Where Are He Headed As A Country?

On November 22, 2014,  John Thompson writes in the Russell County News-Register:

I hardly know anyone who’s happy about the way the country is going at the moment. But before I get started, let me say this first, just to make some people mad, because they hate it when Bush is blamed, especially since Obama’s been in office for the last six years. Know what? I don’t care.

It’s Bush’s fault.

It’s Bush’s fault.

It’s Bush’s fault.

Bush isn’t only to blame. Actually we all are, but man did he ever push this increasingspiral downward.

I sit and listen on the radio, or read on the internet or newspaper and it gets rather depressing. Actually it gets quite depressing sometimes. Especially when you hear stories of 2.5 million homeless children in the U.S. butted up against a story of a $325 million contract to a single baseball player, butted up against a story of an electric company who wants to shut down in upper Michigan since a major customer of the power plant moved and now customers actually face an increase of hundreds of dollars a month in costs.

This morning it was that Kentucky will lose $129 million for road funding with the cut in gas tax which will result in the cost of gas being about four cents a gallon cheaper. That is really going to cut road funds in Russell County, and the magistrates are going to have a hard go of it. Guess they’ll get a little taste of what the purpose of taxes are.

McConnell is pushing Republicans to be silent on the NSA reform bill, not allowing it to be discussed for much needed reform, so we can further devolve into the spying police state we’re becoming as well.

Also, congress just passed a measure which seeks to forbid scientists from advising the Environmental Protection Agency on their own research, but allows corporations to advise, of course. I can’t imagine the measure will get past the House, but if it does, as the director for the Union of Concerned Scientists said, “In other words, academic scientists who know the most about a subject can’t weigh in, but experts paid by corporations who want to block regulations can.”

Being ruled by corporations is fascism. It is corporate fascism, and that is what our country has become.

Yes, the rule of unintended consequences. Republican politicians hate the EPA and would like to dismantle it, returning us to the glory days of smog and heck, why not throw lead in the air again?

Nothing makes any sense to me. We are in an economic crisis. The crisis isn’t that there isn’t a strong economy, it’s that only a very few OWN the economy. The “people” have always had to fight the wealthy to try to have some kind of life beyond forced servitude, but somewhere back when, the wealthy learned how to fool half the population into fighting for them and against themselves.

Here we are in an age of amazing technological advances which has increased productivity hundreds of times, yet unlike the 50’s, where one person in the household could work and provide well for the family, now it takes both heads of household working to make ends meet.

We’re at a time where the poor work hard but are blasted for being lazy. Where it’s believed if you aren’t doing well it’s your own fault only, or the belief that everyone has the same capabilities if they’d just apply themselves.

One problem is absolutely the confusion people have, and I’m certain it’s because of the amount of propaganda that’s thrown at them. It leaves them confused and fighting against what they actually want.

Take the issue of net neutrality, for example.

In a nutshell, net neutrality is the concept that internet providers MUST treat all data equally. They are not allowed to pick and choose who can transmit data faster so it can be received faster. It’s the way the internet has been run up until now.

The devil is in the details, as they say, and I’ll give you a few examples of how bad it could be if ISP’s are given this control, but first let’s finish the explaining of net neutrality.

Recently President Obama declared a strong support for net neutrality, and feels it’s the governments place to insure that everyone has free and equal access to whatever site they would like to visit.

Of course what the corporations have done, well specifically the ISP (Internet ServiceProvider) corporations, is put out propaganda that the government wants to regulate the internet. Well we all know that “government” and “regulate” are bad words, so of course those who aren’t paying attention are up in arms, believing the government is wanting to control the internet.

But it’s the opposite; the government is trying to insure that the internet remains free and open. Of course it’s the government, and independent agencies need to insure that the government doesn’t try to control the internet itself. But to be against net neutrality is to say we need to privatize the internet, and if that’s done, well I’m sorry if you’ve bought into this idea of “freedom” because it will absolutely no longer be free and easy access.

How so? You might ask.

First of all, and it’s happening now, a company can pay a provider for faster data delivery. This is helpful to a company like Netflix or others who stream video. Well, those who stream video for a profit that’s paid by the customer. But if this becomes a permanent business model, I would say it’s safe to assume you’ll no longer have a free Youtube, or at least not one that’s worth watching because the load time would be ridiculous. Personally I think I’ve already noticed it’s getting slower and buffering more.

What else could it mean? Well one company could outbid another in the same market and be given faster data speeds, or restrict viewing of the competition. You know, kind of like cable.

You could even possibly have to pay for access to sites, not by the site, but by the internet provider. Let’s say you wanted to get the Wall Street Journal and the New York Times via the computer. Well what if one pays to have there’s load 10 times or 100 times faster? With the speeding up of some sites you’ll have the slowing down of others.

You might think that’s all good and fine. I mean this is capitalism after all. But you know what? I’m sorry, but sometimes not everything is about money and profit. The idea of the free spread of information and ideas goes beyond money. In fact money KILLS the free spread of information and ideas. It’s part of why our society is so dumbed down. We can’t even get an honest assessment or comparison of say, the economic philosophy of capitalism versus some other way. Sorry, yes you can…over the internet. Why? Because right now it’s free and equal to everyone.

If we are not careful,and equate “freedom” with allowing the internet to be owned in the hands of a few corporations, then we are going to lose what is possibly the most important social experiment in generations: the internet.

Another subject. The Keystone XL Pipeline. This is another prime example of how misinformation and pure propaganda has people fighting for this to happen.

In case you don’t know what it is is an oil pipeline that will run from Canada through the U.S. down to the Gulf of Mexico into awaiting ships to be shipped to other parts of the world. Where the difficulty comes in is, well there’s many, many difficulties. Environmentalists aren’t happy with it because it puts the oil pipeline over important, I mean life important, water aquifers which puts them at risk for contamination. Pipelines rupture more than you might think.

Another great difficulty is, and this one amazes me, because on the right, the conservatives are clamoring for this pipeline, claiming it will create massive numbers of jobs and also, well FREEDOM! But the fact is, the government is having to take land from many people through the use of imminent domain, in order to give the rights to the companies to put the pipe through the land. So sorry for anyone who just happens to have their land split by a pipeline.

Seriously, I thought FREEDOM! … but freedom is just a word to the brainwashed masses of conservatives. Like it’s been said, you shouldn’t be a conservative or a Republican unless you’re rich.

But what about the jobs? Well I pointed out to someone the other day that the pipeline will create a few thousand temporary jobs but in the end only like 50 permanent jobs… 50 permanent jobs!

I was rebuked by being asked if I got that from some liberal television or website. I had to happily inform them that no, I got that figure from none other than the CEO of TransCanada, the company that constructs and maintains the oil pipelines.

50 jobs. Willing to confiscate peoples land, risk untold miles of environment, land and water, and for what? So that oil companies can ship the oil somewhere else. In fact studies show that the pipeline will likely INCREASE gas costs in parts of the United States.

But you know what? What is right, or what is good, or what is just… well these things mean nothing if it just means beating a liberal on some issue. So no matter what harm it would do, the right will cheer, because hey, we beat the liberals! And FREEDOM!

Lastly, I get accused of being anti-gun sometimes. I’m not, but again it doesn’t matter. It’s like agreeing with an Obama policy. If someone believes in an Obama policy, well to some then I must think he’s the Messiah. Yeah, it’s silly, it’s childish, and it’s a rampant thought process; or lack thereof.

I’ll tell you I am not against guns or gun ownership, but what I am against, what really gives me concern is this gun fetishism and fear. Why is it that it seems so often that it’s the ones who insist on carrying a gun that seems the most fearful? Shouldn’t they be less afraid? Well I’ll tell you what I think it does is it always keeps in the front of their mind that they have a weapon, and if they have a weapon it must be because of a perceived threat or possibility of threat.

As Atticus Finch said in To Kill a Mockingbird, “I wanted you to see what real courage is. Instead of getting the idea that courage is a man with a gun in his hand.”

Personally, I kind of like not thinking about carrying around a gun. I’d rather spend my time griping about too many darn people in my way while I’m trying to shop instead of the anxiety of carrying a gun or knowing that I’m carrying it because I’ve become scared of everything.

There’s a second part to that quote from To Kill a Mockingbird: “It’s when you know you’re licked before you begin, but you begin anyway and see it through no matter what.”

I know I’m licked. There’s no way it seems to get people to see things from a different perspective. There seems to be no way to get people to realize there’s plenty for everyone if some didn’t need a million times more than they need while others have to work themselves to death just to survive. There seems to be no way to get people to understand that WE helped give the government to the rich. They didn’t just take it, WE gave it to them, and we keep giving it to them because of our ignorance, our fear, our meanness. I’ll leave you with a very fine quote from a Facebook friend:

“One day you’ll all wake up and realize that government restraints are all that are protecting you from unscrupulous, conscienceless, greedy, profiteering corporations that have no allegiances to you, the country or their employees. They’ll deny your insurances, steal your pensions, outsource your jobs, and let you die all on the name of profit.”


Great summation of the plight of America today.


“Nothing makes any sense to me. We are in an economic crisis. The crisis isn’t that there isn’t a strong economy, it’s that only a very few OWN the economy. The “people” have always had to fight the wealthy to try to have some kind of life beyond forced servitude, but somewhere back when, the wealthy learned how to fool half the population into fighting for them and against themselves.”

Robert Reich: College Gets You Nowhere

Robert Reich: College gets you nowhereEnlargeRobert Reich

The former secretary of labor examines why a degree no longer guarantees a well-playing job

On November 25, 2014, Robert Reich writes on Salon:

This is the time of year when high school seniors apply to college, and when I get lots of mail about whether college is worth the cost.

The answer is unequivocally yes, but with one big qualification. I’ll come to the qualification in a moment but first the financial case for why it’s worth going to college.

Put simply, people with college degrees continue to earn far more than people without them. And that college “premium” keeps rising.

Last year, Americans with four-year college degrees earned on average 98 percent more per hour than people without college degrees.

In the early 1980s, graduates earned 64 percent more.

So even though college costs are rising, the financial return to a college degree compared to not having one is rising even faster.

But here’s the qualification, and it’s a big one.

A college degree no longer guarantees a good job. The main reason it pays better than the job of someone without a degree is the latter’s wages are dropping.

In fact, it’s likely that new college graduates will spend some years in jobs for which they’re overqualified.

According to the Federal Reserve Bank of New York, 46 percent of recent college graduates are now working in jobs that don’t require college degrees. (The same is true for more than a third of college graduates overall.)

Their employers still choose college grads over non-college grads on the assumption that more education is better than less.

As a result, non-grads are being pushed into ever more menial work, if they can get work at all. Which is a major reason why their pay is dropping.

What’s going on? For years we’ve been told globalization and technological advances increase the demand for well-educated workers. (Confession: I was one of the ones making this argument.)

This was correct until around 2000. But since then two things have reversed the trend.

First, millions of people in developing nations are now far better educated, and the Internet has given them an easy way to sell their skills in advanced economies like the United States. Hence, more and more complex work is being outsourced to them.

Second, advanced software is taking over many tasks that had been done by well-educated professionals – including data analysis, accounting, legal and engineering work, even some medical diagnoses.

As a result, the demand for well-educated workers in the United States seems to have peaked around 2000 and fallen since. But the supply of well-educated workers has continued to grow.

What happens when demand drops and supply increases? You guessed it. This is why the incomes of young people who graduated college after 2000 have barely risen.

Those just within the top ten percent of college graduate earnings have seen their incomes increase by only 4.4 percent since 2000.

When it comes to beginning their careers, it’s even worse. The starting wages of college graduates have actually dropped since 2000. The starting wage of women grads has dropped 8.1 percent, and for men, 6.7 percent.

I hear it all the time from my former students. The New York Times calls them “Generation Limbo” — well-educated young adults “whose careers are stuck in neutral, coping with dead-end jobs and listless prospects.” A record number are living at home.

The deeper problem is this. While a college education is now a prerequisite for joining the middle class, the middle class is in lousy shape. Its share of the total economic pie continues to shrink, while the share going to the very top continues to grow.

Given all this, a college degree is worth the cost because it at least enables a young person to tread water. Without the degree, young people can easily drown.

Some young college graduates will make it into the top 1 percent. But that route is narrower than ever. The on-ramp often requires the right connections (especially parents well inside the top 1 percent).

And the off-ramps basically go in only three directions: Wall Street, corporate consulting, and Silicon Valley.

