Tonight’s subject is DEATH. I am not talking nice Peaceful Death quietly in your own bed at night from Old Age, nor even more willfull forms of hastening your own death through Suicide or just bad habits like Smoking, Drinking or doing Drugs. Nor even death that comes from the vicissitudes of Nature, such as an Earthquake bringing the roof of your hut down on your head or naturally occurring diseases that run around the environment and periodically take out large numbers of the population. No, the type of DEATH that I am going to address here is the WILLFULLY CAUSED DEATH of OTHERS. This includes Death caused by War directly, Death caused by Abortion directly, and Death caused indirectly by controlling and making scarce the resources other people need to live. All these subjects have been topics of heated debate here lately, so I thought I would bring them all together and put in my usual 3000 word opinion on the disk. It is sure to be a highly popular opinion. NOT! Actually, this one may make the Top 10 of All Time Most HATED RE Posts, which is saying a lot for me Or it could be one of the Top 10 All Time Most LOVED RE Posts among some readers. Either way I am pretty sure the reactions will be extreme to one side or the other.
For all these forms of Death creation mentioned above, they get nearly universal opprobrium. The Moral Group Think tends to be that War is Evil, Abortion is Evil and Starving People is Evil. In the situation where there really is enough resource to go round, all these Death Creation mechanisms ARE Evil, but once resources are thin for the population as a whole, any one of them can be less Evil than the alternative.
The simple example would be the case of the Small Tribe barely ekeing out an existence. There is only enough resource for say 10 people to live. A woman in the tribe gets pregnant. What are your REAL choices? One choice would be to Abort the child. Then you will not have another mouth to feed. Another choice would be to allow the child to be born, and ask or have “volunteer” an Elderly person in the tribe to Walk into the Great Beyond. Take that last Kayak trip out to Sea, give himself up to the Bear, climb to the top of Denali and Freeze to Death, whatever the choice. Given a Healthy Infant, the better choice is probably for the elderly person to Die, but of course until Born and demonstrating healthy and robust traits, you just don’t know if that life is more worthwhile for the survival of the Tribe than the Elderly person, who might still have a few good years left to pass on some knowledge. In this kind of scenario, you have to consider Exposure as another alternative instead of Abortion. Allow the child to be born, see how robust that child is, and if not sufficiently robust expose it on a mountaintop and leave it for the wolves. These ARE the kinds of choices that had to be made in the past, and all of you come from people who made those choices. As I see it, these choices are coming again to Homo Sapiens. They won’t be taken on willingly or easily, but they WILL happen.
Moral questions which are paramount in times of Surplus do not have the same meaning as they do in times of Deprivation. When the PURE SURVIVAL of the Tribe is in question, life or death of the individual is subsidiary to the survival of the TRIBE, which is the smallest economic unit possible for Homo Sapiens. We are Pack Animals basically, like Wolves that run in small groups. The transition to Agriculture socially changed most of us more to Herd animals like Sheep, though Packs of Wolves still move about among the Sheeple in our society. It’s the juxtaposition of these two basic forms of living among mammals in one species that is at the root of our social dilemma.
As we move forward through the Collapse of our society these two basic forms of mammalian social behavior will assert themselves, and for the most part the Sheeple will be slaughtered by the Wolves. Difference from the rest of Nature is that at any point Sheeple can BECOME Wolves, we aren’t specifically determined by nature to be one or the other as REAL Sheep and Wolves are, it is socially inculcated behavior in our case. Homo Sapiens “sheeple” DO become “wolves” when the society devolves. Gangs form up of former Sheeple, and the deep nature of Homo Sapiens as a Pack Animal reasserts itself. A Failed State like Somalia turns into a bunch of Pack Animal Pirates; a Failed State like Mexico turns into a bunch of Pack Animal Drug Cartels, a bunch of Towel Head farmers in Afghanistan turn into Al-Quaeda Terrorists, etc. In none of these cases do these folks hold onto the same kinds of Moral Restrictions that Sheeple do. Nor of course do the top of the food chain Wolves of Banksters hold onto the same set of moral restrictions or laws that their prey among the Sheeple do.
As a Sheeple, at any point you can become a Wolf. Some are already becoming Lone Wolves. Joe Stack was a Lone Wolf, so was Jared. Lone Wolves don’t last long, but Pack Wolves do, as long as there are Sheeple around to prey on. You have 3 basic choices, which are to be one of the Sheeple, to be a Lone Wolf, or to be a part of a Pack of Wolves. Only one of those 3 choices will allow your survival.
Once you revert to Tribes of Pack Animals, the same type of moral dilemmas that are faced by Sheeple in War are not relevant. It no longer is a question of Wolves slaughtering Sheep, but of Wolves fighting with Wolves. This is the stage we are moving into here now. For a long time it has been Sheep being slaughtered, but now the Sheep are starting to Pack Up and become Wolves, at least in places like Somalia, Pakistan, Afghanistan and Mexico.
