isn't sustainable.

 

Title is somewhat click-baity, but the basic point is essentially true – unless major political reforms occur, the rich will continue to hoover up the vast majority of wealth.

 

---

 

If inequality continues to grow at current rate, richest Americans will own 100% of US wealth in 33 years

 

August 5, 2019

 

“However you slice it, the rich have been getting richer. Lots richer.”

If wealth inequality in the United States continues to soar at its current rate, the top 10 percent of Americans could own 100 percent of the nation’s net worth by 2052.

That’s according to an analysis by Dallas Morning News finance columnist Scott Burns, who wrote Sunday that the wealthiest Americans “will truly ‘have it all’ just 33 years from now.”

“If they continue to gain share at that rate, they’ll have the remaining 22.8 percent of net worth held by the other 90 percent in just 12 more surveys, give or take an upheaval or two.”
—Scott Burns, Dallas Morning News

“However you slice it, the rich have been getting richer. Lots richer,” wrote Burns, citing Federal Reserve data. “Here are the basics. From 2013 to 2016, the top 10 percent of households increased their share of total wealth from an amazing 75.3 percent to a stunning 77.2 percent. That’s a share gain of 1.87 percent in just three years.”

 

https://www.rawstory...6hrP-D0.twitter

 

Can you explain why it's inherently bad people get richer at different rates? 

 

can anyone?

 

 

Because we live in a society comprised of human beings, and humans are deeply jealous, status-seeking animals that don't like seeing other humans become "better" than they are. If a big enough share of a given human population gets too jealous, then the society becomes "unstable." 


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#7
Jakob

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In other news, new research has shown that simple models cannot be extrapolated arbitrarily far into the future.


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#8
caltrek

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Leaving open the question of exactly what forces will come into play before the extrapolated end point arrives?


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The principles of justice define an appropriate path between dogmatism and intolerance on the one side, and a reductionism which regards religion and morality as mere preferences on the other.   - John Rawls


#9
Erowind

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In other news, new research has shown that simple models cannot be extrapolated arbitrarily far into the future.

 

Economic stratification is more gradual and not truly modeled as a constant but as an average, you're correct. And obviously the rich won't own 100% of wealth in 33 years. (I think you already knew that though.) It's more that stratification has been happening rapidly since wages stopped keeping pace with production growth in the late 60s and early 70s. The trend shows no signs of stopping and it is very realistic to say the top 10% will own over 90% of the wealth within 50 years. At what point are these people considered informal aristocrats? To me that threshold was passed decades ago. The headline is glaring with the 100% precisely to bring attention to the fact that economic stratification is happening so rapidly. 


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#10
Erowind

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Leaving open the question of exactly what forces will come into play before the extrapolated end point arrives?

 

Societal breakdown, failed insurgencies and revolutions and eventually a paradigm shift in some direction or another that will either be spurred by successful revolution and or reform. The reason reform only comes last is because political power is currently held by the exact people causing economic stratification meaning that their power base will need to be displaced before reform is viable. 


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#11
ralfy

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The catch is that much of that wealth consists of promissory notes which can only be backed by continuous and increasing production and consumption of goods and services by the rest of the population.


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#12
caltrek

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So, the rich will own 100% of the wealth and everybody else will pay rent.


The principles of justice define an appropriate path between dogmatism and intolerance on the one side, and a reductionism which regards religion and morality as mere preferences on the other.   - John Rawls


#13
caltrek

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Can you explain why it's inherently bad people get richer at different rates? 

 

can anyone?

 

 

For me, it is not so much that it is "inherently" bad.  Rather, it is the way this comes about.

 

Consider this  that I recently posted in another thread:

 

Why are we all paying a tax to credit card companies?

 

https://theweek.com/...-card-companies

 

Extract:

Quote

 

(The Week) It's fat times for credit card companies.

 

Visa made $10.3 billion in profits in 2018 on just $20.6 billion in revenue, up from $6.7 billion and $18.3 billion respectively in 2017. Profits were up again to $3.0 billion in the first quarter of 2019, a 14 percent increase from the same period in 2018. Mastercard, meanwhile, took in $5.9 billion in profits in 2018, up almost 50 percent from 2017, and saw a similar 25 percent jump in the first quarter of 2019. Beyond that, individual banks who issue such cards rake in billions more, especially with credit cards. A 2018 Federal Reserve report shows that between 2011 and 2017, large credit card banks have collected returns on assets between 3.37 percent and 5.37 percent — as compared to 1.32 percent for all commercial banks in 2017.

 

…In brief, payment card companies are piggybacking on public systems and guarantees to gouge the American public, especially with credit cards. They act as middlemen, skimming fees off transactions and using their size to bully businesses into accepting their terms — who then raise prices on all consumers. The associated profits, both for Visa and company and the issuing banks, are effectively a tax on everything Americans pay for.

 

fees.jpg?itok=IcZvMlEm

 

 

 

The article goes on to point something that pro-corporate libertarians have a hard time acknowledging:

 

Quote

 

Government action has also been key in pushing improvements in payment efficiency. Universal check clearing only came about because of state pressure. Banks technically own the ACH, but it is extensively regulated to ensure stability and consistency, and prevent fraud — what's more, the Fed operates one of two ACH "switches" (which coordinate payments between ACH member banks). Moreover, the banks themselves are backstopped by state power at every level. Federal deposit insurance prevents bank runs, and protects savings when banks go under. And as we saw in 2008, when the financial system blows itself up with irresponsible lending and fraud, the state has been there to save it.