Don’t get me wrong. I don’t believe the main reason to go to college – or to choose one career over another — should be to make lots of money.

Hopefully, a college education gives young people tools for leading full and purposeful lives, and having meaningful careers.

Even if they don’t change the world for the better, I want my students to be responsible and engaged citizens.

But when considering a college education in a perilous economy like this, it’s also important to know the economics.

I think that a university education is a stimulus for figuring out your options and opportunities, and as well develops personal discipline and responsibility. But Robert Reich is correct in that a university education does not guarantee success.

But education is a critical part of personal development, which produces visionaries and leader who work to create new technological inventions and innovations, as well as positive economic and social progress that can raise the standard of living for everyone.

While education is critical to our future societal development,  we should be developing and providing advanced education opportunities for Americans, not foreigners. Education in America needs to be universally free through all levels––kindergarden, grade school, high school, and university (BS, MS and Phd.) so that there will never be a shortage of qualified workers and abate the investments now being made outside the United States, which ONLY develops and shifts abroad high-technology job opportunities in science, engineering and mathematics.  Education is, without question, a taxpayer investment that will benefit the future of our country.

At present, for the most part, foreign students studying  in America, are representative of privileged access to American institutions of higher learning because their families have sufficient income to pay the tuitions, which support our institutions. As tuition costs continue to inflate, fewer and fewer Americans can afford, even with student loans, to earn a university education. This is putting more pressure on our institutions to reach out to wealthy families abroad who desire that their children benefit from a university education in America.

As for the tech industry sector, as with EVERY business, reducing costs maximizes profits and sustainable success. And being able to draw foreign talent educated in our universities provides opportunities for the tech industry to use cheap foreign workers rather than American talent.

But in reality, given the current invisible structure of the economy, except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job that pays sufficient wages or salaries to support a family or prevent a lifestyle, which is gradually being crippled by near poverty or poverty earnings. Thus, education is not the panacea, though, as noted, it is critical for our future societal development. And younger, as well as older people, will increasingly find it harder and harder to secure a well-paying job––for most, their ONLY source of income––and will find themselves dependent on taxpayer-supported government welfare, open and disguised or concealed.

Why? Because tectonic shifts in the technologies of production are exponentially occurring, which results in less job opportunities as production shifts from people making things to “machines” (the non-human factor) of technology making things. The combination of cheap global labor costs and lower, long-term-invested “machine” costs has forced the worth of labor downward, and this will continue to be the reality. Our only way to far greater prosperity, opportunity, and economic justice is to embrace technological innovation and invention and the resulting human-intelligent machines, super-automation, robotics, digital computerized operations, etc. as the primary economic engine of growth.

While education is critical, the result as related to the human input factor of production is that our scientists, engineers, and executive managers are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital (the workers are not owners themselves, except for those in the highest employed positions),  are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to get the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption. It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.

But significantly, unless we reform our system to empower EVERY American to acquire, via pure, interest-free insured capital credit loans, viable full-ownership holdings (and thus entitlement to full-dividend earnings) in the companies growing the economy, with the future earnings of the investments paying for the initial loan debt to acquire ownership, the concentration of ownership of ALL future productive capital will continue to be amassed by a wealthy minority ownership class. Companies will continue to globalize in search of “customers with money” or simply fail, as exponentially there will be fewer and fewer customers to support their businesses worldwide. Why, because the majority will be disconnected from the dividend income derived from the non-human means of production that is replacing the need for labor workers who earn wages and salaries, which are then used to purchase products and services.

Soon, industrial monopoly capitalism will reach its twin goals: concentration of productive capital ownership among the elite ownership class and work performed with as few labor workers and the lowest possible wages and salaries. The question to be answered is “What then?”

The transition to the non-human factor of production has been occurring for decades but is now experiencing exponential development––the result of tectonic shifts in the technologies of production. As costs for computer-controlled machines become less than the cost of human workers, and the skills and productivity of the machines exceed those of human workers, then robot worker numbers will rapidly increase and enable our society to build architectural wonders, revitalize and redevelop our cities and build new cities of wonder and amazement, along with support energy, transport, and communications systems. Super-automation and robotics is transforming the world of manufacturing as robots become lighter, more mobile, and more flexible with better sensing, perception, decision-making, and planning and control capabilities due to advanced digital computerization. Super-automation and robotics operated by human-intelligent computerization will dramatically improve productivity and provide skills and abilities previously unique to human workers. This will effectively increase the size of the labor work force globally beyond that provided by human workers, no matter what the level of education attained. With advanced human-level artificial intelligence, computer-controlled machines will be able to learn new knowledge and skills by simply downloading software programs and apps. This means that the years of training that apply to personal human development will no longer apply to the further sophistication and operation of the machines. The result will be that productivity will soar while the need and demand for human labor will further decline.

Unfortunately, in the long term, unless the vast majority of people have a substantial and viable source of income other than wages and salaries, the impact of technological innovation and invention as embodied in human-level artificial intelligence, machines, super-automation, robotics, digital computerized operations, etc. will be devastating.

There are ONLY two options: either “Own or Be Owned.” The “Owned” model is what our society practices today and is expressed as monopoly capitalism (concentrated ownership) or socialism (taxpayer-supported redistributed social benefits). The “Own” model, or what my colleagues and I term the Just Third Way (see http://www.cesj.org/thirdway/thirdway-intro.htm), has yet to be implemented on the scale necessary to empower every man, woman, and child to acquire private, individual ownership stakes in the future income-producing productive capital assets of the “intelligent automated machine age”––facilitated by the future earnings of their investments in the companies developing and employing this unprecedented economic power.

Unfortunately, the disruptive nature of exponential growth in technology and its impact on productivity––tectonically shifting production of products and services from human workers to non-human means––is not understood and ignored by the economic establishment, academia, and our political leaders.

While the rate of technological progress is directly proportional to the number and quality of the people engaged in the fields of science and engineering, economic policy is the mechanism that fuels investment and development of technological innovation and invention. This is where education is critical to our future societal development.

Education should be encouraged and expanded. Everyone should have the opportunity to personally develop their own exceptional innate abilities and unlock their creativity.

But except for the personal development benefit to advancing one’s education, the reality is that far less “educated” people will be necessary in the long term to produce the products and services necessary and valued by society. This is due to the exponential development of human-level artificial intelligence, which is embodied in advanced automation and robotics.

We need to realize that full employment is not a function of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever-increasing role.

We need to reform and restructure our economy and set as the GOAL broadened private, individual ownership of future wealth-creating, income-generating productive capital assets among ALL Americans, with capital estates ever building as the economy grows. Without a policy shift to broaden productive capital ownership simultaneously with economic growth, further development of technology and globalization will undermine the American middle class and make it impossible for more than a minority of citizens to achieve middle-class status. By changing course, over time and within a few decades, our “machined-powered” growth economy would produce greater wealth, and widespread private, individual ownership would assure prosperity, opportunity, and general affluence for every citizen. Broadened productive capital ownership would strengthen our democracy and individuals and families would be less or non-dependent on government welfare, whether disguised or not.

This prosperous society is achievable because, fortunately, in the near term, we can begin to grow our way out of the swelling unemployment and underemployment by increasing our investment significantly as a ratio of Gross Domestic Product (GDP) resulting in double-digit growth, while simultaneously broadening private, individual ownership of future income-producing productive capital investments, thus initiating the process of empowering every man, woman, and child to build over time a viable capital estate and reap the income generated. The key operative is BROADEN OWNERSHIP. Such investment would, in the short term, generate millions of new “real” productive jobs. The result would not only be that the GDP would dramatically grow but tax revenues from the high rate of economic growth would enable us to balance the federal budget, fully fund Social Security, Medicare, and Medicaid, provide Universal Health Care, Universal University Education, lower tax rates, and maintain a strong military, all simultaneously.

We have the opportunity to free economic growth from the “enslavement” of human labor and from the financial mechanisms that are based on the slavery of past savings. Technological progress, though, is no longer dependent on the number and quality of human workers. This fact will become obvious eventually to anyone who can think and analyze as they realize the reality that human labor will cease to be the primary source of wealth production in the future. As a result we can expect over the long term that unemployment and underemployment will remain high indefinitely. But the difference will be that people will drop out of the labor force voluntarily because they will be able to live off their dividend earnings via their ownership portfolios. This will create swelling demand for human workers who want to continue working. And with both dividend and wage and salary incomes for everyone there will be more customers to purchase the products and services produced, which in turn will create further dividends and earnings, which will create more customers, etc.

While the future holds less promise for universal job employment due to the ever-progressing contribution of technological-driven production using human-intelligent machines, super-automation, robotics and digital computerized operations, the jobs that will be in demand will require some mastery of technology, math, and science. As long as working people are limited by earning income solely through their labor worker wages, they will be left behind by the continued gravitation of economic bounty toward the top 1 percent of the people that the system is rigged to benefit. If we don’t re-chart our economic policies to broaden private, individual ownership of new productive capital formation, then more troubling is that the continued stagnation of the American economy will further dim the economic hopes of America’s youth, no matter what their education level. The result will have profound long-term consequences for the nation’s economic health and further limit equal earning opportunity and spread income inequality. As the need for labor decreases and the power and leverage of productive capital increases, the gap between labor workers and productive capital asset owners will increase, and the conditions will become very frightening and very chaotic.

Sadly, our leaders are not prepared and are not preparing the American people for the coming economic collapse and the next Great Depression, due to their lack of wisdom and foresight to understand that full employment is not an objective of businesses and private sector job creation opportunities are constantly being eroded by physical productive capital’s ever increasing role––as the use of human-intelligent machines, super-automation, robotics, digital computerized operations, etc. replaces labor workers to produce products and services.

The question that requires an answer is now timely before us. It was first posed by binary economist Louis Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what ownership is. Therefore, by ignoring such issues of economic justice and ownership, our leaders are ignoring the concentration of power through ownership of productive capital, with the result of denying the 99 percenters equal opportunity to become productive capital owners. The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total goods and service,” and thus, “how do we get from a world in which the most productive factor—–physical capital—–is owned by a handful of people, to a world where the same factor is owned by a majority—–and ultimately 100 percent—–of the consumers, while respecting all the constitutional rights of present capital owners?”

The path to prosperity, opportunity, and economic justice can be found in the writings about the Capital Homestead Act at http://www.cesj.org/homestead/index.htm. For more overviews related to this topic see my article “The Absent Conversation: Who Should Own America?” published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/who-should-own-america_b_2040592.html and by OpEd News at http://www.opednews.com/articles/THE-Absent-Conversation–by-Gary-Reber-130429-498.html

Also see “The Path To Eradicating Poverty In America” at http://www.huffingtonpost.com/gary-reber/the-path-to-eradicating-p_b_3017072.html and “The Path To Sustainable Economic Growth” at http://www.huffingtonpost.com/gary-reber/sustainable-economic-growth_b_3141721.html, and the article entitled “The Solution To America’s Economic Decline” at http://www.nationofchange.org/solution-america-s-economic-decline-1367588690

Forget The 1 Percent

It is the 0.01% who are really getting ahead in America


On November 8, 2014, The Economist reports:

AMONG the most controversial of Thomas Piketty’s arguments in his bestselling analysis of inequality, “Capital in the Twenty-First Century”, is that wealth is increasingly concentrated in the hands of the very rich. Rising wealth inequality could presage the return of an 18th century inheritance society, in which marrying an heir is a surer route to riches than starting a company. Critics question the premise: Chris Giles, the economics editor of the Financial Times, argued earlier this year that Mr Piketty’s data were both thin and faulty. Yet a new paper suggests that, in America at least, inequality in wealth is approaching record levels.*

Earlier studies of American wealth have tended to show only small increases in inequality in recent decades. A 2004 study of estate-tax data by Wojciech Kopczuk of Columbia University and Emmanuel Saez of the University of California, Berkeley, found an almost imperceptible rise in the share of wealth held by the top 1% of families, from about 19% in 1976 to 21% in 2000. A more recent investigation of the Federal Reserve’s data on consumer finances, by Edward Wolff of New York University showed a continued but gentle increase in inequality into the 2000s. Mr Piketty’s book, which drew on this previous work, showed similarly modest rises in wealth inequality in America.

