U. S. on the Fourth of July: More Unequal than Ever

In June 2009, the U.S. economy saw its second steepest decline in 27 years. New jobless claims increased, business inventories fell and exports plunged as bad economic news persisted.

Will the once high-flying American wealth machine continue to produce the vast inequalities of the past?

Only two years ago, Steve Forbes, CEO of Forbes magazine, declared 2007 “the richest year ever in human history.” During eight years of the Bush Administration, the 400 richest Americans, who now own more than the bottom 150 million Americans, increased their net worth by $700 billion. In 2005, the top one percent claimed 22 percent of the national income, while the top ten percent took half of the total income, the largest share since 1928.

In June 2009, the Merrill Lynch Global Wealth Report estimated the number of the world’s wealthiest people declined by 15 percent, the steepest decline in the report’s 13-year history. The number of millionaires in the U.S. fell by 19 percent to 2.5 million people.

Analysts tell us the economy is being restructured, but how will the disparities in wealth between the rich and the poor play out?

“The source of wealth has changed over the past thirty years; corporations have become the engine of inequality in the U.S.,” says Sam Pizzigati, associate fellow at the Institute for Policy Studies in Washington D.C. “In the past, wealth came from ownership: Today it comes increasingly from income.”

The highest incomes come from executive pay at top corporations. In 2007, the ratio of CEO pay to the average paycheck was 344 to one, lower than the record 525 to one ratio set in 2001, but substantial. This year’s ratio is estimated to decrease to 317 to one. In the 60s, 70s and 80s, the average ratio fluctuated between 30 and 40 to 1.

Over 40 percent of GNP comes from Fortune 500 companies. According to the World Institute for Development Economics Research, the 500 largest conglomerates in the U.S. “control over two-thirds of the business resources, employ two-thirds of the industrial workers, account for 60 percent of the sales, and collect over 70 percent of the profits.”

Corporations systematically created a wealth gap over the last 30 years. In 1955, IRS records indicated the 400 richest people in the country were worth an average $12.6 million, adjusted for inflation. In 2006, the 400 richest increased their average to $263 million, representing an epochal shift of wealth upward in the U.S.

In 1955, the richest tier paid an average 51.2 percent of their income in taxes under a progressive federal income tax that included loopholes. By 2006, the richest paid only 17.2 percent of their income in taxes. In 1955, the proportion of federal income from corporate taxes was 33 percent; by 2003, it decreased to 7.4 percent. Today, the top taxpayers pay the same percentage of their incomes in taxes as those making $50,000 to $75,000, although they doubled their share of total U.S. income.

“Over the past 30 years, the income of the top one percent, adjusted for inflation, doubled: the top one-tenth of one percent tripled, and the one-one-hundredth quadrupled,” says Pizzigati. “Meanwhile, the average income of the bottom 90 percent has gone down slightly. This is a stunning transformation.”

Meanwhile, wages for most Americans didn’t improve from 1979 to 1998, and the median male wage in 2000 was below the 1979 level, despite productivity increases of 44.5 percent. Between 2002 and 2004, inflation-adjusted median household income declined $1669 a year. To make up for lost income, credit card debt soared 315 percent between 1989 and 2006, representing 138 percent of disposable income in 2007.

According to Pizzigati, the wealth disparity is the result of corporations squeezing more profits from workers.

“In the past corporations laid off workers because business was bad,” Pizzigati says. “But over the past few decades, downsizing has been a corporate wealth generating strategy. Today, CEOs don’t spend their time making trying to make better products: they maneuver to take over other companies, steal their customers and fire their workers.”

Progressive taxation used to prevent the rich from capturing a disproportionate share of national compensation, and the labor movement, which represented 35 percent of private sector employees and today represents 8 percent, once served as a political force to limit excessive executive pay. The Reagan backlash cut the top income tax rates, and saw the creation of right-wing think tanks that spent $30 billion over the past 30 years, propagandizing for deregulation, privatization, and wealth worship.

Bubble economies over the past 30 years helped CEOs pump up their income, and efforts to corral their pay are weak and ineffective. CEO pay may fall during these economic hard times, but disparity isn’t going away. Without a strong movement for change, the wealth gap will only increase in this downturn.

“There won’t be a restructuring of the economy unless we take on executive compensation,” concludes Pizzigati. “Outrageously large rewards give executives an incentive to behave outrageously. If we allow these incentives to continue, we will just see more of the reckless behavior that has driven the global economy into the ditch.”

