Just How Rich Have The Rich Become, And What Can We Do About It?

By Steve Hynd

The liquid wealth - that's "excluding primary residence, collectibles, consumables, and consumer durables" - of the super-rich was $39 trillion in 2009. That's almost triple the GDP of the United States.

Lenin's Tomb blog has the facts and numbers, culled from the annual Merrill Lynch Cap Gemini World Wealth Report. Merrill Lynch classify High Net Worth Individuals as those who have at least $1 million liquid wealth, and  Ultra High Net Worth Individuals who have at least $30 million.

The world�s population of high net worth individuals (HNWIs) grew 17.1% to 10.0 million in 2009, returning to levels last seen in 2007 despite the contraction in world gross domestic product (GDP). Global HNWI wealth similarly recovered, rising 18.9% to US$39.0 trillion.

...The U.S., Japan and Germany still accounted for 53.5% of the world�s HNWI population at the end of 2009, down only slightly from 54.0% in 2008. Australia became the tenth largest home to HNWIs, after overtaking Brazil, due to a considerable rebound.

...After losing 24.0% in 2008, Ultra-HNWIs saw wealth rebound 21.5% in 2009. At the end of 2009, Ultra-HNWIs accounted for 35.5% of global HNWI wealth, up from 34.7%, while representing only 0.9% of the global HNWI population, the same as in 2008.

Think about that last number. Less than one percent of the world's super-rich between them have liquid wealth - cash on hand - of $13.85 Trillion dollars. That's more than the annual GDP of these United States. All of this liquid wealth is concentrated in the hands of a mere 36,300 people, or 0.0005% of the population. The richest 1 percent of Americans now take home almost 24 percent of American income. The rich have eaten all the pie and now want to complain if you try to raise their taxes to pay off the massive deficit their policies created. Instead, the poor must suffer cutbacks in their already threadbare safety-nets.

"Lenin" writes:

Most of the new wealth held by the rich was, as you can see, not produced by economic growth, but by stock market capitalisation. In other words, market relations, sustained by state intervention, facilitated the transfer of wealth from the working class to the rich at a time when most of the world's economy was such that the direct exploitation of labour could not sustain high profit rates. That's what the bail-outs did; it's what they were intended to do. Another intended consequence is that there were not only more high net worth individuals, 10 million of them globally (0.014% of the world's population), but the 'ultras' did far better at increasing their share of liquid assets than mere millionaires - thus wealth became even more concentrated than it had been, among a mere 36,300 people, or 0.0005% of the population. The corollary of this has been, and will continue to be, a general decline in the living standards of the working class in most of the advanced capitalist economies: at the same time as the wealth of the richest grew, global unemployment rose by 14.4%.

Something is stinkingly rotten  - and if you expect your elected representatives here in the US to do anything about it then I've a bridge to sell you.

In 2008, the average net worth of a Senator was almost $14 million. The average net worth of a Congressman was $4.6 million. Every single one stands to gain $3 million from the extended Bush tax cuts if they continue over the next decade. Even our "socialist" President is a fat cat, worth at least $5 million. In fact, you have to go back to Harry Truman to find the last president who wasn't a multi-millionaire, and back as far as Calvin Coolidge to find another before Truman. Not a single president since World War Two has left office poorer than when he went in.

 As Matt Taibbi says, "there�s a bait and switch being pulled...the real action is not the social issues - it never is - but rather the money. The looting of America by the Biggest, Ballsiest Crooks Ever is the only genuinely important story," - and our leaders are inextricably part of the problem, not the solution.

What is the solution? Well, Kevin Drum points part of the way today as he extols the key virtue of unions (bold emphasis mine).

that's the point of a strong labor movement: it forces the government to fight for full employment. It fights for lots of other stuff too, and that's the whole virtue of organized labor. It's true that they also produce a modest wage premium for their own members, but if that's all they did then I wouldn't care much about them and neither would most other liberals.

Unions have lots of pathologies: they can get entranced by implementing insane work rules, they can get co-opted by other political actors, and they can end up fighting progress on social issues, just to name a few. But they fight for economic egalitarianism, and they're the only institution in history that's ever done that successfully on a sustained basis. That's what makes them so indispensable to liberalism and that's what makes them the sworn enemies of conservatism.

You just can't pull labor and full employment apart. It's not a matter of emphasis. A country without a strong labor movement is almost inevitably one in which economic and political power is overwhelmingly on the side of business interests and rich people, and that means you're not going to have sustained full employment because that's not what business interests and rich people want. It's all about power, baby, power.

There's no way to talk about addressing and rebalancing America and the world's income disparity gaps that doesn't involve unions and an organised labor movement that is sadly lacking in America because it does not have its own political party to call home but must instead howl on the fringes of a Whig-Tory two party monopoly. That no constituency exists for such a Labor Party is a convenient fable proppogated by the two-party elite.

Consider that the current electorate is not the same as the potential electorate. By American standards the turnout for the 2004 Presidential election was high, for example - yet by the standards of other Western democracies it was woefully low. Chris Bowers at MyDD researched who didn't turn out to vote and came up with some interesting findings. In 2004, for example, the national median income was $35,100 p.a. yet the median income of the electorate was $55,300 - a difference of 57.5%.

In other words, it is mostly the poorest segment of society who don't vote. Consider that although a presidential election winner might gain 52% of the electorate, he'd still only win 34% of all the possible votes. There is a huge potential constituency out there, between 25% and 30% of the potential electorate, who simply don't vote - and they don't vote simply because neither major party have policies that address their concerns! Add in some 10% or more of those who currently vote Dem because they're better than the alternative - what's currently known as the leftwing "base" of the Democratic party - and you have a potentially election-winning majority .

Only a true Labor movement, a "big tent" party, can alter the current status quo. I've been banging this drum since 2005, making arguments for a coalition of the Left (by which I mean the true constituency of the Left - all of those who are simply not rich and are unwilling to shill for the rich in return for scraps from their table). 

The Democrat leadership are well aware that the current system makes them one of only two big fish and that their core agenda is elitist and corporate. They are also well aware that a true Labor party would take away their "base" of hopeful activists and leave them with plenty of corporate finance but no-one to knock doors. Thus their perpetual circular arguments against any labor grouping - essentially that since a true broadbased party of the poor and working class doesn't yet exist it cannot ever get elected.

Let's not pretend that such a Labor Party, built grassroots-up from a labor movement that will have to be largely resurerected almost as if beginning from scratch, will be an easy accomplishment. It could take a decade or more, just as the original Labor parties of Europe did. But it's the only solution. If the American Left wishes to save itself by the end of the decade, it must cease to think of itself as a pressure group clamped parastically onto the flank of the centrist-right Democratic party and begin to see itself instead as a nascent political party in its own right - one that is preparing for government.