A new paper by Mr Saez and Gabriel Zucman of the London School of Economics reckons past estimates badly underestimated the share of wealth belonging to the very rich. It uses a richer variety of sources than prior studies, including detailed data on personal income taxes (which the authors mine for figures on capital income) and property tax, which they check against Fed data on aggregate wealth. The authors note that not every potential source of error can be accounted for; tax avoidance strategies, for instance, could cause either an overestimation of the wealth share of the rich (if they classify labour income as capital income in order to take advantage of lower rates) or an underestimation (if they intentionally seek out lower yielding investments for their tax advantages). Yet they believe their estimates represent an improvement over past attempts.

The results are enough to make Mr Piketty blush. The authors examine the share of total wealth held by the bottom 90% of families relative to those at the very top. Because the bottom half of all families almost always has no net wealth, the share of wealth held by the bottom 90% is an effective measure of “middle class” wealth, or that held by those from the 50th to the 90th percentile. In the late 1920s the bottom 90% held just 16% of America’s wealth—considerably less than that held by the top 0.1%, which controlled a quarter of total wealth just before the crash of 1929. From the beginning of the Depression until the end of the second world war, the middle class’s share of total wealth rose steadily, thanks largely to collapsing wealth among richer households. Thereafter the middle class’s share grew along with national wealth thanks to broader equity ownership, middle-class income growth and rising rates of home-ownership. The expansion of tax breaks for retirement savings also helped. By the early 1980s the share of household wealth held by the middle class rose to 36%—roughly four times the share controlled by the top 0.1%.

From the early 1980s, however, these trends have reversed. The ratio of household wealth to national income has risen back toward the level of the 1920s, but the share in the hands of middle-class families has tumbled (see chart). Tepid growth in middle-class incomes is partly to blame; real incomes for the top 1% of families grew 3.4% a year from 1986-2012 while those for the bottom 90% grew 0.7%. But Messrs Saez and Zucman reckon the main cause of falling middle-class net worth is soaring debt. Rising home values did little to raise middle-class wealth since mortgage debt also soared. The recession battered home prices but left the debt untouched, further squeezing middle-class wealth.

The really, really rich get much, much richer

On the other side of the spectrum, the fortunes of the wealthy have grown, especially at the very top. The 16,000 families making up the richest 0.01%, with an average net worth of $371m, now control 11.2% of total wealth—back to the 1916 share, which is the highest on record. Those down the distribution have not done quite so well: the top 0.1% (consisting of 160,000 families worth $73m on average) hold 22% of America’s wealth, just shy of the 1929 peak—and exactly the same share as the bottom 90% of the population. Meanwhile the share of wealth held by families from the 90th to the 99th percentile has actually fallen over the last decade, though not by as much as the net worth of the bottom 90%.

The outsize fortunes of the few would not be too worrying were they largely the product of entrepreneurial activity: riches amassed by hardworking billionaires who are as likely as not to give their bounty away through philanthropy. Messrs Saez and Zucman find some evidence for this dynamic. Wealthy families are younger than they were a generation or two ago, and they earn a larger share of the country’s income from labour: 3.1% in 2012 versus less than 0.5% prior to 1970.

Yet one should not yet rule out the return of Mr Piketty’s “patrimonial capitalism”. The club of young rich includes not only Mark Zuckerbergs, the authors argue, but also Paris Hiltons: young heirs to previously accumulated fortunes. What’s more, the share of labour income earned by the top 0.1% appears to have peaked in 2000. In recent years the proportion of the wealth of the very rich held in the form of shares has levelled off, while that held in bonds has risen. Since the fortunes of most entrepreneurs are tied up in the stock of the firms that they found, these shifts hint that America’s biggest fortunes may be starting to have less to do with building businesses, just as Mr Piketty warned.

*Studies cited in this article
Top wealth shares in the United States, 1916-2000: Evidence from estate tax returns“, by Wojciech Kopczuk and Emmanuel Saez, National Tax Journal, June 2004.
Recent trends in household wealth in the United States: Rising debt and the middle-class squeeze—an update to 2007“, by Edward Wolff, Levy Economics Institute Working Paper, March 2010.
Wealth inequality in the United States since 1913: Evidence from capitalized income tax data“, by Emmanuel Saez and Gabriel Zucman, National Bureau of Economics Research Working Paper, October 2014.


One of the primary reasons I remain confident that my pessimistic outlook for the economy longer term will be vindicated. As this Economist article shows, inequality is as bad as any time in history. And history has shown time and time again that the more inequality, the more booms and busts. The less inequality, and the bigger the middle class, the stronger the economy over the long term. Excerpt:

“A NEW paper by Emmanuel Saez of the University of California, Berkeley, and Gabriel Zucman of the London School of Economics suggests that, in America at least, inequality in wealth is approaching record levels. The authors examine the share of total wealth held by the bottom 90% of families relative to those at the very top. In the late 1920s the bottom 90% held just 16% of America’s wealth—considerably less than that held by the top 0.1%, which controlled a quarter of total wealth just before the crash of 1929. From the beginning of the Depression until well after the end of the second world war, the middle class’s share of total wealth rose steadily, thanks to collapsing wealth among richer households, broader equity ownership, middle-class income growth and rising rates of home-ownership. From the early 1980s, however, these trends have reversed. The top 0.1% (consisting of 160,000 families worth $73m on average) hold 22% of America’s wealth, just shy of the 1929 peak—and almost the same share as the bottom 90% of the population.”

Stocks Are Now So Fantastically Expensive That They Will Likely Have Negative Returns For Years

On November 22, 2014, Henry Blodget writes on Business Insider:

As regular readers know, I am increasingly worried about the level of stock prices.

So far, this concern has seemed unwarranted. And I hope it will remain so. (I own stocks, and I’m not selling them.)

But my concern has not diminished.

On the contrary, it grows by the day.

I’ve discussed the logic behind my concern in detail here. Today, I’ll just focus on the primary element of it:


Stocks are now more expensive than at any time in history, with the brief (and very temporary) exceptions of 1929 and 2000.

Importantly, today’s high prices do not mean that stock prices can’t go even higher. They can. And they might. What it does mean is that, at some point, unless it is truly “different this time,” stock prices are likely to come crashing back down, likely well below today’s levels.  Just as they did after those two historic market peaks.

(I unfortunately know this especially well. Because I was one of the people hoping it was “different this time” in 1999 and 2000. For many years, it did seem different — and stocks just kept going up. But then they crashed all the way back down, erasing three whole years of gains. This was a searing lesson for me, as it was for many other people. It was also a lesson that cost me and others a boatload of money.)

Anyway, here are three charts for you…

First, a look at price-earnings ratios over 130 years. The man who created this chart, Professor Robert Shiller of Yale, uses an unusual but historically predictive method to calculate P/Es, one that attempts to mute the impact of the business cycle. Importantly, this method is consistent over the whole 130 years.

As you can see, today’s P/E, 27X, is higher than any P/E in history except for the ones in 1929 and 2000. And you can also see how quickly and violently those P/Es reverted toward the mean:

S&P Shiller PE annotatedRobert Shiller, Business Insider

Second, a chart from fund manager John Hussman showing the performance predictions for 7 different historically predictive valuation measures, including the “Shiller P/E” shown above.  Those who want to remain bullish often attack the Shiller P/E measure, pointing out that it is useless as a timing tool (which it is). Those folks may also want to note that the 6 other measures in the chart below, including Warren Buffett’s favorite measure, same almost exactly the same thing.

Hussman stock predictionJohn Hussman, Hussman Funds

Third, a table from the fund management firm GMO showing predictions for the annual returns of various asset classes over the next 7 years.

As you can see, the outlook for all stocks, but especially U.S. stocks, is bleak. Specifically, GMO foresees negative real returns for U.S. stocks for the next 7 years. Even after adding back the firm’s inflation assumption of 2.2% per year, the returns for most stocks are expected to be flat or negative. The lone bright(er) spot is “high quality” stocks — the stocks of companies that have high cash flow and low debt. Those are expected to return only a couple of percent per year. (Returns for international stocks are expected to be modestly better, but still far below average).

GMO stock forecastGMO

The real bummer for investors, as GMO’s chart also makes clear, is that no other major class offers compelling returns, either. The outlook for bonds and cash is lousy, too. This puts investors in a real predicament. The only asset class forecasted to provide compelling returns over the next 7 years is… timber. And most of us can’t go out and buy trees.

To be crystal clear:

There is only one way that stocks will keep rising from this level and stay permanently above this level. That is if it really is “different this time,” and all the historically valid valuation measures described above are no longer relevant.

It is possible that it is different this time.

It is not likely, however.

And one thing to keep in mind as you listen to everyone explain why it’s different this time is that one of the things everyone does when stocks get this expensive is attempt to explain the high prices (and justify even higher ones) by looking for reasons why it’s different this time.

That’s what most of us did in 1999 and 2000.

For a while, we seemed “right,” and we were heroes because of it.

But then, suddenly, without much warning, we were drastically, violently wrong.

And we — or me, at least — learned that searing lesson that I referred to above: That it’s almost never “different this time.”




GOLDMAN: So Far, Larry Summers Has Been Wrong About The US Economy

larry summersREUTERS/Stefan WermuthFormer Harvard University President Lawrence H. Summers

On November 23, 2014, Myles Udland writes on Business Insider:

About a year ago, former Treasury secretary Larry Summers gave his famous speech at the IMF about “secular stagnation.”

The basic idea behind secular stagnation is that the economy in its current condition is unable to create enough demand to sustain its growth trend, requiring negative interest rates for the Fed to hit its employment and inflation goals.

In a note to clients over the weekend, Goldman Sachs economist Jari Stehn revisits Summers’ hypothesis, and writes that while it’s still early, there are signs pointing towards a US economy that may not, in fact, be stuck in secular stagnation.

Output Gap

GS output gap

The key figure proponents of the secular stagnation hypothesis point to is the “output gap” that has shown up in the economy since about 2006.

Since 2006, the US has underperformed the Congressional Budget Office’s projections for real GDP.

And so while the financial crisis and resulting recession certainly put a dent in GDP, the economy still hasn’t gotten back to the growth trend it was experiencing before the crisis.

The the economy has failed to close this “output gap” has been a staple of the argument that we’re stuck in secular stagnation, and that our economic problems of the last several years are secular rather than cyclical.

Current Activity Indicator

Goldman expects the US economy to experience above-trend growth through 2017. This is in contrast to an economy stuck in secular stagnation, which would not see above-trend growth over a period of several years.

As evidence that the US economy is beginning to meaningfully take off, Stehn cites Goldman’s Current Activity Indicator (CAI), a composite figure developed by Goldman Sachs that is 25 economic indicators, including things like the jobs report, jobless claims, and manufacturing surveys.

Over the past year, the CAI has increased by 3%, the fastest since the recession.

And while Stehn notes that this is just a preliminary sign rejecting secular stagnation — and that these gains have been made with rates at 0% — the improvement in the CAI is a sign that the economic malaise of the last 5 or so years was cyclical rather than secular.

As far as monetary policy is concerned, Stehn writes that even if the economy has been slow to recover due to cyclical rather than secular problems, it will likely still be appropriate to keep policy accommodative (i.e., keep rates “lower for longer.”).

But Stehn is optimistic that the US economy, while disappointing over the last several years, is not stuck in the economic purgatory that secular stagnation implies.

That fate, Stehn writes, may belong to Europe.

GS CAI 11.23




How Universal Basic Income Will Save Us From The Robot Uprising


On October 31, 2014, George Dvorsky writes io9.com:

Robots are poised to eliminate millions of jobs over the coming decades. We have to address the coming epidemic of “technological unemployment” if we’re to avoid crippling levels of poverty and societal collapse. Here’s how a guaranteed basic income will help — and why it’s absolutely inevitable.

Illustration by Tara Jacoby

The idea of a guaranteed basic income, also referred to as unconditional or universal basic income, is starting to gain traction in many parts of the world, both in developed and developing nations. It’s actually a very simple idea: Everyone in society receives a single basic income to provide for a comfortable living whether they choose to work or not. Importantly, it’s only intended to be enough for a person to survive on. The money for this social welfare scheme could come from the government or some other public institution, in addition to funds or income received from other sources. It could be taxable, or non-taxable, and divvyed up on a continual basis, monthly, or annually.

Advocates argue that a basic income is essential to a comprehensive strategy for reducing poverty because it offers extra income with no strings attached. But looking ahead to the future, we may have little choice but to implement it. Given the ever-increasing concentration of wealth and the frightening prospect of technological unemployment, it will be required to prevent complete social and economic collapse. It’s not a question of if, but how soon.

