Proposals for broadening ownership have long been stymied-greeted with cheery words of support, yet backed with precious little political action. That impotent relationship draws sustenance from those content only to propose elegant objections and graceful diversions. Meanwhile, concentrated wealth and income continue to work their devastation on the nation’s economic and social fabric.
Though quick to chronicle the theoretical risks of an ownership routinely denied, critics conveniently ignore the real risks with which people must regularly cope. For instance, the Federal Reserve’s 1995 Survey of Consumer Finances (their latest) confirms that between 1983 and 1995 only the top 5 percent of households saw an increase in their net worth. Median financial wealth was $9,950 in 1995, down 10 percent from 1983.1
From 1983 to 1995, the net worth of the bottom 40 percent shrank 79.6 percent while the portion of households with zero or negative financial wealth grew from 26 to 29 percent. That too is risk-financial, societal, psychological. Meanwhile, the richest 1 percent of families claimed 47 percent of total household wealth, endangered by a net worth that’s now 2.4 times that of the poorest 80 percent. The top 20 percent own 93 percent.
The same goes for income. Only the top quintile saw their income rise from 1982 to 1994. By 1995, the bottom 40 percent of families between ages 25 and 54 had no financial savings. The vaunted middle quintile had enough to sustain their normal consumption for all of 1.2 months (down from 3.6 months in 1989).
In addition to ensuring an epidemic of economic anxiety, today’s grotesquely exclusive capitalism blithely ignores the fact that every producer requires a customer. Yet we rely on labor earnings to generate market demand while trusting increasingly globalized labor markets to reduce labor costs. Add deflation now to our pantheon of real risk.
For those who favor a more redistributive approach, consider that the last time wealth and income were this concentrated, Louisiana’s Senator Huey P. Long (father of Russell, my Senate mentor) proposed a levy on those owning or earning more than 300 times the average family’s wealth or income. By comparison, Plato resolved to protect the polity with a 5:1 limit. His rationale: “there should exist among the citizens neither extreme poverty nor, again, excessive wealth, for both are productive of great evils.”
Under the “Long Plan,” family fortunes in excess of five million dollars (roughly $40 million today) would be turned over to a corporation that, in turn, would issue its stock for distribution “among the peoples according to any plan deemed suitable by the Congress.” The Kingfish’s populist proposal is identical in structure to Warren Buffet’s popular investment strategy, whereby he invests long term in a portfolio of securities, with investors participating through their stake in Berkshire Hathaway. He and Microsoft’s Bill Gates now boast a combined net worth greater than the 100 million poorest of their fellow citizens.
Long was assassinated in 1935, the same year we enacted Social Security. That highly regressive job tax is now the largest single levy paid by most, and its promised benefits their largest “wealth.” Rather than risk Long’s “Share Our Wealth,” we opted instead for “Tax Our Workers.” The rest, as they say, is history.