Poor Grow Poorer : Richest 1% Has Captured America’s Wealth


The ultra rich have captured America;
How can we take it back?

By David DeGraw / February 19, 2010

“The war against working people should be understood to be a real war… Specifically in the U.S., which happens to have a highly class-conscious business class… And they have long seen themselves as fighting a bitter class war, except they don’t want anybody else to know about it.” — Noam Chomsky

As a record amount of U.S. citizens are struggling to get by, many of the largest corporations are experiencing record-breaking profits, and CEOs are receiving record-breaking bonuses. How could this be happening, how did we get to this point?

The Economic Elite have escalated their attack on U.S. workers over the past few years; however, this attack began to build intensity in the 1970s. In 1970, CEOs made $25 for every $1 the average worker made. Due to technological advancements, production and profit levels exploded from 1970-2000. With the lion’s share of increased profits going to the CEO’s, this pay ratio dramatically rose to $90 for CEOs to $1 for the average worker.

As ridiculous as that seems, an in-depth study in 2004 on the explosion of CEO pay revealed that, including stock options and other benefits, CEO pay is more accurately $500 to $1.

Paul Buchheit, from DePaul University, revealed, “From 1980 to 2006 the richest 1% of America tripled their after-tax percentage of our nation’s total income, while the bottom 90% have seen their share drop over 20%.” Robert Freeman added, “Between 2002 and 2006, it was even worse: an astounding three-quarters of all the economy’s growth was captured by the top 1%.”

Due to this, the United States already had the highest inequality of wealth in the industrialized world prior to the financial crisis. Since the crisis, which has hit the average worker much harder than CEOs, the gap between the top one percent and the remaining 99% of the U.S. population has grown to a record high. The economic top one percent of the population now owns over 70% of all financial assets, an all time record.

As mentioned before, just look at the first full year of the crisis when workers lost an average of 25 percent off their 401k. During the same time period, the wealth of the 400 richest Americans increased by $30 billion, bringing their total combined wealth to $1.57 trillion, which is more than the combined net worth of 50% of the US population. Just to make this point clear, 400 people have more wealth than 155 million people combined.

Meanwhile, 2009 was a record-breaking year for Wall Street bonuses, as firms issued $150 billion to their executives. 100% of these bonuses are a direct result of our tax dollars, so if we used this money to create jobs, instead of giving them to a handful of top executives, we could have paid an annual salary of $30,000 to 5 million people.

So while U.S. workers are now working more hours and have become dramatically more productive and profitable, our pay is actually declining and all the dramatic increases in wealth are going straight into the pockets of the Economic Elite.

If our income had kept pace with compensation distribution rates established in the early 1970s, we would all be making at least three times as much as we are currently making. How different would your life be if you were making $120,000 a year, instead of $40,000?

So it should come as no surprise to see that we now have the highest inequality of wealth in the industrialized world and the highest inequality of wealth in our nation’s history. The backbone of America, a hard working middle class that has made our country a world leader, has been devastated.

Now that we have a better understanding of how our income has been suppressed over the past 40 years, let’s take a look at how the economy has been designed to take the limited money we receive and put it into the hands of the Economic Elite as well.

Cartoon from links.org.

Costs of living

Other than in the workplace, in almost all our costs of living the system is now blatantly rigged against us. Let’s take a look at it, starting out with our tax system.

In total, the average U.S. citizen is forced to give up approximately 30% of our income in taxes. This tax system is now strategically designed to flow straight into the hands of the Economic Elite. A huge percentage of our tax dollars ultimately end up in their pockets. The past decade proves that — whether it’s the Republicans or the Democrats running the government — our tax money is not going into our community, it is going into the pockets of the billionaires who have bought off both parties — it is obscene.

For an example of how this system flows to the Economic Elite, just look at the Wall Street “bailout.” The real size of the bailout is estimated to be $14 trillion — and could end up costing trillions more than that. By now you are probably also sick of hearing about the bailout, but stop and think about this for a moment. Do you comprehend how much $14 trillion is?

What could be accomplished with this money is almost beyond common comprehension.

And this is just the tip of the iceberg that has hit us. On top of the trillions given to the Wall Street elite, we already have a record $12.3 trillion in national debt — and we now have to pay $500 billion in interest to the Economic Elite on this debt every year, yet another way they are milking us dry. When you add in unfunded liabilities owed, like social security payments, we actually owe a stunning $74 trillion. That adds up to a debt of $242,000 for every man, woman and child in America.

