More Inequality Shock (Demo)

On February 3, 2014, Paul Buchheit writes on Nation of Change:

Inequality is a cancer on society, here in the U.S. and across the globe. It keeps growing. But humanity seems helpless against it, as if it’s an alien force that no one understands, even as the life is being gradually drained from its victims.

The recent Oxfam report on global wealth inequality reveals some of the ugly extremes that have divided our world. It also directs our attention to the Global Wealth Report compiled by Credit Suisse, and the companion Databook, which offer a shocking testament to the severity of U.S. and global inequality.

1. The 30 Richest Americans Own as much as Half of the U.S. Population

The Oxfam report tells us that 85 individuals own as much as half the world. The U.S. is the biggest reason for that, with 5% of the world’s population and 30% of the wealth. China, India, and Africa, on the other hand, combine for about half the world’s population and just 12% of the wealth.

In the U.S., the richest 30 individuals own about $792 billion, while the bottom half of Americans own 1.1% of our country’s wealth, also about $792 billion. That’s 30 people owning as much as 157,000,000 people.

This information is derived from the Global Wealth Databook and the Forbes 400 List. More details are provided at Us Against Greed.

2. The Bottom Half of America Owns a Smaller Percentage of National Wealth than Almost All Other Countries and Continents

The 1.1% of America’s wealth owned by the poorest half is less than the poorest halves of Asia (1.3% of the region’s wealth), Africa (2.1%), Latin America (3.2%), India (4.5%), the United Kingdom (7.6%), and China (9.6%).

It goes beyond the poorest half. The upper-middle class of America (roughly $50,000 to $200,000 in wealth) own a smaller percentage of wealth than the corresponding upper-middle classes of China and India. Of course, America’s lower and middle classes have more money in absolute terms than corresponding classes in China and India. But that leads to the next topic.

3. Less Mobility: North America’s Bottom Half Has Less Chance to MOVE UP than Any Other Region of the World

Conservatives argue that individuals should be able to improve their economic positions with personal initiative and hard work. But economic mobility is lower in the U.S. than in most developed countries. And lower than in many undeveloped countries.

The results of a Credit Suisse wealth mobility simulation are given in the Global Wealth Databook: “North America is…less mobile than other regions, especially over longer time horizons. Europe is next in line, followed by the middle group of Asia-Pacific, Latin America and Africa. The most mobile regions are China and India.”

4. America’s MIDDLE CLASS is Further from the Top than in All Other Developed Countries

As noted above, it’s not just the bottom half being battered by inequality — it’s most of the rest of us. The U.S. median of $44,911 is only 15% of the $301,140 mean (which is greatly skewed by the wealth of the richest 10%). That ratio is less than any other of the 27 developed countries listed by Credit Suisse, and much less than the average OECD ratio of 35%.

For the world as a whole, the median is only 8% of the mean, reflecting the fact that half the world’s adults average less than $500 in wealth.

The Greatest Shock: How Little is Needed to Restore Some Sanity

Extreme inequality means that people without homes are freezing to death in America. On a winter day in 2012 over 633,000 people were homeless in the United States. Based on an annual single room occupancy (SRO) cost of $558 per month, a little over $4 billion would provide shelter for every homeless person for the entire year.

The stock market grew by $4.7 trillion in 2013. A wealth tax of just a one-tenth of 1 percent (one dollar out of every thousand) would have provided the $4 billion needed to shelter every homeless American for 365 days.

But we have no wealth tax. And the wealth just keeps growing for the wealthiest Americans.

Paul Buchheit’s proposal for a “wealth tax” is, of course, redistributive and does not address the REAL problem that the majority of Americans lack personal ownership of wealth-creating, income-producing physical capital assets. The 99 percent are essentially propertyless,  capital-less or under-capitalized serf dependent on jobs for income, while the rich are rich because they are wealthy capital asset owners.

This reality is not addressed by Buchheit or other pundits, nor it is a subject focused on by our national media. Yet until we address concentrated ownership and devise and implement policies and set new rules and regulations regarding ownership concentration there will be no remedy to widening economic inequality.

We must reform the system of wealth finance and tax reform to empower EVERY American citizen to accumulate over time a viable, diversified income-producing capital estate acquired with insured, interest-free capital credit loans repayable out of the FUTURE earnings of the investments. We must incentivize through tax reform corporations to finance their future growth by issuing and selling new full-voting, full dividend payout stock to American citizens using capital credit to purchase the stock.  Such incentives must encourage corporations to pay out all their profits as taxable personal incomes to avoid paying corporate income taxes and to finance their growth by issuing new full dividend payout shares for broad-based citizen ownership

As a substitute for inheritance and gift taxes, a transfer tax should be imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.

The Federal Reserve needs to stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every child, woman and man to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.

The end result is that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on our only legitimate social monopoly –– the State –– and whatever elite controls the coercive powers of government.

Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, Monetary Justice at http://capitalhomestead.org/page/monetary-justice, and the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.

http://www.nationofchange.org/more-inequality-shock-1391440735