Don Monkerud is an California-based writer who follows cultural, social and political issues. He can be reached at: monkerud@cruzio.com. Copyright © 2011 Read other articles by Don.

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  1. ned lud said on July 3rd, 2009 at 8:16am #

    I imagine these hyper-rich, hyper-filthy execs are ever on the watch for James Hickmans.

    Obscene wealth requires guards. Lots of obscene wealth requires lots of obscene guards. Ready to detect, and to shoot and burn the opposition.

    And people still wonder how there can be suicide bombers…

    …suicide bombers are tired of the life they’re given by these filthy rich. Which is no life at all…

  2. Tennessee-With-Zelaya said on July 3rd, 2009 at 8:44am #

    Here is a prayer that I wrote for Socialist-Awakening in this hour of pessimism and depression in the USA. And I pray that individuals and groups throughout America will begin to pray prayers such as this:

    Oh LORD God, we come to You in the name of our LORD Jesus Christ. We acknowledge that we have missed the mark in all our efforts to save this nation from the capitalist system.

    We repent of self-reliance, pride and supporting the free markets, the capitalist system which is the system that Satan has used to decieve this world.

    We repent from selfishness, greed, pride, and for imagining that we could make a difference in this nation by our own human efforts and through the corrupt capitalist parties.

    We repent from voting for The Democratic Party and for The Republican Party, instead of voting for Socialist Parties.

    Oh LORD, we acknowledge that only you can change the heart of this nation and restore to it the fear and honor that belongs to You alone.

    We pray today that you will turn our hearts to you. Send the fire of your presence, power and love once again to this nation. We pray for another Great Awakening toward Socialism. Which is your Kingdom!

    .

  3. Russell Olausen said on July 3rd, 2009 at 4:31pm #

    If the school curriculum stays in the hands of the unduly influential, any attempt at an egalitarian society is bound to wither. The school is our first media that combines discipline and reward for acknowledging a mindset, the rest follows.Anybody for some new math?Ha Ha.

  4. Melissa said on July 3rd, 2009 at 5:35pm #

    Russell gets it, too.

    When will common sense overcome?

  5. Don Hawkins said on July 3rd, 2009 at 5:40pm #

    Tennessee I read your prayer and brother fear not the transformation will come with help from all places the Earth. They know not what they do and with help from above and below and the middle we shall overcome. Tomorrow is July fourth and what is it good for absolutely nothing just like war. Sound and furry signifying nothing. Yes some may take exception to this and I say please step aside and make room for a new World. Take your golf clubs and your white shoes the designer dresses and your nonsense your lack of reason your war’s your old way of thinking your greed and that illusion that has served you so well to the garbage dump. It’s time to start with a new way of thinking before it’s to late. Hallelujah Hallelujah————- Hallelujahhhhhh.

  6. nora said on July 3rd, 2009 at 8:16pm #

    The richest dominate the educational institutions. Their endowments and special programs and scholarships sound so philanthropic, however, I suspect they serve in the long run to filter intellect in political fashion.

    Great article. Thank you.

  7. Deadbeat said on July 3rd, 2009 at 8:37pm #

    This is an important article and these figures are very much needed especially against the “Ron Paul” “Libertarians” who seems to be cropping up everywhere trying to excuse Capitalism as being the cause of the crisis. They tend to use “government” as the foil shifting the blame to the “public” sector (which has been wholly privatized) and away from the private sector.

    Articles like this helps restore the drift towards Marxism and helps people understand that Capitalism itself is THE Ponzi scheme. Madoff is a pawn compared to the entire system that robs us blinds everyday.

  8. Andres Kargar said on July 3rd, 2009 at 11:06pm #

    “The history of all hitherto existing society is the history of class struggles.

    Freeman and slave, patrician and plebian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary reconstitution of society at large, or in the common ruin of the contending classes.”

    -Manifesto of the Communist Party – by Karl Marx & Frederick Engels

  9. Don Hawkins said on July 4th, 2009 at 4:45am #

    In 1955, the richest tier paid an average 51.2 percent of their income in taxes under a progressive federal income tax that included loopholes. By 2006, the richest paid only 17.2 percent of their income in taxes. In 1955, the proportion of federal income from corporate taxes was 33 percent; by 2003, it decreased to 7.4 percent. Today, the top taxpayers pay the same percentage of their incomes in taxes as those making $50,000 to $75,000, although they doubled their share of total U.S. income.

