I call your attention to Pew Research's A Rise in Wealth for the Wealthy; Declines for the Lower 93%.
During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%, according to a Pew Research Center analysis of newly released Census Bureau data.
From 2009 to 2011, the mean wealth of the 8 million households in the more affluent group rose to an estimated $3,173,895 from an estimated $2,476,244, while the mean wealth of the 111 million households in the less affluent group fell to an estimated $133,817 from an estimated $139,896.
These wide variances were driven by the fact that the stock and bond market rallied during the 2009 to 2011 period while the housing market remained flat.
Affluent households typically have their assets concentrated in stocks and other financial holdings, while less affluent households typically have their wealth more heavily concentrated in the value of their home.
From the end of the recession in 2009 through 2011 (the last year for which Census Bureau wealth data are available), the 8 million households in the U.S. with a net worth above $836,033 saw their aggregate wealth rise by an estimated $5.6 trillion, while the 111 million households with a net worth at or below that level saw their aggregate wealth decline by an estimated $0.6 trillion.
Because of these differences, wealth inequality increased during the first two years of the recovery. The upper 7% of households saw their aggregate share of the nation’s overall household wealth pie rise to 63% in 2011, up from 56% in 2009. On an individual household basis, the mean wealth of households in this more affluent group was almost 24 times that of those in the less affluent group in 2011. At the start of the recovery in 2009, that ratio had been less than 18-to-1...
It's an old story—the rich get richer, everybody else gets poorer...
Here is what I wrote in The Inevitable Rise of Wealthy Global Elites on October 18, 2012, well before this Pew study came out.
We should not be surprised to see this enormous wealth gap. When has unfettered Capitalism, given free rein over markets and labor, ever led to a different outcome? The promise is always the same, and might be summarized as a rising tide lifts all boats, a phrase first used by Jack Kennedy in a speech in 1960. The free flow of capital which gives us this "winner take all" situation justifies itself in the great prosperity many ordinary people (labor) will allegedly achieve, although these people don't have access to capital and markets. So we see right away that the world is neatly divvied up into the Those Who Make The Magic Happen (the global capitalists) and Those Who Benefit From the Magic (global labor).
A rising tide lifts all boats—if you have a boat, or temporary access to one...
There is nothing to discuss here. The promise of limitless economic Progress—the rising tide lifting all boats—is bogus. That story is false. Those extolling the inherent goodness of economic growth are full of shit, and have been for the last 35 years here in the U.S.
Now, let's ask ourselves why human societies work like this. Even when a rising tide does lift most boats for some period of time, as occurred in the three decades after World War II in the U.S., it is always the case that complex societies revert to their natural state, which is great (and growing) wealth inequality.
Why aren't human societies organized around the principle that everyone must be taken care of?
That is to say, there would be a minimum standard of living for all members of all societies, and no one would go without, and no one would be able to accrue such great wealth that they can skew the society to serve their own interests.
Well, of course, that story is a fiction. I just made it up. But the question remains—why do we always have the one kind of society, and not the other? Why do socialist economies always fail? Why do democracies always fail?
Why must we live in society which finds a way to rationalize great unfairness, and mostly ignores that unfairness?
The question of Progress in human affairs begins and ends with the question what is Human Nature?
If humans could acknowledge that there is such a thing as Human Nature, even if they don't quite know what it is, then the question regarding future human societies becomes what is possible?
Once you understand what is possible, you also can identify what is not possible.
Any discussion of Progress—explicit or implicit, pro or con—is merely empty talk if one doesn't address the question of Human Nature. Such a discussion is just so much bullshit, which is one thing we have in great abundance on Planet Earth.
I have a lot more to say about all this, but I will say it in future posts.
Increasing inequality is, of course,a long term trend, especially in the USA. QE is the cherry on top for these 7%.
Posted by: Ken Barrows | 04/29/2013 at 10:09 AM