They're Back! And Rich As They Ever Were
Originally posted on Common Dreams, Sept. 24, 2013
Two weeks ago, Forbes released its 2013 list of the richest 400 Americans. And the not-so-surprising news: The fortunes of those at the top continue to rise while Americans across the country continue to suffer. What is surprising though is that they have now regained "all" of the losses from the economic collapse.
"Five years after the financial crisis sent the fortunes of many in the U.S. and around the world tumbling, the wealthiest as a group have finally gained back all that they lost. The 400 wealthiest Americans are worth just over $2 trillion, roughly equivalent to the GDP of Russia. That is a gain of $300 billion from a year ago, and more than double a decade ago. The average net worth of list members is a staggering $5 billion, $800 million more than a year ago and also a record. The minimum net worth needed to make the 400 list was $1.3 billion. The last time it was that high was in 2007 and 2008, before property and stock market values began sliding. Because the bar is so high, 61 American billionaires didn’t make the cut."
Half of those who dropped off the Forbes list didn't do so because their fortunes' declined. They "fell off the list" because others passed them up. As Forbes notes, "The rest simply couldn't keep up with the rising tide." It's an economic bonanza for the rich.
In glorifying and idolizing the superrich, what Forbes and much of our popular culture fails to acknowledge is the role that inherited wealth, race, gender, and public policy have played in shaping who is and who is not on the list. But last year, United for a Fair Economy (UFE) took a closer, more critical look at the list with the release of our "Born on Third Base" report, which analyzed the 2011 Forbes 400 list. Here’s what we learned:
- At least 40% of those on the 2011 Forbes 400 list inherited a medium-sized business or substantial wealth from a spouse or family member.
- Over 20% – including many Walton family members – inherited enough to place them on the Forbes 400 list with their inheritance alone. It's like they were born on home plate.
- Only a small number can be said to truly come from modest means, and even they had help.
America's long history of race and gender bias also shape who is and is not on the list. Women and people of color make up only a tiny sliver of the overwhelmingly white, male Forbes 400. Even in 2013, the Forbes list includes only one African-America: Oprah Winfrey.
In UFE's 2006 book, The Color of Wealth, we examine the history of these disparities, including the way that women and people of color have been systematically excluded from the wealth-building public programs that helped create the white middle class. These wealth disparities have been passed on to each successive generation through the power of inheritance.
It's not just the birthright, there are public policies that give an unnecessary "leg up" to those at the top. One of the more egregious tax breaks we give to the wealthiest Americans is the reduced tax rate on investment income. We tax investment income from capital gains and appreciated stock at nearly half the top rate at which we tax income from wages earned through actual work.
Who does that special tax break benefit? No great mystery here. 60% of the income made by the Forbes 400 billionaires comes from capital gains, i.e. investment income. Together with the rest of their compatriots in the top 0.1%, they capture half of all capital gains income in the country. At the very least, we need to "tax wealth like work" and end this special tax break that disproportionately benefits those at the top.
By ignoring the role of inherited wealth, race, gender, and public policy advantages, Forbes describes many of the richest Americans as "self-made." This is an assertion that UFE challenged, both in our "Born on Third Base" report and in our 2012 book, The Self-Made Myth.
Attributing the success of those at the top entirely to their own efforts, by implication, also insinuates that those who are poor, are poor by their own efforts. Such an incomplete, black-and-white narrative distorts our views on the merits of a host of public policies—through this lens, progressive taxes become akin to "punishing success," and public policies aimed at correcting past injustices become "hand outs." The list goes on.
Instead of falling over ourselves in gleeful adulation of the superrich, let's honor the labors of all hard-working people across the country, and not overlook all the nuances. At the very least, it will be a more honest dialogue.
Housing, a cornerstone of the "American Dream," is the largest form of privately wealth held by families across the United States. This infographic draws attention to the intersection of housing as both a globally-recognized human right and as a commodity in a global stock market controlled by the wealthy. We urge readers to acknowledge the history behind the long-standing racial wealth divide and to consider the interplay between federal housing policies and risky financial practices and their impacts on the divide.