Trillions more, 25% of taxpayer dollars allocated to military spending, goes unaccounted for every year, not to mention the billions spent on overcharging and outright fraud. During the War on Terror, the Economic Elite have used our tax money to build a private army that has more soldiers deployed than the U.S. military — a congressional study revealed that 69% of the “U.S.” fighting forces deployed throughout the world in our name are in fact private mercenaries, 80% of them are foreign nationals.

Private contractors regularly get paid three to five times more than our soldiers, and have been repeatedly caught overcharging and committing fraud on a massive scale. A congressional investigation revealed this and strongly recommended that we seize wasting tax dollars on these private military contractors. However, under Obama, there has actually been a drastic increase in total tax dollars spent on them.

In 2009, just over $1 trillion tax dollars were spent on the military, it’s safe to say that at least $350 billion of that was needlessly wasted.

When you research our tax system you see an unprecedented level of waste and fraud rampant throughout most expenditures. Our tax system is a national disaster of epic proportions. It is literally an organized criminal operation that continues to rob us in broad daylight, with zero accountability.

Politicians and mainstream “news” outlets will not tell you this, but most every serious economist knows that due to so much theft and debt created in the tax system, the only way to fix things, other than stopping the theft and seizing the trillions that have been stolen, will be for the government to cut important social funding and drastically raise our taxes.

Other than the record national debt, many states are running record deficits and are barreling toward economic disaster, raising the likelihood of higher taxes, more government layoffs and deep cuts in services. Our nation’s biggest state economies, like California and New York, are the ones in most trouble.

To merely say that things will not be improving economically is to be a delusional optimist. The truth that you will not hear: we have been hit by an economic deathblow and the United States lay in ruins.

It’s not just this criminal tax system; the theft is now built into all our costs of living.

Trillions more in our spending on food and fuel has been stolen due to fraudulent stock transactions and overcharging. Just 10 years ago, in 2000, American families paid 7% of our income on food and fuel. We now pay 20%.

This drastic increase is primarily driven by fraudulent market manipulation that drives up stock prices. Congress uncovered this in 2006; as part of the Enron investigation they found that companies manipulated the oil market to create major spikes in stock values, and then they didn’t do anything about it — nothing to see here, just move on.

As mentioned before, we have the most expensive health care system in the world and we are forced to pay twice as much as other countries, and the overall care we get in return ranks 37th in the world. On average, U.S. citizens are now paying a record high 8% of their income on medical care.

Part of the reason why foreclosure rates are so high is because the percentage of income Americans pay on their housing has risen to 34%.

So for these basic necessities — taxes, food, fuel, shelter and medical bills — we have already lost 92% of our limited income. Then factor in ever-increasing interest rates on credit cards, student loans, rising prices for cable, internet, phone, bank fees, etc., etc., etc. We are being robbed and gouged in all costs of living, in every aspect of our life. No wonder bankruptcies are skyrocketing and the number of people suffering from psychological depression has reached an epidemic level.

The American worker is screwed over every step of the way, and it all starts with the explosion in the cost of a college education. This is one of the Economic Elite’s most devastating weapons. To have any chance of succeeding in this economy, it is commonly believed that you must attend the best college possible. With the rising costs involved, today’s students are graduating with record levels of debt from student loans.

At the same time, the unemployment rate among recent college graduates has risen higher than the national average, and those that do find work are making significantly less than they expected to make. This combination of extreme debt and reduced pay has crippled an entire generation right from the start and has put them in a vicious cycle of spiraling debt that they will struggle with for the rest of their lives. The most recent college graduates are now known as a “lost generation.”

The American dream has turned into a nightmare. The economic system is a sophisticated prison cell; the indentured servant is now an indebted wage slave; whips and chains have evolved into debts.

“There are two ways to conquer and enslave a nation. One is by sword. The other is by debt.” — John Adams

Concealing national wealth

“Liberty in the concrete signifies release from the impact of particular oppressive forces; emancipation from something once taken as a normal part of human life but now experienced as bondage… Today, it signifies liberation from material insecurity and from the coercions and repressions that prevent multitudes from participation in the vast cultural resources that are at hand.” — John Dewey

When you take the time to research and analyze the wealth that has gone to the economic top one percent, you begin to realize just how much we have been robbed. Trillions upon trillions of dollars that could make the lives of all hard working Americans much easier have been strategically funneled into the coffers of the Economic Elite. The denial of wealth is the key to the Economic Elite’s power. An entire generation of massive wealth creation has been strategically withheld from 99% of the U.S. population.

