Only Fifteen U.S. Counties Account for Wealth Increase

History has shown us that large concentrations of wealth do lead to social stability, including large wars.

http://www.forbes.com/sites/robertlenzner/2012/07/20/increasing-wealth-inequality-is-a-warning-sign-of-instability/

Robert Lenzner, Forbes Staff 7/20/2012

.....

The way to measure this inequality is to look at the incomes of geographic counties. See that the stock market before 2000 rewarded the inhabitants of Silicon Valley and the financiers in New York and Greenwich that rode the tech bubble up to 5000 on the NASDAQ index. Galbraith found out that just 15 counties in the whole of the nation– with half of them from New York, Silicon Valley and King County, Washington (Microsoft millionaires)– these 15 counties are responsible for most, if not all, the increase in wealth.

.....

The quandary for the nation is that ordinary wage compensation, just did not keep up with the rewards from the movement of capital markets,i.e. the upward trajectory of some common stocks, especially technology issues during that period. The goal of the wealthy was to drive stocks higher–leaving wage “slaves” far behind. Capital has become the be-all and end-all surpassing wage income in emphasis. No wonder we see the social phenomena of Occupy Wall Street (pretty much over for the time being) and the Obama push for the Buffett millionaires tax (30% if you make a million), which has no expectation whatsoever of becoming law.

In fact, Galbraith ruefully admits that “the ability or willingness of political systems to affect the movement of inequality is very limited in the world today.” If he’s right then we and you are stuck with not only the 1% vs. the 99%– but the notion of 0.10 of 1% continuing to real the major share of the capital gains, meaning the bonanza of paying no more than a 15%b tax on shares or property held longer than a year. This is the tax advantage property has over wage income.

The “have-mores” have a stronger motivation to see Mitt Romney oust Barack Obama, as they want to retain this tax advantage of paying only 15% on their long term profits in the stock market. The Dow Industrial Average has more than doubled since its low point in April, 2009– but average wages for the middle class have barely moved when adjusted for inflation. And the continued weakness in home values has caused the median income in he U.S. to decline 38% since 2007 to $77,000.

Social and political problems must arise sooner or later from this predicament. As Galbraith writes, (WE study inequality) “because it enables us to understand the economic world in which we live, in ways that were not accessible to us before. One of the most important of those ways is precisely the neglected linkage between inequality and instability, between finance and society, and between economic and social differences and the risks of financial crisis.”

.....

So, ask yourselves whether the growing tendency for inequality of wealth could lead to unrest and less innocent political action than Occupy Wall Street. I know some academics who believe social unrest in three to five years is a very real possibility. Harvard economist Ken Rogoff, for example, has been predicting that as the federal budget is reduced, and there are reduced payments for Medicare and Medicaid as well as Social Security, there is bound to be social unrest from the pinched “have-nots.”