Once you understand that your only REAL choice is whether to get slaughtered as Sheeple or become a Wolf yourself, if you want to LIVE then you become a Wolf. I am reminded here of that scene in Terminator II where Arnold reaches out his hand and says to Linda Hamilton “Come with me if you want to LIVE!”. You are in a fight for survival, and you have to Pack Up with some other wolves to have any chance at all. Once you do, you TAKE NO PRISONERS.
The Wars we are pursuing in Afghanistan and Iraq are a manifestation of this phenomenon on the aggregate level of the Nation State. As a Culture, it is Kill or Be Killed between our society and the one controlling the resource of Oil that we need as a culture to survive. Morality isn’t a question in this war, as long as it is perceived that we MUST have OIL to survive. ANYTHING goes. Killing civilian children is nothing more really than exposing them on a mountain top because your society needs the resources those children would use, just it is done on a mass scale as is the nature of war in the industrial era. From this point of view, its not morally wrong, and that would be the Bryzhinski/Kissinger/Cheney model of morality. Its just a Geopolitical Chess Game.
Where the Moral Flaw really exists is in the inequity of power distribution between the Packs of Wolves. In fact it’s not so much a moral flaw or problem as it is one of homeostasis. When there is relatively equal power distribution between packs of wolves, they tend to kill each other off in equal numbers when fighting over a given territory. When one group of wolves comes up with Industrialization, the whole power distribution setup goes out of whack and the Wars are not even in casualties. I remember those Numbers from Vietnam that used to be published each night on the Network TV Newz programs. 2000 Vietcong DEAD, 20 US Marines Dead. No Balance there, and so the whole shebang goes out of Homeostasis.
This is why the pictures JimQ puts up of Dead and Mutilated Children are so disturbing, because people sense the inherent inequity here in the battle. A Big High Tech War Machine going in and Dropping Death from Above on a bunch of simple Villagers in Afghanistan is not a very fair fight. Same bizness in Vietnam. Who was not disturbed by the image in Platoon of the grunts torching the little Vietnamese Village, which of course was the cinematic version of the Me Lai Massacre? No matter how you feel about Commies or Towel Heads, your basic sense of fairness makes such slaughter seem quite immoral, which of course it is in this situation.
Its not the same moral dilemma when a couple of relatively evenly matched Tribes decide to Duke it Out over a Watering Hole. In this case one of them might sneak up in the middle of the night on the other one, and kill off everyone from the opposing tribe, women and children included, although more often just the men are killed and the women and children are taken as slaves. While this is a rather gruesome process, its not inherently unfair and doesn’t have the same kind of moral stink about it.
Abortion has similar inequities in the modern world, because it is inequitably distributed among the poor. Like Military Power, Economic power is inequitably distributed here, so MOST of the growing organisms being vacuumed up from mommy’s tummy are of course the potential progeny of poor people, likely to be poor themselves and in a social welfare state members of the dependent class, respectfully referred to on the pages of TBP as the Free Shit Army. LOL.
All sorts of Eugenics arguments have been put forth to justify this type of inequitable distribution of abortion, which basically comes from the faulty assumption that because people are poor, they also are Feeble Minded. This is much more likely to be the EFFECT of being poor rather than the CAUSE of it. Poor diet, poor educational opportunities and a poor nurturing environment is a more likely culprit than genetic differences for creating feeble minded people in this demographic. In any event, George Bush is living PROOF that rich people can be just as Feeble Minded as any Poor Person. LOL.
In our current Global society, in truth there is still quite a bit of surplus, and if a means could be found for equitable distribution of the remaining resources, neither Abortion nor War would be necessary. Unfortunately for a whole host of reasons setting up an economic system which can do such a job of equitable distribution is an exceedingly difficult problem, one which has never been solved for large societies at the Nation State level. It probably is an insoluble problem at this level, which means that both War and Abortion are inevitable, along with the slower form of death distribution of the powerful over the less powerful, which is resource starvation.
The main mitigating factor here is that due to the deterioration of complex systems, which I call the Conduits, power distribution is going to be leveled as these Conduits fail. As that happens, more of the Sheeple all over the world will morph into Wolves. Its going to become a fight of Pack Animals against each other with more or less the same tools for making that fight once the Oil resource drops below a critical mass. We are still a ways away from that though, so in the intitial stages here of this spin down there will be a lot of very unfair fights and asymmetric types of warfare engaged in. Techno War simply breeds more Terrorists, because you cannot fight a Drone Aircraft with Guided Missiles with Homemade Bombs. So you have to carry the homemade bombs to hotels and buses and marketplaces where the people who are supporting the Techno Army are engaged in their daily toils, bringing the War to their shores and their lives. This type of asymmetric battle is in full flower in the Middle East already, and of course, its Coming Soon to a Theatre Near You also. It already has in small scale with events like Joe Stack and Jared, along with numerous College Campus Postals over the last couple of years.
