We're far from poor — we just have a wildly lopsided distribution of wealth that makes us seem poor.
America is loaded. We are not a struggling nation ready to go under. We are not facing an enormous debt crisis despite what the politicians and pundits proclaim. We are not the next Greece.
Rather, we have an enormous concentration-of-wealth problem — one that must be solved for the good of our commonwealth. We are a very rich nation but it doesn’t seem that way because our wealth is so concentrated in the hands of a few. This is America’s disaster.
But wait. Doesn’t the wealth belong to the super-rich? Didn’t they earn it fair and square? Isn’t that the way it’s always been?
Not by a long shot. The amount of wealth that flows to the super-rich is determined by our public policies. It’s all about how we choose to share our nation’s productivity.
Productivity and the Wealth of Nations
Our country is rich because we are enormously productive as measured by output per hour worked. The greater our collective output per hour, the more our economy produces and the wealthier we are…or should be. It’s not a perfect measure since it doesn’t adequately take into account our environment, our health or our overall well-being. But it is a good gauge of our collective level of effort, skill, knowledge, level of organization, and productive capacity. As the top line on the productivity chart below shows, we’ve been able to produce more and more per hour year after year since WWII. It’s a remarkable achievement.
From 1947 until the mid-1970s, the fruits of our bountiful productivity were shared reasonably fairly with working people. As productivity rose so did workers’ real wages (See the bottom line in the chart below. It represents the average weekly wage of non-supervisory workers who make up about 80 percent of the entire workforce.) This wasn’t socialism. There were still plenty of rich people who earned a significant slice of the productivity harvest. But much of that wealth was plowed back into the economy through taxation rates that between 1947 and 1980 hovered between 70 to 91 percent on incomes over $3 million (in today’s dollars). Much of that money was used to build our physical and knowledge infrastructures, and to fight the Cold War. Unions were supported by public policy and workers' real wages rose steadily after accounting for inflation. Wall Street was tightly controlled and the middle-class grew like never before.
Then something happened.
It wasn’t an act of God, or the blind forces of technological change, or the mysterious movements of markets. Nor did the super-rich become enormously smarter than before. Instead, flesh-and-blood policy makers decided that deregulation and tax cuts should become the order of the day starting in the mid-1970s. The idea was that if we cut taxes on the super-rich and deregulated the economy (and especially Wall Street), investment would dramatically increase and all boats would rise. But as we can see from the chart below, the average worker's wage in real terms stalled and even declined after the mid-'70s. The fruits of productivity no longer were shared equitably. The enormous gap between the two lines (trillions of dollars per year) went almost entirely to the super-rich. The wealth of the wealthy skyrocketed, not by accident, but by policy design. "Greed is good" replaced the middle-class American dream.
What Is Wealth and Who Has It?
Wealth or net worth is the total value of what you own (your assets) minus the total value of your debts (your liabilities.) Our collective net worth is really huge. We’re talking big, big numbers. As of the end of 2011, U.S. households had $30 trillion in private assets and $13.6 trillion in liabilities for a total net worth of $16.4 trillion (PDF). How much is that? It comes to an average of $141,000 per household – free and clear of any debts.
|Les Leopold is the author of
The Looting of America: How Wall Street's Game of
Fantasy Finance Destroyed Our Jobs, Pensions, and
Prosperity—and What We Can Do About It