Socialist Appeal - Inequality grows

Inequality grows

By Michael Roberts
Tuesday, 05 May 2009
The United States of America is the greatest capitalist economy in the world. What does capitalism bring? Does it bring better standards of living? Does it bring happiness? Does it bring justice and fairness? Those questions have been answered elsewhere, but the short answer is ‘no’. But one thing it definitely does not bring is equality of income and wealth. The last 20 years saw a massive boom in stock markets for the rich and a huge reduction in the welfare state or social safety net for the poor and weak. Given the current collapse in capitalist economies into the greatest recession since the Great Depression of the 1930s, we now know the growth in inequality was not worth it. The extent of the inequalities in income and wealth in the US has now been revealed by the US Federal Reserve Bank. Hidden in an obscure working paper, the Fed’s researchers have found that the top 1% of wealth-owning households own 33.8% of all US household wealth (namely property, stocks and shares and cash). That’s up from 30.1% in 1989. The top 10% of wealth-owners own 71.5% of all personal wealth! That’s up from 67.2% in 1989. Much of this wealth has been accumulated from the rising value of stocks and shares and bonds (namely financial wealth rather than in property). The top 1% of wealth holders own 52% of all shares and 62% of all bonds, up from 41% and 52% respectively in 1989. The top 10% now own 90% of all shares and 98% of all bonds! Inequality of income among American households is less than it is for wealth, but it is still very unequal. The top 1% of households got 17% of all income earned in 1989. Now that figure is over 21%. The top 10% got 42% in 1989, but they now receive over 47% of all income. The share of income taken by the bottom 50% of American households has fallen from 15.6% in 1989 (yes – that’s all they get) to 14.6% now. And as for wealth, the bottom 50% can forget it. Many don’t own homes and none have stocks and shares. Their ‘wealth’ is restricted to a bit of cash savings. In 1989 the bottom 50% had just 3% of all America’s household wealth; now they have just 2.5%. So much for the American dream.