A BIG Idea Whose Time Has Come

As a concept, a basic income guarantee (BIG) has been bantered around for quite some time now. As early as 1795, American revolutionary Thomas Paine called for a Citizen’s Dividend to all U.S. citizens for “loss of his or her natural inheritance, by the introduction of the system of landed property.” Even Napoleon Bonaparte agreed that “man is entitled by birthright to a share of the Earth’s produce sufficient to fill the needs of his existence.”

In his 1967 speech, “Where Do We Go From Here,” Martin Luther King Jr. said: “I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”

The idea has also been supported by the esteemed economists Friedrich Hayek and Milton Friedman, the latter of whom advocated for a minimum guaranteed income via a “negative income tax.”

A number of countries are currently considering, or even implementing, various basic income schemes, such as Brazil, Switzerland, Canada, and Germany.

Even conservatives are on board. A noted by Noah Gorden in The Atlantic, creating a wage floor would be an effective way to fight poverty and to reduce government spending and intrusion.

Fewer and Fewer Jobs

As we head deeper into the 21st century, it’s becoming painfully obvious that there are fewer and fewer jobs available. As noted by Marshall Brain, founder of How Stuff Works and author ofManna, there are more working-age people in the U.S. receiving some form of welfare than there are working-age people who do not.

How Universal Basic Income Will Save Us From the Robot UprisingEXPAND

He adds that

“Another interesting fact about the United States is that a surprisingly large portion of working age adults are not working, primarily because there are too few jobs to go around. This may not be obvious, because the declared unemployment rate in the United States seems low, at consistently less than 10% over a long period of time. The problem is that the official unemployment rate hides the huge number of working-age Americans who are no longer considered a part of the workforce. Currently, only 63% of working-age adults are actually working.”

Owing to technologically-induced unemployment, it’s a problem that’s only set to get worse. As noted in Brain’s article, “Robotic Nation,” this is a small sampling of what we have to look forward to:

  • “Driverless cars are improving rapidly, and it is easy to understand that they will begin to eliminate all the jobs held by truck drivers, taxi drivers, etc. That is a million or more jobs that will be lost.
  • “Tablets and kiosks in restaurants will be eliminating many of the jobs currently held by waiters and waitresses.
  • “There are currently 3.7 million full-time K-12 teachers in the United States. Yet there is a host of new tools, including MOOCs, apps, computer-aided instruction, etc. that will start eliminating teaching positions in the near future. The pressure to reduce the cost of public education is relentless, and so is the advancement in the technology.
  • “Combine those trends with similar trends in factories, the construction industry, retail, etc.”

Another prominent thinker who has given this considerable thought is James Hughes, a sociologist from Trinity College in Connecticut.

“We are now entering the beginning of an era in which technology has started to destroy employment faster than it creates it,” he told io9. “The advance of information technology, artificial intelligence and robotics will eventually reduce the demand for all forms of human labor, including those dependent on ‘human skills’ like empathy and creativity.”

He offers the example of Expedia. The online program may not be as creative at travel planning as an experienced travel agent, but it still displaces travel agents because it’s considerably cheaper and more accessible. It’s also an example of another impact of information technology, that of cutting out the middle man.

“Eventually 3D printing and desktop manufacturing will cut out most of the work between inventors and consumers,” says Hughes. “Alongside growing technological unemployment, we will also be living much longer, and will need to figure out an equitable solution to the growing ratio of retirees to workers and tax-payers. Basic income is the logical re-negotiation of the social contract to ensure that we don’t spiral into widespread poverty and inequality.”

Concentrating Wealth

Adding insult to injury is the fact that wealth is becoming increasingly concentrated. Economists Emmanuel Saez and Gabriel Zuchman have found that over the past three decades,the share of household wealth owned by the top 0.1% has increased from 7 to 22 percent. They say:

“There is no dispute that income inequality has been on the rise in the United States for the past four decades. The share of total income earned by the top 1 percent of families was less than 10 percent in the late 1970s but now exceeds 20 percent as of the end of 2012. A large portion of this increase is due to an upsurge in the labor incomes earned by senior company executives and successful entrepreneurs.”

In addition to skyrocketing labor compensation at the top, the explosion in U.S. wealth inequality has been fueled by stagnant wages, increasing debt, and a collapse in asset values for the middle class.

Making It Work

So with potentially billions of people out of work, and with the world’s wealth concentrated into the hands of a few, a simple question emerges: How are people supposed to live?

According to Hughes, doing nothing is not an option.

“Allowing economies to go fallow because of widespread unemployment and poverty would bankrupt nations faster,” he says. “What’s more, a basic income guarantee would start by combining existing social welfare payments, reducing the size of the bureaucracies needed to maintain each of them separately. So the burden of the state would shrink. Various public resources can be monetized, as Alaska has done with Alaskan oil, the proceeds of which are distributed as payments to Alaskans. But we will need redistribution of wealth to sustain a BIG. There is enormous wealth being created by technological innovations, but it is mostly being sucked up by the top 1% of the population.”

Indeed, when it comes to funding BIG, there are no shortage of options. Various proposals include tax revenues, shortening the workweek, and the reduction or elimination of other social security programs such as unemployment insurance. Milton Friedman even suggested that, if we’re going to have a basic income, we should just scrap minimum wage altogether, which he felt just distorted labor market economics.

Futurist Mark Walker says we could pay for it all by slapping down a 14% VAT (value-added tax) across all goods and services, which in the U.S. would yield a guaranteed income of $10,000. It would be a start, but clearly not enough.

Last year, the Equal Life Foundation published the Living Income Guaranteed Proposal where it outlined practical implementation measures. Among its recommendations, the group calls for serious changes to the current socio-economic and political structure, including the nationalization of resources and social dividends, the redirection of military budgets, taxation, the preservation of a reasonable minimum wage, sustainable pricing, automation, transparency, and the digitalization of money.

Some thinkers contend that broader social restructuring will have to accompany the problems wrought by technological unemployment. In their essay, “Technology, Unemployment & Policy Options: Navigating the Transition to a Better World,” authors Gary Marchant, Yvonne Angelica, and James Hennessy present six possible policy options:

  1. Protecting Employment: Using legal interventions to protect jobs that might otherwise be lost due to technology innovation and development.
  2. Sharing Work: Minimizing the frequency of unemployment by sharing the paid work that is available across more workers.Although these policies are mostly short-term, they may help delay or lessen the impact of technological unemployment.
  3. Making New Work: Using governmental and other non-market interventions to create additional employment that would not otherwise be available under existing market conditions.
  4. Redistribution: Redistributing wealth in order to blunt the human and social costs of widespread technological unemployment. This would include guaranteed basic income.
  5. Education: Revising our educational system to make workers more adept in succeeding in an increasingly technology-focused and changing world.
  6. Fostering a New Social Contract: Altering the existing social model in which an individual’s economic livelihood, social status, and personal self-worth are based on their employment.

As an example of protecting employment, the Toyota Motor Corporation in Japan wants humans to take the place of machines in plants across Japan so workers can develop new skills and figure out ways to improve production lines and the car-building process. Also, robotics companies could help the workers they displace.

Hughes is not a fan of hindering technological progress, as he believes that would impoverish nations competing in a global market, and annoy consumers forced to rely on more expensive and inefficient human labor.

“We can however adopt transitional policies to ease into a post-work society, such as redistributing work by shortening the workweek, expanding free life-long education, and expanding public employment,” he told io9.

A Bright Future

I asked Hughes about the short-term prospects of BIG.

“The basic income movement has exploded in the last couple of years, and people can find and join organizations that are a part of it,” he says. “BIG has also begun to be adopted into the platforms of Green and other parties, and proposed in referenda in places like Switzerland. The U.S. policy debate, however, has so far been dominated by advocates of job-creating Keynesian policies versus advocates of austerity and a minimal state. So it will take longer for the policy to break through here.”

But he says that the proportion of the population that is employed continues to decline, so eventually policy makers will have to respond.

How Universal Basic Income Will Save Us From the Robot UprisingEXPAND

Workers in China. Human destiny?

Looking further ahead to the future, the prospect of a jobless economy certainly seems daunting. But if we can successfully manage it and put our machines to work, we could enter into an unprecedented era of material abundance while dramatically extending our leisure time. Rather than be tied to menial and demeaning work, we’d be free to engage in activities that truly interest us.

Hughes agrees — and he doesn’t believe that BIG will kill motivation.

“It is very recent in human history that we learned to be motivated to work for pay, and were convinced that those who didn’t work for pay should feel shame about it,” he says. “For women that transition only occurred in the last two generations. And there have always been aristocrats who found motivation to get out of bed in seeking prestige or power or simply the intrinsic rewards of the activity, like scientific discovery. It will certainly require at least a generation to transition from a psychological and cultural assumption that self-worth requires work for pay to a society where we find self-worth in voluntary activities. But some of us are already there.”


Meet The House That Inequality Built: 432 Park Avenue––A Monument To Owning!

With over 400,000 square feet of usable interior space, there are only 104 units for people to live in. 432 Park Avenue is a monument to the epic rise of the global super-wealthy.

“There are only two markets, ultraluxury and subsidized housing.” —Rafael Viñoly, architect of 432 Park Avenue

On November 24, 2014, Joshua Brown writes in Fortune Magazine:

Along a stretch of New York City’s Park Avenue, between 56th and 57th Street, soars a tower so jaw-droppingly altitudinous that King Kong himself would likely think twice before scaling it.

Its rooftop, roughly a quarter of a mile high, makes it the tallest building in New York and the highest residential tower in the western hemisphere.

At 96 stories (1,396 feet), it has no company in the space it occupies atop Manhattan’s skyline. The Empire State Building tops out some 150 feet below that. Absent its spire, the newly built World Financial Center—itself a giant—is 28 feet shorter than this new cathedral to uber-wealth. 432 Park Avenue can be seen from all five boroughs of New York City, from inbound Metro-North trains coming in along the Harlem River, from the Meadowlands in New Jersey, and from several vantage points on Long Island. Its lone silhouette dominates the skyline from every angle. It demands your attention in a way that no residential building ever has.

The most remarkable thing about 432 Park, however, is not just its sheer size. It is the fact that, in a building so tall and imposing, with over 400,000 square feet of usable interior space, there are only 104 units for people to live in. 432 Park Avenue is, in short, a monument to the epic rise of the global super-wealthy. It is the house that historic inequality built.

Our story begins in 2009 with a little-known Los Angeles-based private equity firm called CIM. The firm’s three managing partners, a former Drexel Burnham banker and a pair of former Israeli paratroopers, quietly dropped in on Manhattan’s punch drunk post-financial crisis real estate market with money to spend. CIM moved quickly, writing checks to bail out some of the city’s most prestigious real estate families and firms, as projects were stalling and financing had all but dried up. The outsiders became Manhattan power players overnight.

Strong relationships with investment organizations like Blackstone and Calpers put the west coast-based firm in a position to capitalize on a once-in-a-generation opportunity in a city where the incumbents were largely overleveraged from the prior boom. They acted as the bank behind the resurrection of several high-profile distressed properties, and allowed the original developers to stay involved with each deal as their partners.

By 2011, CIM was everywhere. The economy was slowly improving, the financial firmament was beginning to thaw, and institutional investors were cutting checks again. It is in this recovering environment that a project as ambitious as 432 Park Avenue can even be dreamed of, let alone funded.

Harry Macklowe is one of the real estate industry’s most famous and colorful characters, with a massive portfolio of properties and projects to go along with his outsize personality. No stranger to gambles and calculated risks, Macklowe found himself in a bit of a squeeze in 2008, as the seams of the property market began to tear and the bills from New York’s decade of excess came due. A highly leveraged real estate transaction backed by a $5.8 billion loan from Deutsche Bank kept his name in the news, and his stake in several trophy properties, like the General Motors Building, were said to have been in jeopardy.

CIM stepped into the breach, providing financing for several of Macklowe’s troubled projects, and a partnership was born that would lead to the groundbreaking at 432 Park. By August 2011, their incredible plans for the tower—which would occupy the land where the Macklowe-owned Drake Hotel had been demolished—began to leak onto real estate news sites like Curbed and The New York Observer. The idea of a “fifth-act” survivor like Harry Macklowe partnering with a “mysterious” developer from out of town proved to be an irresistible storyline to the chattering classes.

