An American Aristocracy: Everyone Loves the Rich
By Don Monkerud
In his early sixties with rugged good looks and a physique honed
by years of surfing, Michael lives in a modest house with his wife
and two daughters and is the type of person one would expect to vote
his self-interest. After years of self-employment, he was forced to
take a minimum wage job at a manufacturing plant during a recession
in the 1990s. Although an intelligent, hardworking man, Michael
identifies with the rich.
"You may think that I've given up, but I haven't," Michael says. "I
am going to be rich someday."
Although he has no plans to propel him to riches, Michael
nonetheless shares a dream held by many Americans. The "get rich
someday" dream is cited by many as the reason Americans vote against
their economic self-interest and lend their political support to the
wealthy who are creating a new American aristocracy.
The wealthiest - the top 0.1 percent, some 145,000 taxpayers with an
average income of $3 million a year - are amassing wealth at an
unprecedented pace according to a recent study by the New York
Times.
They more than doubled their share of national income to 7.4 percent
since 1980, which is the highest level since the 1920s.
A few fulfill their dream. The number of those with $1 to $5 million
in net worth increased by 125 percent from 1983 to 2001, while those
with assets between $5 and $10 million increased 304 percent. The
super rich - those with over $10 million in assets - increased by
409 percent, from 66,500 to 338,400. With his hourly wage to pay his
bills, Michael can only dream of reaching these sums.
Some get rich in the technology industry where Michael works. In
2004, the 150 largest Silicon Valley companies reported record
profits and earnings increases of 169 percent. The 728 top
executives took home $2.1 billion, a 57 percent increase over 2003
and almost as much as the $2.3 billion they garnered at the peak of
the stock market bubble in 1999. The top ten CEOs, alone, took home
$578 million.
These Silicon Valley executives cannot compete with the nation's
truly rich. Nationwide, billionaires are richer and more numerous
for the second year in a row, according to Forbes magazine 2005
survey.
The Forbes 400 list of the richest Americans starts at $750 million
and 78 percent of them were billionaires in 2004. In the past year,
69 more Americans became billionaires, which gives the country
almost half the world's billionaires. In 2004, the combined net
worth of the nation's wealthiest was $1 trillion, an increase of $45
billion in one year; they increased their wealth by $300 billion
providing truth to the term "the rich get richer."
At the same time, the common working person's dreams of wealth
become harder to achieve. Wages for most Americans didn't improve
from 1979 to 1998 and the median male wage in 2000 was below the
1979 level despite productivity increases of 44.5 percent. Despite
gains made in income during the 1990s, wages are now on a downward
spiral. In May, The Financial Times reported that wages are falling
faster than at any time in the last 14 years. Meanwhile hidden
unemployment soars as U.S. economists declare a "jobless recovery."
Borrowing leads to identification with the rich, according to
economists Fabrizio Perri of New York University and Dirk Drueger of
Goethe University in Frankfurt, Germany. They trace the credit surge
to the widening income gap between rich and poor from 1970 to 2000.
Simply put, people feel richer because they consume more. While
median income rose 11 percent since 1990 - less than 1 percent a
year
- spending jumped 30 percent and debt increased 80 percent.
Despite working longer hours, often at lower pay, without vacation
or medical insurance, Americans mimic the wealthy by going ever
deeper in debt. Since 2001, they cashed out $480 billion in home
equity, two-and-a-half-times more than they cashed out from 1993 to
2000.
Americans now owe $766 billion in home equity loans, 74 percent
increased the years on their mortgages and now owe 45 percent of the
value of their homes, up from 32 percent in 1973. Financial experts
contend these higher mortgage debts will make families less able to
weather financial shocks and will drastically curtail retirement
spending.
Recent research by Michael J. Graetz and Ian Shapiro, authors of
Death by a Thousand Cuts, points out that most Americans, like my
friend, live in a fantasy world, hoping to be rich someday. A 2000
Time/CNN poll found that 39 percent of Americans believe they are in
the wealthiest one percent or soon will be. They even supported
Bush's abolition of the inheritance tax, which only applies to the
richest two percent of American families.
Thinking like they're rich, Americans allow their representatives to
lower taxes for the wealthy and increase their share of the nation's
assets. After Bush's tax cuts, the 400 top taxpayers now pay at the
same rate as those making $50,000 to $75,000 and many of the largest
corporations pay no tax at all. Unlike the average wage earner,
these people know their interests: 72 percent of the Forbes richest
400 who contributed to the 2004 campaign gave money to Bush.
When F. Scott Fitzgerald said the very rich "are different from you
and me," he was right. The rich and corporations invest heavily to
convince Americans to lower taxes, abolish regulations and give them
free rein to amass more wealth and create a virtual aristocracy.
Meanwhile, the bottom 90 percent struggle to pay their credit card
bills and only dream of getting wealthy "someday."
Copyright 2005
Don Monkerud
monkerud@cruzio.com writes about politics, business and cultural
issues and lives in Aptos, California.
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