We are releasing this infographic just days after Duke University released a new study, which found that Black and Latino homebuyers are paying more for housing than Whites. Earlier this year, shortly after the release of UFE's report on housing and racial inequality, a Brandeis University study highlighted homeownership as the number one driver of the growing racial wealth gap.
How many studies need to be published before policymakers begin treating housing like a human right and not a commodity to be gambled with on Wall Street? Perhaps more importantly, what must be done to unite and galvanize communities—of all races and classes—to push lawmakers and to take control of the situation where they're falling short? Inequality has become worse than most people think. Economic apartheid has gripped our country. But, money is no match for people power.
Learn more about what's happening on the ground with State of the Dream 2013: A Long Way From Home. Share this information and invite others to join the conversation and take part in efforts to address racial injustice in your community.
Infographic design by Design Action Collective
This amazing web video, posted by YouTube user, politizane, animates research by Michael Norton (Harvard University) and Dan Ariely (Duke University) about the dramatic differential between people's perceptions and the reality of the wealth divide in the United States. Their findings suggest that Americans overwhelmingly want to live in a more equal society—like Sweden's, specifically—but also that too many people just don't know how bad the economic situation has gotten.
Each year, we train hundreds of organizers, activists, educators, and others involved in social and economic justice work. Much of what we do is about engaging people—organizers, activists, educators, and others—in a conversation about the economy, and this video is rich with opportunities for dialogue. You can also play a role.
Share it with your online and real life networks. It's easy! Copy & paste this link everywhere: http://bit.ly/YYqIFm. Tell people why you think it's important. Ask for others' reflections. Urge them to consider the implications—social, economic, political, ecological, etc.—of an economy marked by massive wealth inequality. And, encourage them to become involved in efforts large and small to build a new economy on the principles of democracy, sustainability, and cooperation—one where everyone contributes their fair share and everyone has the same opportunity to succeed.
Youth activism is always very exciting. We were inspired by the dedication, creativity, and energy of the young people at the annual Youth Jobs Coalition (YJC) rally in Boston. The participants, thousands of Boston Public School students, spent their class recess working together to make the youth unemployment crisis more visible to the community. The YJC demonstration, staged in Boston's Financial District, publicized the connection between concentration of wealth and political power in the financial sector and budget cuts that directly affect funding for youth jobs.
The absence of job opportunities is making it difficult for young people to build skills for future success and earn money to help their families. Young people of color are experiencing the greatest struggle. Black teen unemployment, for example, is nearly twice as high as White teen unemployment, which is deepening the racial economic divide.
|Angie Auguste and Princess Mansaray led lobby day trainings for youth activists at the Massachusetts State House as a part of the YJC day of action.|
We were disappointed, though not surprised, to see that the first to comment on our posts of support were skeptics who questioned the merits of the teens' efforts. As one Facebook user opined, "maybe being on the streets applying for jobs would have been more productive."
If only it were that simple. Our reply:
In real terms, unemployment may be upwards of 80% higher than reported when we factor in underemployment. Teen unemployment is at a remarkable high, with Black teens faring worst. This should be a concern to all of us because of the many social ills connected to poverty and extreme inequality. We view the actions and continued efforts of these young people through the Youth Jobs Coalition and other groups as a sign of hope. They are making a choice to work together in peaceful demonstration to address an economic system that's falling short, with inefficient allocation of public resources driven by a concentration of wealth and power. We hope you will consider that, in addition to solid individual initiative, we'll need systemic remedies to unemployment and other economic struggles. The momentum for change won't be generated in board rooms and legislative sessions alone. To make the problems and solutions more visible, we have to get some feet on the street with a unified message.
As banal as it sounds, young people are our future. Peaceful protest has helped to generate positive change throughout U.S. history. Should we not encourage the youth community to be more engaged in this way?