Within a year, we began to get a sense of what 432 Park Avenue would come to represent. First, we learned that the number of condo units built would be closer to 100 than the originally planned 140. Next came details about the building’s sales efforts. Notably, while Macklowe Properties had kept 432 Park Avenue’s units off of popular broker databases like StreetEasy and the Residential Listing Service (RLS), the firm was going full-throttle in its attempt to court the Russian oligarchy. A kind of traveling sales office was set up at the Ritz-Carlton Hotel on Moscow’s Tverskaya Street, where dozens of billionaires pass through the lobby each day.

By May 2013, Macklowe had announced that the top-floor penthouse was already sold for an astonishing $95 million. Half of the building’s apartments were under contract, with projections of $3 billion in total sales. This February, Manhattan realtor Douglas Elliman was brought on as the exclusive co-sales agent to help move the rest of the units.

It is widely believed that the building will only be one-quarter occupied at all times, even though it will be completely sold out. Keep in mind that these are pied-a-terres that begin at $7 million each and include several full-floor parcels in the $75 million range. More than anything else, this speaks to the insatiable appetite of the world’s greatly expanded billionaire class. Middle Eastern oil magnates, Chinese billionaires, Russian oligarchs, and the Latin American aristocracy all have one thing in common: More money than they know what to do with and a desperation to get as much of it out of their home countries as possible. New York real estate works very well as both a facilitator of this as well as a store of value.

A view of New York City to the north from the 75th floor of 432 Park AvenuePhoto by Timothy A. Clary—AFP/Getty Images

As of this writing, there are currently plans for eight more ultra-luxe towers in and around Manhattan, in various stages of development. The explosion of wealth among ultra high net worth (UNHW) individuals around the world has made all of this possible. According to a new study from UBS and Wealth-X, there are 211,275 people in the world who could be considered ultra high net worth, with assets totaling north of $30 million. The approximate amount of wealth controlled by this group is estimated at just under $30 trillion. And while the number of UHNW people grew by 6% since 2013, their assets grew by 7%.

But these figures obscure an even more important trend taking root among the UHNW rankings: People with over a billion dollars in assets (there are 2,325 of them) saw their wealth increase by 12% year over year, while those at the bottom of the group—the 91,000 people with assets between $30 million and $49 million—realized a comparatively smaller 7% bump in wealth. Those at the top of the top are seeing their fortunes grow twice as fast as those at the bottom of the top. And the number of UHNW individuals who fall in the $750 million to $1 billion category saw their ranks swell by 20% this year to over 1,200 people. The bottom line is that the richer you are, the faster you’re getting even richer.

This explains why a city like New York can build dozens of ultra-luxury residential towers and continue to sell out. In New York alone, it is estimated that there are 8,655 full-time residents who would be categorized as ultra-high net worth, the most of any city in the world. Wealth-X finds that the average UHNW individual owns 2.7 properties and that 8% of their wealth is invested in real estate. Logically speaking, as their wealth grows, so too does their capacity to own and invest in an increasing amount of high-end housing.

This coming spring, the few dozen occupants of 432 Park Avenue, North America’s third-tallest building, will begin to move in. They will furnish their palatial apartments against a global backdrop of deflationary fears, central banks in perpetual crisis mode, massive unemployment, and stubbornly stagnating wage growth for 99% of the world’s population.

In previous generations, when towers of this scale were erected, they were monuments to working. 432 Park, unlike the Chrysler Building, the World Financial Center, and the Empire State Building, is a monument to owning.

In the Medieval era, towers were erected to separate royalty and feudal overlords from the rest of the population during times of plague and suffering. It was an effective barrier, both physical and symbolic. A 1,400-foot skyscraper, in America’s most populous city, in which fewer than 100 people will reside, is perhaps the perfect present-day parallel to such behavior. The ascendance of 432 Park Avenue to its now-dominant place in the skyline says more about the state of our world than a thousand Thomas Pikettys typing on a thousand keyboards ever could.


This monument to OWNING is  quarter-mile high structure that houses 104 wealthy families, who the system has enabled to concentrate their ownership of wealth-creating, income-producing capital assets.

Own the Future or Be Owned!

Paul Krugman: Deluded New Majority In Congress Insists We’re Living In An Ayn Rand Novel

On November 24, 2014, Janey Allon writes on AlterNet:

Paul Krugman is not exactly optimistic about the new Congress that will be sworn in in January. That’s because both houses of legislature will be dominated by the party that has essentially failed to grasp the fundamental economic realities of our day, which is that when the economy is at rock bottom where ours has been for the past six years, everything changes. As Krugman explains in today’s column:

“As I  wrote way back when, in a rock-bottom economy “the usual rules of economic policy no longer apply: virtue becomes vice, caution is risky and prudence is folly.” Government spending doesn’t compete with private investment — it actually promotes business spending. Central bankers, who normally cultivate an image as stern inflation-fighters, need to do the exact opposite, convincing markets and investors that they will push inflation up. “ Structural reform,” which usually means making it easier to cut wages, is more likely to destroy jobs than create them.”

This is neither wild-eyed nor radical, despite appearances, Krugman explains. It is rather what both mainstream economic anaylsis says will happen, and what history tells us. Not that either history nor economics has swayed the Very Serious People who have influenced our policy makers. Since 2008, we’ve had economic policy that relies on gut feeling rather than good and careful economic analysis, Krugman writes. And Congress’s insistence on cutting spending has wreaked havoc on jobs and infrastructure. Europe, meanwhile, is “flirting with outright deflation.”

Thanks to the Fed, the U.S. is in marginally better shape than Europe, with a dropping unemployment rate, and the Fed is expected to raise interest rates next year.  “But inflation is low, wages are weak, and the Fed seems to realize that raising rates too soon would be disastrous,” Krugman writes. We are far from being out of the woods, and the country just elected leaders who really don’t get it. Will they read Krugman? He concludes:

“The counterintuitive realities of economic policy at the zero lower bound are likely to remain relevant for a long time to come, which makes it crucial that influential people understand those realities. Unfortunately, too many still don’t; one of the most striking aspects of economic debate in recent years has been the extent to which those whose economic doctrines have failed the reality test refuse to admit error, let alone learn from it. The intellectual leaders of the new majority in Congress still insist that we’re living in an  Ayn Rand novel; German officials still insist that the problem is that debtors haven’t suffered enough.”

Not a lot of reason for optimism.


Wealth, Income, And Power

In February 2013, Professor G. William Domhoff of the Sociology Department of the University of California at Santa Cruz writes:

This document presents details on the wealth and income distributions in the United States, and explains how we use these two distributions as power indicators.

Some of the information may come as a surprise to many people. In fact, I know it will be a surprise and then some, because of a recent study (Norton & Ariely, 2010) showing that most Americans (high income or low income, female or male, young or old, Republican or Democrat) have no idea just how concentrated the wealth distribution actually is. More on that a bit later.

As far as the income distribution, the most striking numbers on income inequality will come last, showing the dramatic change in the ratio of the average CEO’s paycheck to that of the average factory worker over the past 40 years.

First, though, some definitions. Generally speaking, wealth is the value of everything a person or family owns, minus any debts. However, for purposes of studying the wealth distribution, economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale (see Wolff, 2004, p. 4, for a full discussion of these issues). Once the value of all marketable assets is determined, then all debts, such as home mortgages and credit card debts, are subtracted, which yields a person’s net worth. In addition, economists use the concept offinancial wealth — also referred to in this document as “non-home wealth” — which is defined as net worth minus net equity in owner-occupied housing. As Wolff (2004, p. 5) explains, “Financial wealth is a more ‘liquid’ concept than marketable wealth, since one’s home is difficult to convert into cash in the short term. It thus reflects the resources that may be immediately available for consumption or various forms of investments.”

We also need to distinguish wealth from income. Income is what people earn from work, but also from dividends, interest, and any rents or royalties that are paid to them on properties they own. In theory, those who own a great deal of wealth may or may not have high incomes, depending on the returns they receive from their wealth, but in reality those at the very top of the wealth distribution usually have the most income. (But it’s important to note that for the rich, most of that income does not come from “working”: in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. See Norris, 2010, for more details.)

This document focuses on the “Top 1%” as a whole because that’s been the traditional cut-off point for “the top” in academic studies, and because it’s easy for us to keep in mind that we are talking about one in a hundred. But it is also important to realize that the lower half of that top 1% has far less than those in the top half; in fact, both wealth and income are super-concentrated in the top 0.1%, which is just one in a thousand. (To get an idea of the differences, take a look at an insider account by a long-time investment manager who works for the well-to-do and very rich. It nicely explains what the different levels have — and how they got it. Also, David Cay Johnston (2011) has written a column about the differences among the top 1%, based on 2009 IRS information.)

As you read through the facts and figures that follow, please keep in mind that they are usually two or three years out of date because it takes time for one set of experts to collect the basic information and make sure it is accurate, and then still more time for another set of experts to analyze it and write their reports. It’s also the case that the infamous housing bubble of the first eight years of the 21st century inflated some of the wealth numbers.

There’s also some general information available on median income and percentage of people below the poverty line in 2010. As might be expected, most of the new information shows declines; in fact, a report from the Center for Economic and Policy Research (2011) concludes that the decade from 2000 to 2010 was a “lost decade” for most Americans.

One final general point before turning to the specifics. People who have looked at this document in the past often asked whether progressive taxation reduces some of the income inequality that exists before taxes are paid. The answer: not by much, if we count all of the taxes that people pay, from sales taxes to property taxes to payroll taxes (in other words, not just income taxes). And the top 1% of income earners actually pay a smaller percentage of their incomes to taxes than the 9% just below them. These findings are discussed in detail near the end of this document.

Exactly how rich are the Top 1%?

People often wonder exactly how much income and/or wealth someone needs to have to be included in the Top 1% or the Top 20%; Table 1 below lists some absolute dollar amounts associated with various income and wealth classes, but the important point to keep in mind is that for the most part, it’s the relative positions of wealth holders and income earners that we are trying to comprehend in this document.

Table 1: Income, net worth, and financial worth in the U.S. by percentile, in 2010 dollars
Wealth orincome class Mean household income Mean householdnet worth Mean household financial (non-home) wealth
Top 1 percent $1,318,200 $16,439,400 $15,171,600
Top 20 percent $226,200 $2,061,600 $1,719,800
60th-80th percentile $72,000 $216,900 $100,700
40th-60th percentile $41,700 $61,000 $12,200
Bottom 40 percent $17,300 -$10,600 -$14,800
From Wolff (2012); only mean figures are available, not medians.  Note that income and wealth are separate measures; so, for example, the top 1% of income-earners is not exactly the same group of people as the top 1% of wealth-holders, although there is considerable overlap.

The Wealth Distribution

In the United States, wealth is highly concentrated in a relatively few hands. As of 2010, the top 1% of households (the upper class) owned 35.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 53.5%, which means that just 20% of the people owned a remarkable 89%, leaving only 11% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one’s home), the top 1% of households had an even greater share: 42.1%. Table 2 and Figure 1 present further details, drawn from the careful work of economist Edward N. Wolff at New York University (2012).

Table 2: Distribution of net worth and financial wealth in the United States, 1983-2010
Total Net Worth
Top 1 percent Next 19 percent Bottom 80 percent
1983 33.8% 47.5% 18.7%
1989 37.4% 46.2% 16.5%
1992 37.2% 46.6% 16.2%
1995 38.5% 45.4% 16.1%
1998 38.1% 45.3% 16.6%
2001 33.4% 51.0% 15.6%
2004 34.3% 50.3% 15.3%
2007 34.6% 50.5% 15.0%
2010 35.4% 53.5% 11.1%
Financial (Non-Home) Wealth
Top 1 percent Next 19 percent Bottom 80 percent
1983 42.9% 48.4% 8.7%
1989 46.9% 46.5% 6.6%
1992 45.6% 46.7% 7.7%
1995 47.2% 45.9% 7.0%
1998 47.3% 43.6% 9.1%
2001 39.7% 51.5% 8.7%
2004 42.2% 50.3% 7.5%
2007 42.7% 50.3% 7.0%
2010 42.1% 53.5% 4.7%


Total assets are defined as the sum of: (1) the gross value of owner-occupied housing; (2) other real estate owned by the household; (3) cash and demand deposits; (4) time and savings deposits, certificates of deposit, and money market accounts; (5) government bonds, corporate bonds, foreign bonds, and other financial securities; (6) the cash surrender value of life insurance plans; (7) the cash surrender value of pension plans, including IRAs, Keogh, and 401(k) plans; (8) corporate stock and mutual funds; (9) net equity in unincorporated businesses; and (10) equity in trust funds.

