U.S. Senator Bernie Sanders mentioned our study, Billionaire Bonanza, several times during last night’s debate. Fact checkers at The New York Times, the Washington Post and CNN verified Sen. Sanders’ claims.
On June 28, Chuck Collins writes on Inequality.org:
he wealthiest 3 billionaires in the U.S. – Jeff Bezos, Bill Gates and Warren Buffett — now have as much wealth as the bottom half of the U.S. population combined.
Those were the first words spoken at last night’s 2020 Democratic Debate, citing a wealth inequality study by the Institute for Policy Studies.
In fact, Sen. Bernie Sanders mentioned the study, Billionaire Bonanza, several times during the debate.
Fact checkers at The New York Times, the Washington Post and CNN verified Sen. Sanders’ claims.
These extreme levels of wealth inequality are possible, in part, because the bottom fifth of U.S. households are underwater, with zero or negative net worth. And the next fifth has so few assets to fall back on that they live in fear of destitution.
“We’re developing into a plutocracy,” said former Federal Reserve Chairman Paul Volcker.
Some more powerful IPS statistics from our latest edition of Billionaire Bonanza: One troubling indicator that we are drifting toward a society governed by the wealthy is the expanding fortunes of multi-generational wealth dynasties.
The three wealthiest U.S. families are the Walton’s of Walmart, the Mars candy family, and the Koch brothers, heirs to the country’s second largest private company, the energy conglomerate Koch Industries. These are all enterprises built by the grandparents and parents of today’s wealthy heirs and heiresses.
These three families own a combined fortune of $348.7 billion, which is four million times the median wealth of a U.S. family.
Since 1982, these three families have seen their wealth increase nearly 6,000 percent, factoring in inflation. Meanwhile, the median household wealth went down 3 percent over the same period.
The dynastic wealth of the Walton family grew from $690 million in 1982 (or $1.81 billion in 2018 dollars) to $169.7 billion in 2018, a mind-numbing increase of 9,257 percent.
Gary Reber Comments:
I applaud Senator Bernie Sanders, who is now using terms such as “ownership” and “control” such as: “We live in a nation owned and controlled by a small number of multi-billionaires whose greed, incredible greed, insatiable greed, is having an unbelievably negative impact on the fabric of our entire country.”
But what is vague, at best, is how Sanders specifically plans to “create an economy that works for all.”
While he has a platform for universal healthcare, free tuition at public colleges and universities, breaking up big banks, etc. the policies and programs do not directly address how to break up concentrated wealth-creating, income-producing capital asset wealth and control (power follows property) and ensure that capital wealth concentration never again occurs.
Sanders should advocate for an Own The Future Deal, which would provide equality of opportunity for EVERY child, woman, and man to become a productive capital asset owner, without taking from anyone who already is an owner.
Yet, instead of advocating for this pathway to achieving equal economic opportunity and eliminating overtime economic inequality in opportunity, Sanders and other progressive politicians and academia, focus on job creation and minimum wage increases in the face of tectonic job-destroying shifts in the technologies of production, such as in temporary employment in infrastructure construction or dependency on a guaranteed job. Why? Because they only see a job as a means for people to earn an income. Yet, clearly, common sense should tell these narrow thinkers, that the wealthy few are wealthy because they own wealth-creating, income-producing capital assets, and the rest (the masses) of the citizenry are essentially job serfs or dependent on taxpayer welfare support.
The obvious solution is to create financial mechanism which will provide equal opportunity for EVERY child, woman, and man to acquire productive capital assets, as they are being formed, with the earnings of the investments. The rich understand how to do this but never share how they do it with those dependent on them for jobs.
The only impediment to ordinary Americans, working or not, who are propertyless in the capital asset context, from becoming an owner of newly formed, self-liquidating productive capital assets is putting up collateral as insurance or a guarantee against a capital credit loan for an investment that does not perform as expected.
As every rich person knows, capital acquisition takes place on the logic of self-financing and asset-backed credit for productive uses. People invest in capital ownership on the basis that the investment will pay for itself. The basis for the extension of capital credit and commitment of loan guarantees is the fact that nobody who knows what he or she is doing buys a physical capital asset or an interest in one (existing or to be formed) unless he or she is first assured, on the basis of the best advice one can get, that the asset in operation will pay for itself within a reasonable period of time — five to seven or, in a worst case scenario, 10 years (given the current depressive state of the economy). And after it pays for itself within a reasonable capital cost recovery period, it is expected to go on producing income indefinitely with proper maintenance and with restoration in the technical sense through research and development.
Still, there is at least a theoretical chance, and sometimes a very real chance, that the investment might not pay for itself, or it might not pay for itself in the projected time period. So, there is a business risk. This is why the lender has no reason to loan to anyone unless it has two sources of repayment. In addition to determining that the investment is viable and that the person or business corporation is creditworthy and reliably expected to make loan repayments, there needs to be security against default. Thus, for the lender to make the loan, loan security must be provided. This is always in the form of some type of equity accrued through past savings.
But, there is another path to solve the security issue, that is, the risk can be absorbed by capital credit insurance or commercial risk insurance and re-insurance. Thus, in order to achieve national economic democracy, we need a way to handle risk management in finance by broadly insuring the risks. Such capital credit insurance would substitute for the security demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with no or few assets (the 99 percent) to overcome the collateralization barrier that excludes the non-halves from access to wealth-creating, income-generating productive capital.
And because financing does not require borrowing from past savers, the capital credit loans can be interest-free, as well as insured.
It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic wellbeing.
The solution is embodied in the proposed Capital Homestead Act. To read How Capital Homesteading Works, see this section in my article “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” at http://www.foreconomicjustice.org/?p=11.