Top photo c/o Steve Schnapp
Responding to the unprecedented level of outside spending in last year's election cycle, Responsible Wealth has joined a coalition of investors to step up its campaign to press companies to refrain entirely from making political contributions. The coalition, including Clean Yield Asset Management, Green Century Capital Management, Zevin Asset Management, and Harrington Investments, has filed resolutions with Chevron, Bank of America, 3M, Target, Starbucks, ExxonMobil, and the EQT Corporation. Responsible Wealth members filed at Bank of America and Target.
Because of the 2010 Citizens United ruling, so-called “independent” or outside spending in federal elections—made in support of candidates by groups with no supposed connections to their campaigns—contributions increased nearly fivefold between 2010-2012, from $300 million to $1.3 billion (Center for Responsive Politics). Just last week, Demos & the US PIRG Education Fund released a report estimating that for-profit corporations were responsible for at least $101 million in political spending in the 2012 elections, although the actual amount could be up to four times that amount due to vagaries in reporting requirements.
“In 2012, Chevron gave $2.5 million dollars of company funds to a Super PAC—the single largest corporate donation to a Super PAC ever. Shareholders don’t want to pay for Chevron’s political preferences or contribute to the untamed spending unleashed by the Citizens United ruling. It’s time for Chevron to listen to its shareholders and stop throwing millions of dollars into the wind.” - Leslie Samuelrich, Senior Vice President of Green Century Capital Management
At the same time, we’re seeing a rise in public opposition and backlash to corporate influence in the democratic process. In February 2010, immediately following the Citizens United decision, an ABC News/Washington Post poll found that 80% of respondents opposed Citizens United, across partisan lines. Political spending and lobbying undermine the trust of the consumer.
“By the sheer volume of money involved, dollar democracy by corporations is drowning out individual political voices and undermining the essence of the American political system. ExxonMobil’s huge political donations are symptomatic of this corrosion of democracy, so as shareholders, we have a responsibility to put a stop to this dangerous behavior.” - Sonia Kowal, Director of Socially Responsible Investing at Zevin Asset Management
And contrary to conventional wisdom, campaign contributions may actually stunt the long-term growth of a company. A 2012 University of Minnesota study found that companies contributing to political action committees and other outside political groups between 1991-2004 grew more slowly than other firms, invested less, spent less on research and development, and were linked to poor corporate governance.
By changing their policies around political spending, companies have an opportunity to set a higher standard in business, raising the bar for their competitors. At Target, Bank of America, ExxonMobil, 3M, and EQT, Responsible Wealth and its partners are calling for company directors to conduct a study examining the feasibility of adopting a no-spending policy. Chevron is being asked to completely desist from political giving. And at Starbucks, the request is for a complete end to political spending while also asking the company to refrain from establishing a political action committee, a vehicle for raising and spending money from employees and shareholders.
Responsible Wealth members Marnie Thompson & Stephen Johnson (Greensboro, NC) and RW Director Mike Lapham are currently in negotiations with Target executives and are pressing the company to be more transparent about its process and reasons for engaging in political giving. If Target changes its policy around political giving, it’s possible the bar will be raised for its competitors. Only time will tell, but for now, we’re keeping the pressure on.
CLICK HERE to see the full press release.
UFE's tenth annual Martin Luther King, Jr. Day report, State of the Dream 2013: A Long Way From Home, outlines the state of the racial wealth divide in the U.S. and puts forward creative solutions for addressing persistent racial inequities.
Black and Latino families continue to have far less wealth than White families and have emerged from the Great Recession more indebted and less able than White families to face the economic challenges before them.
Housing, an integral piece of the increasingly elusive American Dream, has much to do with the hemmorhaging of wealth in communities of color. This report examines the link between housing and asset-building policies, the impacts of those policies on communities of color, and urges a targeted, goal-oriented policy approach that is guided by our shared values and principles.