Total liabilities are the sum of: (1) mortgage debt; (2) consumer debt, including auto loans; and (3) other debt. From Wolff (2004, 2007, 2010, & 2012).

Figure 1: Net worth and financial wealth distribution in the U.S. in 2010







In terms of types of financial wealth, the top one percent of households have 35% of all privately held stock, 64.4% of financial securities, and 62.4% of business equity. The top ten percent have 81% to 94% of stocks, bonds, trust funds, and business equity, and almost 80% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America; see Table 3 and Figure 2 for the details.

Table 3: Wealth distribution by type of asset, 2010
Investment Assets
Top 1 percent Next 9 percent Bottom 90 percent
Stocks and mutual funds 35.0% 45.8% 19.2%
Financial securities 64.4% 29.5% 6.1%
Trusts 38.0% 43.0% 19.0%
Business equity 61.4% 30.5% 8.1%
Non-home real estate 35.5% 43.6% 20.9%
TOTAL investment assets 50.4% 37.5% 12.0%
Housing, Liquid Assets, Pension Assets, and Debt
Top 1 percent Next 9 percent Bottom 90 percent
Principal residence 9.2% 31.0% 59.8%
Deposits 28.1% 42.5% 29.5%
Life insurance 20.6% 34.1% 45.3%
Pension accounts 15.4% 50.2% 34.5%
TOTAL other assets 13.0% 37.8% 49.2%
Debt 5.9% 21.6% 72.5%
From Wolff (2012).






Figure 2a: Wealth distribution by type of asset, 2010: investment assets
Figure 2b: Wealth distribution by type of asset, 2010: other assets
From Wolff (2012).

Inheritance and estate taxes

Figures on inheritance tell much the same story. According to a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans receive $100,000 or more in inheritance. Another 1.1% receive $50,000 to $100,000. On the other hand, 91.9% receive nothing (Kotlikoff & Gokhale, 2000). Thus, the attempt by ultra-conservatives to eliminate inheritance taxes — which they always call “death taxes” for P.R. reasons — would take a huge bite out of government revenues (an estimated $253 billion between 2012 and 2022) for the benefit of the heirs of the mere 0.6% of Americans whose death would lead to the payment of any estate taxes whatsoever (Citizens for Tax Justice, 2010b).

It is noteworthy that some of the richest people in the country oppose this ultra-conservative initiative, suggesting that this effort is driven by anti-government ideology. In other words, few of the ultra-conservative and libertarian activists behind the effort will benefit from it in any material way. However, a study (Kenny et al., 2006) of the financial support for eliminating inheritance taxes discovered that 18 super-rich families (mostly Republican financial donors, but a few who support Democrats) provide the anti-government activists with most of the money for this effort. (For more infomation, including the names of the major donors, download the article from United For a Fair Economy’s Web site.)

Actually, ultra-conservatives and their wealthy financial backers may not have to bother to eliminate what remains of inheritance taxes at the federal level. The rich already have a new way to avoid inheritance taxes forever — for generations and generations — thanks to bankers. After Congress passed a reform in 1986 making it impossible for a “trust” to skip a generation before paying inheritance taxes, bankers convinced legislatures in many states to eliminate their “rules against perpetuities,” which means that trust funds set up in those states can exist in perpetuity, thereby allowing the trust funds to own new businesses, houses, and much else for descendants of rich people, and even to allow the beneficiaries to avoid payments to creditors when in personal debt or sued for causing accidents and injuries. About $100 billion in trust funds has flowed into those states so far. You can read the details on these “dynasty trusts” (which could be the basis for an even more solidified “American aristocracy”) in aNew York Times opinion piece published in July 2010 by Boston College law professor Ray Madoff, who also has a book on this and other new tricks: Immortality and the Law: The Rising Power of the American Dead (Yale University Press, 2010).

Home ownership & wealth

For the vast majority of Americans, their homes are by far the most significant wealth they possess. Figure 3 comes from the Federal Reserve Board’s Survey of Consumer Finances (via Wolff, 2012) and compares the median income, total wealth (net worth, which is marketable assets minus debt), and non-home wealth (which earlier we called financial wealth) of White, Black, and Hispanic households in the U.S.

Figure 3: Income and wealth by race in the U.S.
From Wolff (2012). All figures adjusted to 2010 US dollars.

Besides illustrating the significance of home ownership as a source of wealth, the graph also shows that Black and Latino households are faring significantly worse overall, whether we are talking about income or net worth. In 2010, the average white household had almost 20 times as much total wealth as the average African-American household, and more than 70 times as much wealth as the average Latino household. If we exclude home equity from the calculations and consider only financial wealth, the ratios are more than 100:1. Extrapolating from these figures, we see that 71% of white families’ wealth is in the form of their principal residence; for Blacks and Hispanics, the figures are close to 100%.

And for all Americans, things have gotten worse: comparing the 2006/2007 numbers to the 2009/2010 numbers, we can see that the last few years (“The Great Recession”) have seen a huge loss in wealth — both housing and financial — for most families, making the gap between the rich and the rest of America even greater, and increasing the number of households withno marketable assets from 18.6% to 22.5% (Wolff, 2012).

Do Americans know their country’s wealth distribution?

A remarkable study (Norton & Ariely, 2010) reveals that Americans have no idea that the wealth distribution (defined for them in terms of “net worth”) is as concentrated as it is. When shown three pie charts representing possible wealth distributions, 90% or more of the 5,522 respondents — whatever their gender, age, income level, or party affiliation — thought that the American wealth distribution most resembled one in which the top 20% has about 60% of the wealth. In fact, of course, the top 20% control about 85% of the wealth (refer back to Table 2 and Figure 1 in this document for a more detailed breakdown of the numbers).

Even more striking, they did not come close on the amount of wealth held by the bottom 40% of the population. It’s a number I haven’t even mentioned so far, and it’s shocking: the lowest two quintiles hold just 0.3% of the wealth in the United States. Most people in the survey guessed the figure to be between 8% and 10%, and two dozen academic economists got it wrong too, by guessing about 2% — seven times too high. Those surveyed did have it about right for what the 20% in the middle have; it’s at the top and the bottom that they don’t have any idea of what’s going on.

Americans from all walks of life were also united in their vision of what the “ideal” wealth distribution would be, which may come as an even bigger surprise than their shared misinformation on the actual wealth distribution. They said that the ideal wealth distribution would be one in which the top 20% owned between 30 and 40 percent of the privately held wealth, which is a far cry from the 85 percent that the top 20% actually own. They also said that the bottom 40% — that’s 120 million Americans — should have between 25% and 30%, not the mere 8% to 10% they thought this group had, and far above the 0.3% they actually had. In fact, there’s no country in the world that has a wealth distribution close to what Americans think is ideal when it comes to fairness. So maybe Americans are much more egalitarian than most of them realize about each other, at least in principle and before the rat race begins.

Figure 4, reproduced with permission from Norton & Ariely’s article in Perspectives on Psychological Science, shows the actual wealth distribution, along with the survey respondents’ estimated and ideal distributions, in graphic form.

Figure 4: The actual United States wealth distribution plotted against theestimated and ideal distributions.

NOTE: In the “Actual” line, the bottom two quintiles are not visible because the lowest quintile owns just 0.1% of all wealth, and the second-lowest quintile owns 0.2%.

Source: Norton & Ariely (2010).

David Cay Johnston, a retired tax reporter for the New York Times, published an excellent summary of Norton & Ariely’s findings (Johnston, 2010b; you can download the article from Johnston’s Web site).

Historical context

Numerous studies show that the wealth distribution has been concentrated throughout American history, with the top 1% already owning 40-50% in large port cities like Boston, New York, and Charleston in the 1800s. (But it wasn’t as bad in the 18th and 19th centuries as it is now, as summarized in a 2012 article in The Atlantic.) The wealth distribution was fairly stable over the course of the 20th century, although there were small declines in the aftermath of the New Deal and World II, when most people were working and could save a little money. There were progressive income tax rates, too, which took some money from the rich to help with government services.

Then there was a further decline, or flattening, in the 1970s, but this time in good part due to a fall in stock prices, meaning that the rich lost some of the value in their stocks. By the late 1980s, however, the wealth distribution was almost as concentrated as it had been in 1929, when the top 1% had 44.2% of all wealth. It has continued to edge up since that time, with a slight decline from 1998 to 2001, before the economy crashed in the late 2000s and little people got pushed down again. Table 4 and Figure 5 present the details from 1922 through 2010.

Table 4: Share of wealth held by the Bottom 99% and Top 1% in theUnited States, 1922-2010.
Bottom 99 percent Top 1 percent
1922 63.3% 36.7%
1929 55.8% 44.2%
1933 66.7% 33.3%
1939 63.6% 36.4%
1945 70.2% 29.8%
1949 72.9% 27.1%
1953 68.8% 31.2%
1962 68.2% 31.8%
1965 65.6% 34.4%
1969 68.9% 31.1%
1972 70.9% 29.1%
1976 80.1% 19.9%
1979 79.5% 20.5%
1981 75.2% 24.8%
1983 69.1% 30.9%
1986 68.1% 31.9%
1989 64.3% 35.7%
1992 62.8% 37.2%
1995 61.5% 38.5%
1998 61.9% 38.1%
2001 66.6% 33.4%
2004 65.7% 34.3%
2007 65.4% 34.6%
2010 64.6% 35.4%
Sources: 1922-1989 data from Wolff (1996). 1992-2010 data from Wolff (2012).

Figure 5: Share of wealth held by the Bottom 99% and Top 1% in theUnited States, 1922-2010.







Here are some dramatic facts that sum up how the wealth distribution became even more concentrated between 1983 and 2004, in good part due to the tax cuts for the wealthy and the defeat of labor unions: Of all the new financial wealth created by the American economy in that 21-year-period, fully 42% of it went to the top 1%. A whopping 94% went to the top 20%, which of course means that the bottom 80% received only 6% of all the new financial wealth generated in the United States during the ’80s, ’90s, and early 2000s (Wolff, 2007).

The rest of the world

Thanks to a 2006 study by the World Institute for Development Economics Research — using statistics for the year 2000 — we now have information on the wealth distribution for the world as a whole, which can be compared to the United States and other well-off countries. The authors of the report admit that the quality of the information available on many countries is very spotty and probably off by several percentage points, but they compensate for this problem with very sophisticated statistical methods and the use of different sets of data. With those caveats in mind, we can still safely say that the top 10% of the world’s adults control about 85% of global household wealth — defined very broadly as all assets (not just financial assets), minus debts. That compares with a figure of 69.8% for the top 10% for the United States. The only industrialized democracy with a higher concentration of wealth in the top 10% than the United States is Switzerland at 71.3%. For the figures for several other Northern European countries and Canada, all of which are based on high-quality data, see Table 5.

Table 5: Percentage of wealth held in 2000 by the Top 10% of the adult populationin various Western countries
wealth owned
by top 10%
Switzerland 71.3%
United States 69.8%
Denmark 65.0%
France 61.0%
Sweden 58.6%
UK 56.0%
Canada 53.0%
Norway 50.5%
Germany 44.4%
Finland 42.3%

The Relationship Between Wealth and Power

What’s the relationship between wealth and power? To avoid confusion, let’s be sure we understand they are two different issues. Wealth, as I’ve said, refers to the value of everything people own, minus what they owe, but the focus is on “marketable assets” for purposes of economic and power studies. Power, as explained elsewhere on this site, has to do with the ability (or call it capacity) to realize wishes, or reach goals, which amounts to the same thing, even in the face of opposition (Russell, 1938; Wrong, 1995). Some definitions refine this point to say that power involves Person A or Group A affecting Person B or Group B “in a manner contrary to B’s interests,” which then necessitates a discussion of “interests,” and quickly leads into the realm of philosophy (Lukes, 2005, p. 30). Leaving those discussions for the philosophers, at least for now, how do the concepts of wealth and power relate?

First, wealth can be seen as a “resource” that is very useful in exercising power. That’s obvious when we think of donations to political parties, payments to lobbyists, and grants to experts who are employed to think up new policies beneficial to the wealthy. Wealth also can be useful in shaping the general social environment to the benefit of the wealthy, whether through hiring public relations firms or donating money for universities, museums, music halls, and art galleries.