    “Over the past 30 years, the income of the top one percent, adjusted for inflation, doubled: the top one-tenth of one percent tripled, and the one-one-hundredth quadrupled,” says Pizzigati. “Meanwhile, the average income of the bottom 90 percent has gone down slightly. This is a stunning transformation.”

    The Reagan backlash cut the top income tax rates, and saw the creation of right-wing think tanks that spent $30 billion over the past 30 years, propagandizing for deregulation, privatization, and wealth worship.

    Wealth worship that’s me alright. I want it all the jet the big house the money and gold and diamonds a big black car and people around me I can tell what to do and power more power and my own driver and cook and even a good book. How to win friends and influence people is my bible and don’t bite the hand that feeds you.

    The middle ground between light and shadow, between science and superstition, and it lies between the pit of man’s fears and the summit of his knowledge. This is the dimension of imagination. It is an area which we call the Twilight Zone. ”

    There is a stunning transformation on the way and it lies between the pit of man’s fears and the summit of his knowledge. You will know the good from the bad when you are calm at peace and think of this as kind of a war. Boring I think not. Happy forth of July and may the force be with you.

  10. Don Hawkins said on July 4th, 2009 at 6:00am #

    Just turned on the tube and Fox News is saying many tea party’s today. Now here’s a movement we can get behind. Because if Fox thinks this is a good idea it must be. They are after all the fair and balanced people looking out for the little guy no hidden agendas they report you decide. So this tea party is no more tax’s because as we know the tax structure is fine just the way it is fair and balanced. Pitting one against another is not the purpose of these tea party’s it’s about freedom and justice in a World gone mad. Obama is a Socialist and probably a Fascist and want’s to redistribute the wealth to Goldman and then take over the bank’s and the means of production and become King of the Earth.

    It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only. Charles Dickens

    Look again at that dot. That’s here. That’s home. That’s us. On it everyone you love, everyone you know, everyone you ever heard of, every human being who ever was, lived out their lives. The aggregate of our joy and suffering, thousands of confident religions, ideologies, and economic doctrines, every hunter and forager, every hero and coward, every creator and destroyer of civilization, every king and peasant, every young couple in love, every mother and father, hopeful child, inventor and explorer, every teacher of morals, every corrupt politician, every “superstar”, every “supreme leader”, every saint and sinner in the history of our species lived there — on a mote of dust suspended in a sunbeam.
    Carl Sagan

    FAIR AND BALANCED and the moon is made of green cheese and the Sun revolves around the Earth.

  11. bozhidar balkas vancouver said on July 4th, 2009 at 6:55am #

    schools are the place where children learn to respect and obey their Dear Leader[s].
    and at the time when ?all of them believe that ?all adults are wise, honest, loving, etc.
    in short, their trust, a very natural and desirable trait, is usurped mostly by their respective dear leaders. tnx

  12. Don Hawkins said on July 4th, 2009 at 7:19am #

    Bozh get the movie “They Live” by John Carpenter old movie but it’s out there as I just got a new copy. It came out before the bullshit got so deep it’s hard to think.

  13. Danny Ray said on July 4th, 2009 at 8:11am #

    Don, Everyone has an agenda, FOX has an agenda, MSNBC has an agenda, BBC has an agenda.
    you hate fox because they do not follow your agenda, I hate Msnbc because they do not follow My agenda. oddly enough we all hate BBC. go figure.
    All news outlets swear that they give you both sides of the story but they only give you the agenda they want to spread. Had all the networks been real reporters PBO would still be in the senate.

  14. Danny Ray said on July 4th, 2009 at 8:14am #

    As far as the Tea parties go, I will be out there in mind if not in body, its time the government went back to doing what we hired them to do. And that was not giving money to Banks.

  15. bozhidar balkas vancouver said on July 4th, 2009 at 11:55am #

    danny, u are right that every medium has own agenda. However, do u not think that if afghani children are 99.99% to100% innocent [but are getting killed by nato anyway] that we shld all accept the agenda that nato stops killing innocent children or adults.

    on a hyerarchy of musts, right to live comes first. Americans recognize that right also but first of all for selves and later for friends.
    actually, methinks, afghanis wld be great friends of US but US needs some of them for enemies. Go figure danny?!
    tnx

  16. B99 said on July 4th, 2009 at 12:32pm #

    Its pretty surprising that there is no mention of race in this article. There really should be no discussion of economics in America without discussing the status and condition of African-Americans and Latinos. When we consider that white household assets are on average ten times those of blacks then we can begin to comprehend the depths of what the recession means for those at the bottom.