Fifty years ago this year, on the steps of the Lincoln Memorial, Martin Luther King, Jr. shared a vision for a future of equality for all people, regardless of race, in his "I Have a Dream" speech. He spent the final years of his life working with thousands of others to challenge economic inequality and racial injustice. Although their efforts made historic civil rights victories possible, much work remains to close the racial divide. We are, indeed, a long way from home.
Read the report today. Share it with your community. Start a conversation. Speak out and work together to make a new economy possible.
Public policies are intended to be a reflection of a country’s values and priorities. In reality, tax and economic policy outcomes represent the wants of the financially enriched, not the needs of the bottom 99%.
The U.S. may be a melting pot of cultures and ethnicities, but wealthy, white males comprise the vast majority of our supposedly representative legislature. Nearly half of Congressional members are millionaires. In 2010, the median net worth of U.S. Senators and Representatives was $2.63 million and $756,765, respectively, compared to a median net worth of $66,740 for U.S. households.
On the other hand, two historically marginalized groups—women and people of color—are dramatically underrepresented at the policy tables. Women account for only 16.8% of Congress (27% of them are women of color). People of color represent only 15.1% of Congress, with only four seats in the Senate.
As such, the interests of the wealthy dominate public debates while policies of particular importance for women and communities of color struggle for acknowledgement, let alone forward movement. Deficit hysteria has prompted harmfully misguided cuts to the social safety net while maintaining unnecessary tax cuts for the wealthy, painting a frightening picture of who our elected officials actually serve.
Throughout the presidential campaign, many have the criticized candidates for being “out of touch” with the majority of Americans. It can be reasonably argued that, with a few exceptions, Congress is as well. A recent report by the Institute for Policy Studies (IPS) points out that some legislators have been loyal advocates for the 99%, while others have not.
The report, “A Congressional Report Card for the 99%,” grades Senators and Representatives based on their voting histories on inequality-related Congressional actions. While the report’s focus is mainly on policies addressing economic inequality, it leaves room for a deeper analysis of the impacts of policies on persistent racial and gender disparities.
Nearly all of the 40 congressional actions evaluated by IPS—including bills related to taxes and the federal budget, jobs and wages, education, housing, poverty, and healthcare—have disproportionately affected communities of color and women.
The Paycheck Fairness Act, for example, would have helped to ensure equal pay for equal work. This measure would have been a boon for women, who still make 77¢ to every dollar a man makes. The Senate failed to secure the 60 votes needed to advance the Act. The oppositions’ main argument—that the bill would burden small businesses—is unfounded and yet another strike in the conservative war on women.
Another bill, the Half in Ten Act, aims to cut poverty in half in the next ten years. The poorest among us, who are disproportionately people of color, were experiencing economic hardship long before the Great Recession began. Blacks and Latinos respectively make up 27.6% and 25.3% of those in poverty and would benefit greatly by this effort. The bill has 68 co-sponsors but has yet to reach a vote in the House or the Senate. Unfortunately, as politically polarized as Congress has become, even the most sensible policies, like Half in Ten, struggle to gain traction.
Moving forward, we should push lawmakers to more carefully examine the impacts of policies on those hardest hit by inequality, like women and people of color. As citizens, we must all fight to make ours a more truly representative democracy, where the voices of those with the biggest bank accounts carry no more volume than those with the smallest.
Our latest report, Born On Third Base, takes the Forbes 400 list to task for spinning a misleading tale about the self-made man and what it takes to become wealthy in America. The Forbes 400 and its extreme examples of economic mobility are the exceptions, not the rule.
In follow-up to the national political
sideshows conventions, MSNBC's Dr. Melissa Harris-Perry hosted a conversation about the Republicans' 2012 slogan, "We Built It." Small business owners discussed the role of government investments—funded by tax revenue—in bolstering entrepreneurialism and job creation by small businesses.
Click here to view because our website doesn't like MSNBC's embeddable code. :\