Second, certain kinds of wealth, such as stock ownership, can be used to control corporations, which of course have a major impact on how the society functions. Tables 6a and 6b show what the distribution of stock ownership looks like. Note how the top one percent’s share of stock equity increased (and the bottom 80 percent’s share decreased) between 2001 and 2010.

Table 6a: Concentration of stock ownership in the United States, 2001-2010
Percent of all stock owned:
Wealth class 2001 2004 2007 2010
Top 1% 33.5% 36.7% 38.3% 35.0%
Next 19% 55.8% 53.9% 52.8% 56.6%
Bottom 80% 10.7% 9.4% 8.9% 8.4%
Table 6b: Amount of stock owned by various wealth classes in the U.S., 2010
Percent of households owning stocks worth:
Wealth class $0 (no stocks) $1-$9,999 $10,000 or more
Top 1% 5.1% 0.6% 94.3%
95-99% 6.9% 4.0% 89.1%
90-95% 11.8% 4.8% 83.4%
80-90% 21.0% 8.5% 70.5%
60-80% 41.3% 15.6% 44.1%
40-60% 55.4% 19.9% 24.7%
20-40% 76.1% 17.4% 6.5%
Bottom 20% 79.2% 17.3% 4.5%
TOTAL 53.1% 17.5% 31.6%
Both tables’ data derived from Wolff (2007, 2010, & 2012).  Includes direct ownership of stock shares and indirect ownership through mutual funds, trusts, and IRAs, Keogh plans, 401(k) plans, and other retirement accounts. All figures are in 2010 dollars.

Third, just as wealth can lead to power, so too can power lead to wealth. Those who control a government can use their position to feather their own nests, whether that means a favorable land deal for relatives at the local level or a huge federal government contract for a new corporation run by friends who will hire you when you leave government. If we take a larger historical sweep and look cross-nationally, we are well aware that the leaders of conquering armies often grab enormous wealth, and that some religious leaders use their positions to acquire wealth.

There’s a fourth way that wealth and power relate. For research purposes, the wealth distribution can be seen as the main “value distribution” within the general power indicator I call “who benefits.” What follows in the next three paragraphs is a little long-winded, I realize, but it needs to be said because some social scientists — primarily pluralists — argue that who wins and who loses in a variety of policy conflicts is the only valid power indicator (Dahl, 1957, 1958; Polsby, 1980). And philosophical discussions don’t even mention wealth or other power indicators (Lukes, 2005). (If you have heard it all before, or can do without it, feel free to skip ahead to the last paragraph of this section)

Here’s the argument: if we assume that most people would like to have as great a share as possible of the things that are valued in the society, then we can infer that those who have the most goodies are the most powerful. Although some value distributions may be unintended outcomes that do not really reflect power, as pluralists are quick to tell us, the general distribution of valued experiences and objects within a society still can be viewed as the most publicly visible and stable outcome of the operation of power.

In American society, for example, wealth and well-being are highly valued. People seek to own property, to have high incomes, to have interesting and safe jobs, to enjoy the finest in travel and leisure, and to live long and healthy lives. All of these “values” are unequally distributed, and all may be utilized as power indicators. However, the primary focus with this type of power indicator is on the wealth distribution sketched out in the previous section.

The argument for using the wealth distribution as a power indicator is strengthened by studies showing that such distributions vary historically and from country to country, depending upon the relative strength of rival political parties and trade unions, with the United States having the most highly concentrated wealth distribution of any Western democracy except Switzerland. For example, in a study based on 18 Western democracies, strong trade unions and successful social democratic parties correlated with greater equality in the income distribution and a higher level of welfare spending (Stephens, 1979).

And now we have arrived at the point I want to make. If the top 1% of households have 30-35% of the wealth, that’s 30 to 35 times what they would have if wealth were equally distributed, and so we infer that they must be powerful. And then we set out to see if the same set of households scores high on other power indicators (it does). Next we study how that power operates, which is what most articles on this site are about. Furthermore, if the top 20% have 84% of the wealth (and recall that 10% have 85% to 90% of the stocks, bonds, trust funds, and business equity), that means that the United States is a power pyramid. It’s tough for the bottom 80% — maybe even the bottom 90% — to get organized and exercise much power.

Income and Power

The income distribution also can be used as a power indicator. As Table 7 shows, it is not as concentrated as the wealth distribution, but the top 1% of income earners did receive 17.2% of all income in 2009. That’s up from 12.8% for the top 1% in 1982, which is quite a jump, and it parallels what is happening with the wealth distribution. This is further support for the inference that the power of the corporate community and the upper class have been increasing in recent decades.

Table 7: Distribution of income in the United States, 1982-2006
Top 1 percent Next 19 percent Bottom 80 percent
1982 12.8% 39.1% 48.1%
1988 16.6% 38.9% 44.5%
1991 15.7% 40.7% 43.7%
1994 14.4% 40.8% 44.9%
1997 16.6% 39.6% 43.8%
2000 20.0% 38.7% 41.4%
2003 17.0% 40.8% 42.2%
2006 21.3% 40.1% 38.6%
2009 17.2% 41.9% 40.9%
From Wolff (2012). The rising concentration of income can be seen in a special New York Times analysis by David Cay Johnston of an Internal Revenue Service report on income in 2004. Although overall income had grown by 27% since 1979, 33% of the gains went to the top 1%. Meanwhile, the bottom 60% were making less: about 95 cents for each dollar they made in 1979. The next 20% – those between the 60th and 80th rungs of the income ladder — made $1.02 for each dollar they earned in 1979. Furthermore, Johnston concludes that only the top 5% made significant gains ($1.53 for each 1979 dollar). Most amazing of all, the top 0.1% — that’s one-tenth of one percent — had more combined pre-tax income than the poorest 120 million people (Johnston, 2006).

But the increase in what is going to the few at the top did not level off, even with all that. As of 2007, income inequality in the United States was at an all-time high for the past 95 years, with the top 0.01% — that’s one-hundredth of one percent — receiving 6% of all U.S. wages, which is double what it was for that tiny slice in 2000; the top 10% received 49.7%, the highest since 1917 (Saez, 2009). However, in an analysis of 2008 tax returns for the top 0.2% — that is, those whose income tax returns reported $1,000,000 or more in income (mostly from individuals, but nearly a third from couples) — it was found that they received 13% of all income, down slightly from 16.1% in 2007 due to the decline in payoffs from financial assets (Norris, 2010).

And the rate of increase is even higher for the very richest of the rich: the top 400 income earners in the United States. According to another analysis by Johnston (2010a), the average income of the top 400 tripled during the Clinton Administration and doubled during the first seven years of the Bush Administration. So by 2007, the top 400 averaged $344.8 million per person, up 31% from an average of $263.3 million just one year earlier. (For another recent revealing study by Johnston, read “Is Our Tax System Helping Us Create Wealth?“).

How are these huge gains possible for the top 400? It’s due to cuts in the tax rates on capital gains and dividends, which were down to a mere 15% in 2007 thanks to the tax cuts proposed by the Bush Administration and passed by Congress in 2003. Since almost 75% of the income for the top 400 comes from capital gains and dividends, it’s not hard to see why tax cuts on income sources available to only a tiny percent of Americans mattered greatly for the high-earning few. Overall, the effective tax rate on high incomes fell by 7% during the Clinton presidency and 6% in the Bush era, so the top 400 had a tax rate of 20% or less in 2007, far lower than the marginal tax rate of 35% that the highest income earners (over $372,650) supposedly pay. It’s also worth noting that only the first $106,800 of a person’s income is taxed for Social Security purposes (as of 2010), so it would clearly be a boon to the Social Security Fund if everyone — not just those making less than $106,800 — paid the Social Security tax on their full incomes.

Do Taxes Redistribute Income?

It is widely believed that taxes are highly progressive and, furthermore, that the top several percent of income earners pay most of the taxes received by the federal government. Both ideas are wrong because they focus on official, rather than “effective” tax rates and ignore payroll taxes, which are mostly paid by those with incomes below $100,000 per year.

But what matters in terms of a power analysis is what percentage of their income people at different income levels pay to all levels of government (federal, state, and local) in taxes. If the less-well-off majority is somehow able to wield power, we would expect that the high earners would pay a bigger percentage of their income in taxes, because the majority figures the well-to-do would still have plenty left after taxes to make new investments and lead the good life. If the high earners have the most power, we’d expect them to pay about the same as everybody else, or less.

Citizens for Tax Justice, a research group that’s been studying tax issues from its offices in Washington since 1979, provides the information we need. When all taxes (not just income taxes) are taken into account, the lowest 20% of earners (who average about $12,400 per year), paid 16.0% of their income to taxes in 2009; and the next 20% (about $25,000/year), paid 20.5% in taxes. So if we only examine these first two steps, the tax system looks like it is going to be progressive.

And it keeps looking progressive as we move further up the ladder: the middle 20% (about $33,400/year) give 25.3% of their income to various forms of taxation, and the next 20% (about $66,000/year) pay 28.5%. So taxes are progressive for the bottom 80%. But if we break the top 20% down into smaller chunks, we find that progressivity starts to slow down, then it stops, and then it slips backwards for the top 1%.

Specifically, the next 10% (about $100,000/year) pay 30.2% of their income as taxes; the next 5% ($141,000/year) dole out 31.2% of their earnings for taxes; and the next 4% ($245,000/year) pay 31.6% to taxes. You’ll note that the progressivity is slowing down. As for the top 1% — those who take in $1.3 million per year on average — they pay 30.8% of their income to taxes, which is a little less than what the 9% just below them pay, and only a tiny bit more than what the segment between the 80th and 90th percentile pays.

What I’ve just explained with words can be seen more clearly in Figure 6.

Figure 6: Share of income paid as tax, including local and state tax
Source: Citizens for Tax Justice (2010a).


We also can look at this information on income and taxes in another way by asking what percentage of all taxes various income levels pay. (This is not the same as the previous question, which asked what percentage of their incomes went to taxes for people at various income levels.) And the answer to this new question can be found in Figure 7. For example, the top 20% receives 59.1% of all income and pays 64.3% of all the taxes, so they aren’t carrying a huge extra burden. At the other end, the bottom 20%, which receives 3.5% of all income, pays 1.9% of all taxes.

Figure 7: Share of all income earned and all taxes paid, by quintile
Source: Citizens for Tax Justice (2010a).

So the best estimates that can be put together from official government numbers show a little bit of progressivity. But the details on those who earn millions of dollars each year are very hard to come by, because they can stash a large part of their wealth in off-shore tax havens in the Caribbean and little countries in Europe, starting with Switzerland. And there are many loopholes and gimmicks they can use, as summarized with striking examples in Free Lunchand Perfectly Legal, the books by Johnston that were mentioned earlier. For example, Johnston explains the ways in which high earners can hide their money and delay on paying taxes, and then invest for a profit what normally would be paid in taxes.

Income inequality in other countries

The degree of income inequality in the United States can be compared to that in other countries on the basis of the Gini coefficient, a mathematical ratio that allows economists to put all countries on a scale with values that range (hypothetically) from zero (everyone in the country has the same income) to 100 (one person in the country has all the income). On this widely used measure, the United States ends up 95th out of the 134 countries that have been studied — that is, only 39 of the 134 countries have worse income inequality. The U.S. has a Gini index of 45.0; Sweden is the lowest with 23.0, and South Africa is near the top with 65.0.

The table that follows displays the scores for 22 major countries, along with their ranking in the longer list of 134 countries that were studied (most of the other countries are very small and/or very poor). In examining this table, remember that it does not measure the same thing as Table 5 earlier in this document, which was about the wealth distribution. Here we are looking at the income distribution, so the two tables won’t match up as far as rankings. That’s because a country can have a highly concentrated wealth distribution and still have a more equal distribution of income due to high taxes on top income earners and/or high minimum wages — both Switzerland and Sweden follow this pattern. So one thing that’s distinctive about the U.S. compared to other industrialized democracies is that both its wealth and income distributions are highly concentrated.