  17. Tennessee-With-Zelaya said on July 4th, 2009 at 6:51pm #

    HEY YOU ALL, BEWARE OF PAT BUCHANAN, A FAR-RIGHT, LIBERTARIAN WHO OFTEN WRITES ARTICLES AGAINST THE WAR ON IRAQ. BUT WHO NEVERTHELESS IS A FAR-RIGHT LIBERTARIAN CONSERVATIVE LIKE GLENN BECK.

    PAT BUCHANAN IS SIDING WITH THE FASCIST COUP DE ETAT PEOPLE. HE IS AN ORTHODOX RONALD REAGAN IDEOLOGIST. AND REMEMBER HOW MANY PEOPLE RONALD REAGAN KILLED IN THE 1980S IN NICARAGUA.

    LIBERTARIANS ARE EVIL. RON PAUL IS EVIL, HE IS ANTI-IMMIGRANTS, ANTI-WORKERS AND PRO-CAPITALISM. AND CAPITALISM IS EVIL.

    .

  18. B99 said on July 4th, 2009 at 7:48pm #

    Tennessee – You won’t get too many defenses of Pat Buchanan here. If and when he’s in agreement with anyone on this site – its likely incidental.

  19. Don Hawkins said on July 5th, 2009 at 5:41am #

    you hate fox because they do not follow your agenda. Hate is a strong word. I don’t hate but watching stupidity and nonsense, illusion is amazing and sad at the same time. Alright let’s take this Rupert Murdoch person. Rupert can I call you Rupert lives in a reality that only a few seem to handle without going nut’s. I watched a few twilight zone’s over the forth and these few who can handle that reality without going nut’s while pushing pushing pushing stupidity and nonsense, illusion would make a good episode of the twilight zone. A good ending would be these few in a white room saying push push push over and over again. Not just Fox bot the media in general it’s almost like them and the people they talk to us all live in trailers and shop at Wal Mart of course Fox really likes to push that agenda. Anyway ever have a run in with a yuppie they are the people who call the waiter back and the food is cold or not cooked right and man are they in for a few surprises in the coming years. Don’t try and tell them it is kind of a waste of time.

  20. Danny Ray said on July 5th, 2009 at 7:02am #

    Well Don while most of us were smoking ribs for the Independance day celabration, I am now wondering what in the hell you were smoking. Your above post makes no sence at all.

    Trailers, Wal-Mart, Yuppies???

  21. Wingnut said on July 5th, 2009 at 9:56am #

    Deadbeat: Capitalism itself is THE Ponzi scheme

    Absolutely right! Google IMAGE search for ‘pyramid of capitalist’ shows it was seen-through way back in 1911, and likely well before that. the pyramid scheme symbol is right there on the back of the USA dollar. I suspect its a Columbian freemason situation, as the USA gov is in a district of Columbia and not even part of the USA.

    If Madoff is guilty of pyramiding, so are ALL capitalists… as least the non-force-ins. Most 18-24 year olds are forced to join, or starve, these days. “Join the competer’s church (capitalism) or starve/die”… as well as “pay-up or lose your wellbeing”… are felony extortion in the flavor of Chicago mobs. Where’s Elliot Ness when we need him most?

    Deadbeat, you’re certainly no “deadbeat”, intellectually speaking.

    Wingnut – MaStars – Anti-Capitalism-ists
    (system fighters, not role-playing-people fighters)

  22. Joe said on July 12th, 2009 at 6:37pm #

    In a free market, wealth is indication of goods and services provided. The fact that we have people like Steve Jobs, who is worth $3.4 billion, means that millions of people have iPods, iPhones, and other cool gadgets.

    Just look around you. Everything you have, you have because someone else was free to become rich.

    Developed countries have been blessed by free market principles. When people are allowed property rights, are given the right to make and keep a buck, everyone’s standard of living rises.

  23. Deadbeat said on July 12th, 2009 at 10:10pm #

    Joe is incorrect. Over the past 30 years wages has been stagnant and inequality rose. The fact is that Steve Jobs wealth comes from the appropriation of the wealth created by his employees NOT by the WORK he does directly. Property rights is the right to rob workers of the value they create.