The U.S. public doesn’t have any understanding of how much wealth has been generated and concentrated into the hands of the Economic Elite over the past 40 years; there is no historical frame of reference. This withholding of wealth is truly the greatest crime against humanity in the history of civilization.

What could be done with all the money that has been hoarded by the Economic Elite is extraordinary!

Let’s consider what we could do with the money that has been stolen from us? On top of what should be our average six-figure yearly income, we could have:

  • Free health care for every American,
  • A free 4 bedroom home for every American family,
  • 5% tax rate for 99% of Americans,
  • Drastically improved public education and free college for all,
  • Significantly improved public transportation and infrastructure,

The list goes on…

This is not some far-fetched fantasy. These are all things that Franklin D. Roosevelt talked about doing in the 1940’s, long before the explosion of wealth creation in our technologically advanced global economy. The money for all this is already there, stashed into the claws of the Economic Elite.

The denial of wealth to the masses is the key to the Economic Elite’s power. Outside of outdated and obsolete economic models and theories — and incredibly short-sighted greed — there is no reason why all this money should be kept in the hands of a few, at the immense suffering and expense of the many.

If Americans could just understand how much wealth is being withheld from us, we would have a massive uprising and the Economic Elite would be swept away, into the history books alongside the evil despots of the past.

[This is Part II of David DeGraw’s report, “The Economic Elite vs. People of the USA,” originally published at Amped Status. Click here for Part I. Read more of David McGraw’s writing here.]

© 2010 Amped Status

Source / Amped Status / AlterNet

Thanks to S.M. Wilhelm / The Rag Blog

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8 Responses to Poor Grow Poorer : Richest 1% Has Captured America’s Wealth

  1. This is not some far-fetched fantasy. .. Yes it is. In fact I don’t think I have ever read a bigger fantasy anywhere.

    The author basically makes the same argument that Mugabe used in Zimbabwe.

    Mugabe gained and held power by redistributing the rich fertile wealth producting lands of white farmers, giving them to poor black people so they could all share in the wealth. And what happened? Well of course the rich productive lands became fallow in the hands of people who had no ability to, or interest in continuing their productive operation. The wealth disappeared and instead of raising the poor into wealth, the whole country plunged into devastating poverty and corruption.

    To assume that the fabulous system of wealth production the exists at present in the US would continue unfettered after ripping the wealth from those who have earned it and know how to produce it and giving it to those who didn’t earn it, don’t deserve it and can’t continue to produce wealth, is the biggest damn fantasy I have ever heard. Should the authors dubious conclusion’s ever come to fruition it would simply drop all Americans into desperate poverty and lawless anarchy.

    If you want more here is what you do: Craft goals and focus your energy and effort on implementing strategies that will achieve them. Educate yourself. Position yourself to take risks. Work harder than you have ever worked before. Expect disappointments and setbacks. If you do those things, you will improve your situation without exception. If you are unable or unwilling to do those things, then be stop whining and be glad for what you already have.

  2. Didier says:

    The American Dream is not over for everyone. You’re still dreaming Extremist.
    Educate yourself :On March 4th, student groups and others across the country will be taking action to defend the right to education at all levels http://www.defendeducation.org
    Sure you’ll participate, Extremist.

  3. Didier says:

    I’ve been working as a social worker for 25 years with “have not”, mainly women.
    This is not a personal attack. Your analysis, I think, is due to ignorance.

    I’m translating into French the Port Huron Statement. This is a document still relevant today in many areas. In the chapter entitled “The Economy”, you can read :

    “Hard-core poverty exists just beyond the neon lights of affluence, and the “have-nots” may be driven still further from opportunity as the high-technology society demands better education to get into the production mainstream and more capital investment to get into “business”. Poverty is shameful in that it herds people by race, region, and previous condition of infortune into “uneconomic classes” in the so-called free society — the marginal worker is made more insecure by automation and high education requirements, heavier competition for jobs, maintaining low wages or a high level of unemployment. People in the rut of poverty are strikingly unable to overcome the collection of forces working against them: poor health, bad neighborhoods, miserable schools, inadequate “welfare” services, unemployment and underemployment, weak politician and union organization.”

  4. BadTux says:

    It is telling that the only argument that those who disagree appear to have is personal attacks upon the authors of this blog posting. They do not disagree with the numbers showing extraordinary concentration of wealth at the top at the expense of those at the bottom, no. Rather, they engage in personal invective.