Table 8: Income equality in selected countries
Country/Overall Rank Gini Coefficient
1.  Sweden 23.0
2.  Norway 25.0
8.  Austria 26.0
10.  Germany 27.0
17.  Denmark 29.0
25.  Australia 30.5
34.  Italy 32.0
35.  Canada 32.1
37.  France 32.7
42.  Switzerland 33.7
43.  United Kingdom 34.0
45.  Egypt 34.4
56.  India 36.8
61.  Japan 38.1
68.  Israel 39.2
81.  China 41.5
82.  Russia 42.3
90.  Iran 44.5
93.  United States 45.0
107.  Mexico 48.2
125.  Brazil 56.7
133.  South Africa 65.0

Note: These figures reflect family/household income, not individual income.

Source: Central Intelligence Agency (2010).

The differences in income inequality between countries also can be illustrated by looking at the share of income earned by the now-familiar Top 1% versus the Bottom 99%. One of the most striking contrasts is between Sweden and the United States from 1950 to 2009, as seen in Figure 8; and note that the differences between the two countries narrowed in the 1950s and 1960s, but after that went their separate ways, in rather dramatic fashion.

Figure 8: Top income shares in the U.S. and Sweden, 1950-2009
Source: Alvaredo et al. (2012), World Top Incomes Database.

The impact of “transfer payments”

As we’ve seen, taxes don’t have much impact on the income distribution, especially when we look at the top 1% or top 0.1%. Nor do various kinds of tax breaks and loopholes have much impact on the income distribution overall. That’s because the tax deductions that help those with lower incomes — such as the Earned Income Tax Credit (EITC), tax forgiveness for low-income earners on Social Security, and tax deductions for dependent children — are offset by the breaks for high-income earners (for example: dividends and capital gains are only taxed at a rate of 15%; there’s no tax on the interest earned from state and municipal bonds; and 20% of the tax deductions taken for dependent children actually go to people earning over $100,000 a year).

But it is sometimes said that income inequality is reduced significantly by government programs that matter very much in the lives of low-income Americans. These programs provide “transfer payments,” which are a form of income for those in need. They include unemployment compensation, cash payments to the elderly who don’t have enough to live on from Social Security, Temporary Assistance to Needy Families (welfare), food stamps, and Medicaid.

Thomas Hungerford (2009), a tax expert who works for the federal government’s Congressional Research Service, carried out a study for Congress that tells us about the real-world impact of transfer payments on reducing income inequality. Hungerford’s study is based on 2004 income data from an ongoing study of a representative sample of families at the University of Michigan, and it includes the effects of both taxes and four types of transfer payments (Social Security, Temporary Assistance to Needy Families, food stamps, and Medicaid). The table that follows shows the income inequality index (that is, the Gini coefficient) at three points along the way: (1.) before taxes or transfers; (2) after taxes are taken into account; and (3) after both taxes and transfer payments are included in the equation. (The Citizens for Tax Justice study of income and taxes for 2009, discussed earlier, included transfer payments as income, so that study and Hungerford’s have similar starting points. But they can’t be directly compared, because they use different years.)

Table 9: Redistributive effect of taxes and transfer payments
Income definition Gini index
Before taxes and transfers 0.5116
After taxes, before transfers 0.4774
After taxes and transfers 0.4284
Source: Congressional Research Service, adapted from Hungerford (2009).


As can be seen, Hungerford’s findings first support what we had learned earlier from the Citizens for Tax Justice study: taxes don’t do much to reduce inequality. They secondly reveal that transfer payments have a slightly larger impact on inequality than taxes, but not much. Third, his findings tell us that taxes and transfer payments together reduce the inequality index from .52 to .43, which is very close to the CIA’s estimate of .45 for 2008.

In short, for those who ask if progressive taxes and transfer payments even things out to a significant degree, the answer is that while they have some effect, they don’t do nearly as much as in Canada, major European countries, or Japan.

Income Ratios and Power: Executives vs. Average Workers

Another way that income can be used as a power indicator is by comparing average CEO annual pay to average factory worker pay, something that has been done for many years byBusiness Week and, later, the Associated Press. The ratio of CEO pay to factory worker pay rose from 42:1 in 1960 to as high as 531:1 in 2000, at the height of the stock market bubble, when CEOs were cashing in big stock options. It was at 411:1 in 2005 and 344:1 in 2007, according to research by United for a Fair Economy. By way of comparison, the same ratio is about 25:1 in Europe. The changes in the American ratio from 1960 to 2007 are displayed in Figure 9, which is based on data from several hundred of the largest corporations.

Figure 9: CEOs’ pay as a multiple of the average worker’s pay, 1960-2007
Source: Executive Excess 2008, the 15th Annual CEO Compensation Survey from the Institute for Policy Studies and United for a Fair Economy.

It’s even more revealing to compare the actual rates of increase of the salaries of CEOs and ordinary workers; from 1990 to 2005, CEOs’ pay increased almost 300% (adjusted for inflation), while production workers gained a scant 4.3%. The purchasing power of the federal minimum wage actually declined by 9.3%, when inflation is taken into account. These startling results are illustrated in Figure 10.

Figure 10: CEOs’ average pay, production workers’ average pay, the S&P 500 Index,corporate profits, and the federal minimum wage, 1990-2005 (all figuresadjusted for inflation)
Source: Executive Excess 2006, the 13th Annual CEO Compensation Survey from the Institute for Policy Studies and United for a Fair Economy.


Although some of the information I’ve relied upon to create this section on executives’ vs. workers’ pay is a few years old now, the AFL/CIO provides up-to-date information on CEO salaries at their Web site. There, you can learn that the median compensation for CEO’s in allindustries as of early 2010 is $3.9 million; it’s $10.6 million for the companies listed in Standard and Poor’s 500, and $19.8 million for the companies listed in the Dow-Jones Industrial Average. Since the median worker’s pay is about $36,000, then you can quickly calculate that CEOs in general make 100 times as much as the workers, that CEO’s of S&P 500 firms make almost 300 times as much, and that CEOs at the Dow-Jones companies make 550 times as much. (For a more recent update on CEOs’ pay, see “The Drought Is Over (At Least for CEOs)” at NYTimes.com; the article reports that the median compensation for CEOs at 200 major companies was $9.6 million in 2010 — up by about 12% over 2009 and generally equal to or surpassing pre-recession levels. For specific information about some of the top CEOs, see http://projects.nytimes.com/executive_compensation.

If you wonder how such a large gap could develop, the proximate, or most immediate, factor involves the way in which CEOs now are able to rig things so that the board of directors, which they help select — and which includes some fellow CEOs on whose boards they sit — gives them the pay they want. The trick is in hiring outside experts, called “compensation consultants,” who give the process a thin veneer of economic respectability.

The process has been explained in detail by a retired CEO of DuPont, Edgar S. Woolard, Jr., who is now chair of the New York Stock Exchange’s executive compensation committee. His experience suggests that he knows whereof he speaks, and he speaks because he’s concerned that corporate leaders are losing respect in the public mind. He says that the business page chatter about CEO salaries being set by the competition for their services in the executive labor market is “bull.” As to the claim that CEOs deserve ever higher salaries because they “create wealth,” he describes that rationale as a “joke,” says the New York Times (Morgenson, 2005).

Here’s how it works, according to Woolard:

The compensation committee [of the board of directors] talks to an outside consultant who has surveys you could drive a truck through and pay anything you want to pay, to be perfectly honest. The outside consultant talks to the human resources vice president, who talks to the CEO. The CEO says what he’d like to receive. It gets to the human resources person who tells the outside consultant. And it pretty well works out that the CEO gets what he’s implied he thinks he deserves, so he will be respected by his peers. (Morgenson, 2005.)

The board of directors buys into what the CEO asks for because the outside consultant is an “expert” on such matters. Furthermore, handing out only modest salary increases might give the wrong impression about how highly the board values the CEO. And if someone on the board should object, there are the three or four CEOs from other companies who will make sure it happens. It is a process with a built-in escalator.

As for why the consultants go along with this scam, they know which side their bread is buttered on. They realize the CEO has a big say-so on whether or not they are hired again. So they suggest a package of salaries, stock options and other goodies that they think will please the CEO, and they, too, get rich in the process. And certainly the top executives just below the CEO don’t mind hearing about the boss’s raise. They know it will mean pay increases for them, too. (For an excellent detailed article on the main consulting firm that helps CEOs and other corporate executives raise their pay, check out the New York Times article entitled“America’s Corporate Pay Pal”, which supports everything Woolard of DuPont claims and adds new information.)

If hiring a consulting firm doesn’t do the trick as far as raising CEO pay, then it may be possible for the CEO to have the board change the way in which the success of the company is determined. For example, Walmart Stores, Inc. used to link the CEO’s salary to sales figures at established stores. But when declining sales no longer led to big pay raises, the board simply changed the magic formula to use total companywide sales instead. By that measure, the CEO could still receive a pay hike (Morgenson, 2011).

There’s a much deeper power story that underlies the self-dealing and mutual back-scratching by CEOs now carried out through interlocking directorates and seemingly independent outside consultants. It probably involves several factors. At the least, on the workers’ side, it reflects their loss of power following the all-out attack on unions in the 1960s and 1970s, which is explained in detail in an excellent book by James Gross (1995), a labor and industrial relations professor at Cornell. That decline in union power made possible and was increased by both outsourcing at home and the movement of production to developing countries, which were facilitated by the break-up of the New Deal coalition and the rise of the New Right (Domhoff, 1990, Chapter 10). It signals the shift of the United States from a high-wage to a low-wage economy, with professionals protected by the fact that foreign-trained doctors and lawyers aren’t allowed to compete with their American counterparts in the direct way that low-wage foreign-born workers are.

(You also can read a quick version of my explanation for the “right turn” that led to changes in the wealth and income distributions in an article on this site, where it is presented in the context of criticizing the explanations put forward by other theorists.)

On the other side of the class divide, the rise in CEO pay may reflect the increasing power of chief executives as compared to major owners and stockholders in general, not just their increasing power over workers. CEOs may now be the center of gravity in the corporate community and the power elite, displacing the leaders in wealthy owning families (e.g., the second and third generations of the Walton family, the owners of Wal-Mart). True enough, the CEOs are sometimes ousted by their generally go-along boards of directors, but they are able to make hay and throw their weight around during the time they are king of the mountain.

The claims made in the previous paragraph need much further investigation. But they demonstrate the ideas and research directions that are suggested by looking at the wealth and income distributions as indicators of power.

Further Information


AFL-CIO (2010). Executive PayWatch: CEO Pay Database: Compensation by Industry. Retrieved February 8, 2010 from http://www.aflcio.org/corporatewatch/paywatch/ceou/industry.cfm.

Alvaredo, F., Atkinson, T., Piketty, T., & Saez, E. (2012). World Top Incomes Database.Retrieved March 14, 2012 from http://g-mond.parisschoolofeconomics.eu/topincomes/.

Anderson, S., Cavanagh, J., Collins, C., Lapham, M., & Pizzigati, S. (2008). Executive Excess 2008: How Average Taxpayers Subsidize Runaway Pay. Washington, DC: Institute for Policy Studies / United for a Fair Economy.

Anderson, S., Cavanagh, J., Collins, C., Lapham, M., & Pizzigati, S. (2007). Executive Excess 2007: The Staggering Social Cost of U.S. Business Leadership. Washington, DC: Institute for Policy Studies / United for a Fair Economy.

Anderson, S., Benjamin, E., Cavanagh, J., & Collins, C. (2006). Executive Excess 2006: Defense and Oil Executives Cash in on Conflict. Washington, DC: Institute for Policy Studies / United for a Fair Economy.

Anderson, S., Cavanagh, J., Klinger, S., & Stanton, L. (2005). Executive Excess 2005: Defense Contractors Get More Bucks for the Bang. Washington, DC: Institute for Policy Studies / United for a Fair Economy.

Center for Economic and Policy Research (2011). New Census Numbers Make it Official: 2000-2010 Was a Lost Economic Decade. Retrieved October 25, 2011 fromhttp://www.cepr.net/data-bytes/poverty-bytes/new-census-numbers-make-it-official-2000-2010-was-lost-economic-decade.

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Citizens for Tax Justice (2010b). State-by-State Estate Tax Figures: Number of Deaths Resulting in Estate Tax Liability Continues to Drop. Retrieved December 13, 2010 fromhttp://www.ctj.org/pdf/estatetax2010.pdf.

Citizens for Tax Justice (2010a). All Americans Pay Taxes. Retrieved April 15, 2010 fromhttp://www.ctj.org/pdf/taxday2010.pdf.

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