The Days of Swine and Roses
Our national wealth is skewed heavily in favor of the rich. This skew is far more severe than most Americans realize. The bottom 50 percent of our tax filers have no wealth at all, while the top 20 percent hold $53 trillion. That is a staggering difference. But here is the biggest eye opener of all time: In 50 years at present growth rates, the wealthy will have $1.6 quadrillion worth of wealth, while the bottom 80 percent will have nothing. How much is $1.6 quadrillion? It is $1,600 trillion; or $1,600,000 billion. By 2063 we will be a country divided by stark contrasts: by squalor and opulence, with unemployment on the largest scale ever, with death and disease running rampant, while the wealthy are partitioned away in their mansions, or on their yachts.
How do I know all this? The answers are found by using any $10 calculator with a power button. The basic data are found in the U.S. Flow of Funds Report, published quarterly by the Federal Reserve Board. And the conclusion is found in the head of any 3rd grade student with above average intelligence.
The Math. Let’s deal with the math first. It is very simple and undeniable. In 1962 our national wealth totaled $2.3 trillion. Today it is $63 trillion. The compound annual growth rate (CAGR) is 7.0 percent. Apply the same growth rate to the next 50 years on just the amount held by the wealthy ($53 trillion), and here is the projection: $53 x 1.07^50 = $1.6 quadrillion.
The projection for the bottom 50 percent is zero because zero raised to any power is still zero.
The Consequence. What the preceding calculation does not show is this: As our national wealth rises to higher and higher amounts for the already wealthy, it will fall lower and lower for all others—the middle class. And long before the middle class will join the bottom 50 percent (those with no wealth at all), a major revolution will take place. It could be as simple as 20 or 30 million Americans taking up arms and redistributing wealth by their own rules, or the division could come after a full scale war of the bloodiest kind. Alternatively, as more and more of our public debt is owned by China, they could begin to buy up more and more of our land and our means of production as they make more and more economic demands from us. We could lose our independence and our identity to them by default and simply become their satellite country.
A national discussion needs to take place very soon in order to set our future toward a different outcome.
The Rational Approach. If we continue to insist that our national wealth is owned by the wealthy and to their heirs in perpetuity, then we must accept that a civil war of liberation is inevitable. And since the bottom 80 percent outnumber the top 20 percent by 4 to1, the outcome of such a war heavily favors the bottom 80 percent. But redistribution could be achieved in a more humane way, one that does not take from anyone at all.
Let’s begin with this simple assumption: Wealth is the product of all our efforts. It is the consequence of our values, our institutions; of our health care delivery system, our means of production, our talent pool; of our schools and our universities, our resources, our means of allocating scarce resources; of our competitive nature, the ebb and flow of our international commerce, of our willingness to share in our good and our bad fortunes; and in the simple acknowledgement that we are all in this thing called “life” together.
When we weigh the totality of all our contributions against the presumed right to pass on that wealth to a tiny minority—the offspring of the wealth holders—the answer becomes clear. Our inheritance laws must be changed. There is no individual right to inherit the wealth that all have contributed to making and sacrificed to advance.
Let the discussion begin.
Chip Bergeron
As far as China is concerned, the mass protests a few years ago forced the Communists to embrace free market capitalism in the way of the Mafia (also practiced in Russia) and has put the wealth of that country in the hands of party officials. Already there are 500 protests a day and pollution of the environment is critical and threatening us with dangerous products.
A graduated (not a regressive flat) tax on net income without deductions or loopholes, with the proceeds going to scientific research, national infrastructure projects, grants and scholarships based on merit on the arts and letters, and a major project for space exploration and development, would do a lot to provide high paying jobs and required schooling and experience to achieve the levels needed in every sector of society. Raising the minimum wage and moving health care from critical to preventive would also help.
Ron