 

 

So, regulations that favor corporate profit formation are quietly accepted, while regulations to protect workers, consumers, and the environment are often vehemently opposed. Resulting inequality of incomes is seen as acceptable.  Come the revolution....


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The principles of justice define an appropriate path between dogmatism and intolerance on the one side, and a reductionism which regards religion and morality as mere preferences on the other.   - John Rawls


#14
caltrek

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Also:

 

https://en.wikipedia...ust_Act_of_1890

 

 

(Wikipedia) Conversely, liberal Supreme Court Justice William O. Douglas criticized the judiciary for interpreting and enforcing the antitrust law unequally: "From the beginning it [the Sherman Act] has been applied by judges hostile to its purposes, friendly to the empire builders who wanted it emasculated... trusts that were dissolved reintegrated in new forms... It is ironic that the Sherman Act was truly effective in only one respect, and that was when it was applied to labor unions. Then the courts read it with a literalness that never appeared in their other decisions."


The principles of justice define an appropriate path between dogmatism and intolerance on the one side, and a reductionism which regards religion and morality as mere preferences on the other.   - John Rawls


#15
ralfy

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The richest cannot own all wealth for obvious reasons.



#16
Alric

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Yeah if the richest own all the wealth then everyone else is just going to murder the rich people and take their shit. That is obvious because if you own all the resources, then people can't survive. People will not willingly die, and so they will take the resources by force if they have to. Any rich person with the attitude of just trying to get as much money as possible for them and their families and screw everyone else, is a moron. They are putting them self in danger, and it doesn't matter how wealthy you, all the wealth in the world can't protect you from the rest of the population.



#17
caltrek

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‘This is obscene’: New study shows CEO pay has grown more than 1,000% since 1978

 

https://www.alternet...000-since-1978/

 

Introduction:

 

(Alternet) As even some of the wealthiest Americans have begun to call for major reforms to the U.S. economic system to narrow the wealth gap, a new study released Wednesday revealed that over the past four decades, salaries for the top executives in the U.S. have gone up by more than 1,000 percent.

 

CEOs at the 350 largest companies now take home salaries that are 278 times higher than those of the average worker, according to the new Economic Policy Institute (EPI) analysis.

 

With an average compensation of $17.2 million per year, report co-author Lawrence Mishel said Wednesday, today’s CEOs would barely notice a change in their quality of life if their salaries were slashed.

 

“You could cut CEO pay in half and the economy would not be any different,” Mishel, a distinguished fellow at EPI, told The Guardian.

 

EPI’s findings about CEO compensation were denounced as “obscene” by critics of the current economic system, under which 40 percent of American workers struggle to find $400 in their budget to cover an emergency expense while the heads of powerful companies are given huge tax breaks on top of their salaries.


The principles of justice define an appropriate path between dogmatism and intolerance on the one side, and a reductionism which regards religion and morality as mere preferences on the other.   - John Rawls


#18
caltrek

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This is from an article that Jessica found:

 

https://www.cbsnews....s-make-12-more/

 

 

(CBS) "CEOs are getting more because of their power to set pay, not because they are increasing productivity or possess specific, high-demand skills," economist Lawrence Mishel and research assistant Julia Wolfe said in the report from the Economic Policy Institute, a left-leaning think tank.


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The principles of justice define an appropriate path between dogmatism and intolerance on the one side, and a reductionism which regards religion and morality as mere preferences on the other.   - John Rawls


#19
ralfy

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What I mean is that much of the wealth of the rich consists of numbers in hard drives, and the value of that wealth is maintained only if more people borrow and spend. Which they can't do if the rich own all of the wealth.



#20
caltrek

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What I mean is that much of the wealth of the rich consists of numbers in hard drives, and the value of that wealth is maintained only if more people borrow and spend. Which they can't do if the rich own all of the wealth.

 

This still doesn't address my point:

 

 

o, the rich will own 100% of the wealth and everybody else will pay rent.

 

 

Of course, if workers are completely automated out of their jobs by AI and robots, then even that wouldn't be sustainable.  Until then, workers can trade in their labor power to pay rent and service their debt borrowing.

 

Not that I like this decidedly dystopian scenario...

 

The other thing is that even if the rich "own" all the monetary wealth, workers can still trade with each other, if only through barter.

 

Finally, I can't see he middle class losing all the equity in their homes.  I would think this form of wealth would prevent the "rich" from owning 100% of the wealth.

 

Still, younger families could easily lose the ability to borrow to buy their own homes, forcing them to rent or to continue to live with their parent.  Their only hope of ever owning their own homes might very well be through inheritance.  I suppose eventually the rich might enact steep inheritance taxes that would apply to residential homes only in order to force sale of even that modest level of wealth.  I can see voters going along with that because at least politicians will continue to pay lip service to white privilege, stopping immigration, preventing abortions, protecting "gun ownership rights" etc.

 

Again, a very dystopian view of the future.


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The principles of justice define an appropriate path between dogmatism and intolerance on the one side, and a reductionism which regards religion and morality as mere preferences on the other.   - John Rawls





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