    At one point in time those at the top of our social totem pole recognized that they needed a thriving middle class, and a lower class that had hope of someday attaining the middle class, in order to maintain social stability. Today’s oligarchs, alas, coddled by years of relative peace, have lost that knowledge that was gained the hard way during the 1920’s labor riots and the 1930’s food riots where dozens of the oligarchs ended up dead. Perhaps the fact that the labor riots and food riots have been written out of our official histories may have something to do with that, but the fact remains: People do not voluntarily starve to death, and people do not voluntarily accede to a status as second-class citizens to be used as footstools by the oligarchs who rule our nation. The only way to maintain the current social order as it continues to become harsher and harsher for those at the bottom will be brute force, a dictatorship of the people by the oligarchy. But how much repression will be enough before the illusion of democracy cracks and breaks? And what happens then, when the mask comes off of the face of tyranny and the majority of Americans realize that they are, in fact, servants of a cruel and vicious oligarchy which sees no problem with strip-mining the wealth created by working Americans for their own benefit?

    – Badtux the Apocalyptic Penguin

  5. Didier, You raise some very good points. I will ponder them. I have no answer for the points you make and that bothers me.

    BadTux, Did you actually read my post? It doesnt sound like you did.

    The analysis you use is interesting but flawed. The middle class of 100 years ago were proud, strong, independent, hard working people. Todays middle class has largely surrendered their liberties and their welfare and their families future to governments. They expect to be cared for and provided for, much as sheep expect to find a pasture to feed in. Todays middle class and dependent classes assume that the federal govement will be there to provide for their welfare. (a generalization I agree)

    Therefore they will demand more of their government as their conditions worsern. The government in turn will demand more taxes of the wealthy who will eventually decline to be raped yet again. That becomes a flashpoint. The federal government will be blamed and held accountable by both sides.

    Besides, if you turn yourself into a sheep, how much can you really complain if a wolf comes along and makes dinner out of you?

  6. BadTux says:

    Yes, I read your post, Extremist, and it was utter balderdash, completely divorced from actual, like, DATA, which shows that today’s upper class literally pays TWENTY PERCENT of the taxes that they paid in 1950. We’ve gone from a top marginal rate of over 70% on our wealthy to a top marginal rate of 16% on our wealthy — yes, the top 1% of taxpayers only pay 16% of their income as taxes. Our upper classes are not overtaxed, if we returned to the tax rates of that commie liberal President Eisenhower we would have no deficit.

    And you are the one accusing the middle and lower classes of being sheep, not me. How do you sleep at night, hating the majority of Americans so much that you believe they’re sheep? You will be sadly disabused if you continue supporting the rape of our middle and lower classes by the top 1% of oligarchs. There will be gallows, and there will be dead people in the streets, if you continue on this path of strip-mining the wealth created by we working people, those of us who actually PRODUCE STUFF as versus sit up at the top of the pyramid leeching off the wealth of us workers. The masses are governed only by their own consent, and your sneering insistence that the masses are sheep who will not rise up at being fleeced by oligarchs who build nothing, construct nothing, provide no services, and do nothing except extract wealth from the pockets of ordinary Americans is just a symptom of the blind ignorance and stupidity of our current generation of oligarchs. You literally HAVE NO CLUE. Americans are a violent people, the most violent people on Earth *STILL* — there is a *REASON* why we have more murders per capita, more violent crimes per capita, than any other nation on Earth — yet you still claim that Americans are sheep? NONSENSE AND BALDERDASH!

  7. Excellent use of the term “balderdash”. I just dont see that term used much anymore and you worked it in twice in the same post. Bravo.

    I find it quite humorous that there are dozens of articles on just this blog that accuse the tea party of being on the verge of mass violence. Yet you are the third hysterical progressive that has pointed out how I best watch myself, lest you and the the rest of the great violent unwashed sneak up and hang me from a tree of toss me from a bridge.

    I have a clue, along with a small arsenal, motion activated wireless cameras and lots of other fun stuff to keep me amused should the worst (or best, depending on your POV) happen.

    Also, I didnt claim that Americans are sheep. You did that yourself.

    General question to Progressives: Almost univerally, you guys put words in my mouth that arent mine and then demand I defend them. Did you guys learn that on the debate team? or is there some secret summer camp for young anarchists where they teach you the secret handshake and how to avoid any meaningful debates with people that are smarter than you?

  8. Anonymous says:

    its funny that the guy said the middle class is lazy, and looking for handouts, just wanting welfare, and the government to take care of them. I’m sorry, who got the bailout of trillions of dollars? THE BANKS. Duh, put out your hand . . .

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