All The Wealth The Middle Class Accumulated After 1940 Is Gone Here's more proof the middle class is dying. The middle-class share of American wealth has been shrinking for the better part of three decades and recently fell to its lowest level since 1940, according to a new study by economists Emmanuel Saez of the University of California, Berkeley, and Gabriel Zucman of the London School of Economics. In other words, remember the surge of the great American middle class after World War II? That's all gone, at least by one measure. In this case, "middle class" is defined rather expansively as the bottom 90 percent of all Americans. "Wealth" is the total of home equity, stock and bond holdings, pension plans and other assets, minus debt. As such assets are mostly owned by mid- to higher-income households -- and considering most Americans define themselves as "middle-class" -- it seems reasonable to use the bottom 90 percent as a proxy for the "middle class." Saez and Zucman discussed their paper in a blog post for the Washington Center For Equitable Growth on Monday that included this stark chart: Debt has been the big force driving net wealth lower for the middle class, according to Saez and Zucman. Brief bubbles in stock and home prices in the 1990s and 2000s only temporarily offset the steady, depressing rise in mortgage, student-loan, credit-card and other debts for the bottom 90 percent. "Many middle class families own homes and have pensions, but too many of these families also have much higher mortgages to repay and much higher consumer credit and student loans to service than before," Saez and Zucman wrote. Another important factor has been that incomes have stagnated for most Americans over the past few decades, once adjusted for inflation. Along with rising debt levels, stagnant wages have made it impossible for most families to save very much money. And who has been the beneficiary of this middle-class misery? The top 0.1 percent of Americans, whose incomes have just kept rising, and whose share of wealth has soared to levels not seen since Jay Gatsby was still staring at the blinking green light at the end of Daisy Buchanan's dock: In fact, the middle class is not alone in suffering from shrinking wealth. The rest of the top 10 percent of Americans below the 0.1 percent -- the "merely rich," Saez and Zucman call them -- have also suffered from falling household wealth over the past four decades. This rising inequality of wealth can only lead to more inequality of income and wealth in the future, Saez and Zucman warned, echoing French economist Thomas Piketty. The very rich will just keep getting richer by living on the returns from their wealth, while the rest of us will keep falling behind. http://www.huffingtonpost.com/2014/10/20/middle-class-wealth-shrinks-1940s_n_6014874.html
Income taxes, death taxes and inflation have done the major damage. Debt is a sign of the damage. To fix this you either need to eliminate income and death taxes completely or only tax the .05% with a progressive tax. You also need to have the Fed stop printing as many digitial trillions as it desires for a few years.
There is no doubt that the middle class is being financially raped into poverty. The debate is, who is to blame, republicans or democrats? Makes for a great never ending campaign. Of course all intellectually honest people know they're both equally culpable in facilitating the demise of the middle class.
this may be the first time you have an economic issue at least partially correct note, I did vote for perot because I had a concern about jobs going over seas and to the south. however, do you think you could explain your comment in the context of how the system works?
Never gonna happen, no one wants this. You may as well dream of a worldwide dictatorship of the proletariat.
it is the correct solution to income inequality. Taxing those who already are on the wrong side of the balance exacerbates the situation. Besides I think I know about 85 million american tax payers who would like the idea. We have inflation anyway and we do not even track how many trillion electronic dollars are being made by the privately owned Federal Reserve. There is no good reason to have an income tax until we actually own and control the money supply.
7 Things the Middle Class Can’t Afford Anymore ERIKA RAWES OCTOBER 22, 2014 . . . Though there is some debate over the exact income a middle class household brings in, we do have an idea of who the middle class are — most working class people. Today’s bourgeoisie is composed of laborers and skilled workers, white collar and blue collar workers, many of whom face financial challenges. Bill Maher reminded us a few months back that 50 years ago, the largest employer was General Motors, where workers earned an equivalent of $50 per hour (in today’s money). Today, the largest employer — Walmart — pays around $8 per hour. The middle class has certainly changed. We’ve ranked a list of things the middle class can no longer really afford. We’re not talking about lavish luxuries, like private jets and yachts. The items on this list are a bit more basic, and some of them are even necessities. The ranking of this list is based on affordability and necessity. Therefore, items that are necessity ranked higher, as did items that a larger percentage of people have trouble paying for. more . . .
