Getting Honest About the One Percent

http://www.washingtonmonthly.com/ten-miles-square/2014/04/getting_honest_about_the_one_p049722.php

By Daniel Luzer
April 3, 2014

There’s a problem with how we talk about wealth in America, and it’s probably skewing our understanding of economics and sociology.

So much of the rhetoric of inequality has to do with the distinction between the top one percent of Americans and everyone else, the 99 percent.

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The truth is that when we look into the numbers, things get a little more complicated. The definitions here are a little ambiguous, but depending on how we draw the line, the money looks like this: in 2009, the top one percent of taxpayers reported a minimum of $344,000 in annual household income. In terms of assets, one enters the one percent with about $1.5 million in asserts.

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An amazing chart from economist Amir Sufi, based on the work of Emmanuel Saez and Gabriel Zucman, shows that when you look inside the 1 percent, you see clearly that most of them aren’t growing their share of wealth at all. In fact, the gain in wealth share is all about the top 0.1 percent of the country. While nine-tenths of the top percentile hasn’t seen much change at all since 1960, the 0.01 percent has essentially quadrupled its share of the country’s wealth in half a century.

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It turns out that wealth inequality isn’t about the 1 percent v. the 99 percent at all. It’s about the 0.1 percent v. the 99.9 percent (or, really, the 0.01 percent vs. the 99.99 percent, if you like). Long-story-short is that this group, comprised mostly of bankers and CEOs, is riding the stock market to pick up extraordinary investment income. And it’s this investment income, rather than ordinary earned income, that’s creating this extraordinary wealth gap.

Most of the one percent are suffering more or less the same fate as your average teacher or nurse or mechanic. Even as the country gets richer, most of this one percent has got about the same money as it always did. They really aren’t getting any richer either.

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Thompson: “Between 1992 and 2008, 3,672 different taxpayers appeared on the Fortunate 400 list. Just one percent of the Fortunate 400—four households—appeared on the list all 17 years. Now there’s your real 1 percent.”

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We have a wealth distribution worse than that of Czarist Russia.