The Fed’s Assault On Savers—–Backdoor Repudiation Of The Federal Debt by Contributor • October 23, 2014 By Chris Martenson …….It’s really that simple. The Fed has openly and actively suppressed rates — not to help the credit markets, as they claim, but to engineer a condition of Financial Repression. Because that’s what the government needs to stealthily take your wealth to pay down the prior debts it accumulated. Thus ‘negative real rates’ are the essential component of transferring wealth from the many to the few, with the ‘few’ being defined as the government, Wall Street, and others who exploit leverage and liabilities at sufficient scale to be on the right side of that wealth transfer. This well-known phenomenon is a thoroughly accepted and well-described practice of governments and central banks everywhere. more at http://davidstockmanscontracorner.c...ers-backdoor-repudiation-of-the-federal-debt/
Piketty’s prophecy comes true: The planet’s middle class is rapidly going extinct New research reveals the superrich have grabbed half the world's resources -- and their wealth is only growing LYNN STUART PARRAMORE According to a new report, the richest one percent have got their mitts on almost half the world’s assets. Think that’s the end of the story? Think again. This is only the beginning. The “Global Annual Wealth Report,” freshly released by investment giant Credit Suisse, analyzes the shocking trend of growing wealth inequality around the world. What the researchers find is that global wealth has increased every year since 2008, and that personal wealth seems to be rising at the fastest rate ever recorded, much of it driven by strong equity markets. But the benefits of this growth have largely been channeled to those who are already affluent. While the restaurant workers in America struggled to achieve wages of $10 an hour for their labor, those invested in equities saw their wealth soar without lifting a finger. So it goes around the world. The bottom half of the world’s people now own less than 1 percent of total wealth, and they’re struggling to hold onto even that minuscule portion. On the other hand, the wealthiest 10 percent have accumulated a staggering 87 percent of global assets. The top percentile has 48.2 percent of the world wealth. For now. One of the scary things about the wealth of the supperich is what French economist Thomas Piketty pointed out in his best-selling book, Capital in the 21st Century. Once they’ve got a big chunk of wealth, their share will get bigger even if they sit by and do absolutely nothing. Piketty sums up this economic reality in a simple and horrifying formula: r > g. Basically, this means that when rate of return on wealth is greater than the overall rate of growth of the economy, as it has nearly always been throughout history, the rich will grow inevitably richer and the poor poorer unless there is some kind of intervention, like higher taxes on wealth, for example. If r is less than g, the assets of the super-wealthy will erode, but if r is greater than g, you eventually get the explosion of gigantic inherited fortunes and dynasties. This is happening now: If you look at the Forbes 400 list of the wealthiest people in America, you see a lot more inherited fortunes in the upper ranks than you did a couple of decades ago, when the policies that held inequality at bay began to get dismantled. In today’s top 10, there are more scions of the Walton family than entrepreneurs like Bill Gates or Mark Zuckerberg. These people have essentially done nothing of value for society, and yet their undue influence shapes our political landscape with the wave of a wad of cash. There have been moments in history when things were not so lopsided. During the post-war period, inequality was contained because governments made sure their rich didn’t accumulate at such alarming rates by doing things like taxing their estates at a high rate. At the same time, they created policies to lift the incomes of the less well-off and allow them to have some basic security. But that’s an exception in history. Most of the time, this kind of intervention did not happen, and so the rich kept gobbling more and accumulating more power to keep it that way until one of two things happened — a revolution or some kind of catastrophe or disruptive event, like a war, shook things up. As the Credit Suisse report states: “[Wealth inequality] has been the case throughout most of human history, with wealth ownership often equating with land holdings, and wealth more often acquired via inheritance or conquest rather than talent or hard work. However, a combination of factors caused wealth inequality to trend downwards in high income countries during much of the 20th century, suggesting that a new era had emerged. That downward trend now appears to have stalled, and possibly gone into reverse.” That’s right. We’re on a turbo-charged ride back to the days of Downton Abbey. Piketty warns that we’re in the early stages of reverting right back to periods of massive inequality, like 19th-century Britain or 18th-century France, where great dynastic fortunes ruled and everybody else fought for scraps. What the statistics and formulas don’t show is the kind of human suffering that results from this kind of extreme inequality. While the global elite zip around the world in private jets and watch their stock portfolios expand on computer screens from within their gated mansions, the bottom half stays awake at night trying to think of how to pay for medicine for a sick child. The things that give life dignity and meaning, like a quality education, a decent job, and the security of knowing you have a roof over your head and a doctor to care for you when you are ill grow further and further out of reach. Anxiety never leaves because one unforeseen mishap can push you down into poverty, and if you’re already there, you spend much of your time searching, often fruitlessly, for a way out. But there’s a little bit of anxiety percolating at the top, too. On the June cover of the conservative magazine American Spectator, a cartoon shows an incensed mob looking on as a monocled fatcat is led to a bloody guillotine — a scene evoking the Reign of Terror during the French Revolution. The caption reads, “The New Class Warfare: Thomas Piketty’s intellectual cover for confiscation.” In the story that accompanies the image, James Pierson warns of revolution and a growing class of suffering people who want to punish the rich and take away their toys. That would be one way to address things. Another would be the recognition that inequality is extremely destabilizing and dangerous, and that non-violent interventions are possible, as we saw in America with the New Deal. Things like robust tax reform, unions, regulation, changes in corporate governance and CEO pay, affordable education, jobs programs, expansion of Social Security and universal healthcare. Or we could just do things the old-fashioned way and wait for a disaster even bigger than the meltdown of 2007-’08. In that case, fasten your seatbelts. This ride could get very rough.