In the great Moral Question here of whether any of this Death is necessary, the fault mainly lies in the fact that there is inequitable power and wealth distribution, and so those who support continuation of such inequity are most at fault, and so most morally corrupt. However, people immersed in a society dependent on the automobile and industrialization don’t see that as corruption, and they aren’t willing to give it up either. It “enhances” their lives. It will only be given up when it is no longer possible to run the War Machine which makes such an asymmetry possible. No individual can fight this, it’s a pointless and unwinnable battle. This is why the Back to the Land Hippy movement of the 1960s and 1970s failed to gain traction. Only when the Conduits truly FAIL will it be possible to fight and WIN this battle, and that day is coming, if not in this generation then almost certainly in the next one.
So, for the foreseeable future, for the rest of your natural life walking the earth, what you can expect to see are many more revoltingly immoral applications of Death by the Powerful on the Less Powerful, punctuated by instances of equally revolting Terrorist bombings of Malls, Train Stations and of course inevitably Elementary Schools or Day Care Centers by the Less Powerful on the Powerful. Besides the gruesome Abortion Mills, there will be more instances of newborns left in garbage bags in dumpsters. Neil Young wrote about this back as far as 1980 in “Keep on Rockin’ in the Free World”.
For myself, I see what is coming down the pipe here, and I report what I see. I don’t like the immoral wars of the powerful on the less powerful when in truth there is still plenty to go round. I don’t like the many dead babies that poverty creates in a world where there is still plenty. To be sure, real deprivation is coming when the Oil resource can no longer keep the Industrial Ag model producing copious amounts of food, but that day is not here YET. Right NOW, the reason people are Starving in Tunisia is because of poor wealth distribution and financial speculation in the Commodities market by people seeking to make a Profit on the misery of others. This is immoral and unjust, but it is an effect of Capitalism, where resources are privatized and artificial scarcity is induced to sieve wealth from one group of people to another. This is why I am so vehemently anti-Capitalist and find the whole system to be unjust and immoral. As someone who believes in Justice, I support the idea of Punishment and Retribution, and I understand why Marie Antoinette’s head went rolling like a Bowling Ball out in front of the Bastille. She was GUILTY, and she deserved what she got, as all people do who live in luxury while others starve.
Nobody should be forced to give away EVERYTHING they ever worked for, but there is a limit to what any individual really needs to keep for himself for some safety and security In any society, having a couple of years worth of food is a prudent measure and not unreasonable for an individual. In our economics here in Amerika, I wouldn’t even begrudge someone who had $100K worth of Gold Coins in his basement safe that measure of security. More than this though here in Amerika? To me sequestering that much wealth is socially destabilizing, and besides that you are likely to lose most if not all of it anyhow when the fiat goes south and most paper assets like stocks and bonds lose their monetary value. Better to give it away and help some friends and family who are hurting while the money is still good for something. That is what I have done. Nobody, not even Bill Gates can Save them ALL. You are also free to choose exactly WHO you would like to Save here, and most of us will choose Friends and Family rather than Strangers. Only AFTER you have helped all your friends and family and your own life is reasonably secured if you STILL have surplus does Noblesse Oblige come into play. It behooves you then to help Strangers also, because doing so will stabilize the society as a whole. If all people lived by these principles, then the Wars and the Abortions could be postponed, and the necessary die off could be spread out over a generation or more. Not gonna happen of course, but because it IS in theory possible, it makes the other choice of hoarding the wealth to be immoral.
To be truly Just, a Society must be based on GIVING rather than TAKING. This is possible, though only demonstrated in much smaller societies than those we have developed at the Nation State level over the last 5000 years. This is why some folks will maintain “It has ALWAYS been like this, and it ALWAYS will be like this.” Not true. Potlatch WAS a viable system, and it will be again, though likely not at population levels and with social structures we currently have extant. That is a failure of the complex system model more than anything else, not a failure of inherent human corruption. It will take the utter and complete destruction of this complex system for the inherent traits of Generosity of Spirit and Giving and Cooperation to once again reassert themselves as the governing behaviors in human society. That this destruction will involve pain beyond all measure is without question. Those who do survive this though must remember what CAUSED it, and never permit this Evil to spread again amongst the race of Homo Sapiens. The Greedy must be Exterminated with Extreme Predjudice. Bring in the Orkin Man, Exterminate the Cockroaches. With a Clean Kitchen, we can cook up a Better Tomorrow.
The ruling elite will have their IT specialists take down my site shortly. Too much light being shined upon their comfy little world.
Wealth, Income, and Power
by G. William Domhoff
September 2005 (updated July 2010)
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 might be a surprise to many people. The most amazing numbers on income inequality come last, showing the 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 of financial 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 wages, 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.
As you read through these numbers, 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.
So far there are only tentative projections — based on the price of housing and stock in July 2009 — on the effects of the Great Recession on the wealth distribution. They suggest that average Americans have been hit much harder than wealthy Americans. Edward Wolff, the economist we draw upon the most in this document, concludes that there has been an “astounding” 36.1% drop in the wealth (marketable assets) of the median household since the peak of the housing bubble in 2007. By contrast, the wealth of the top 1% of households dropped by far less: just 11.1%. So as of April 2010, it looks like the wealth distribution is even more unequal than it was in 2007. (See Wolff, 2010 for more details.)
The Wealth Distribution
In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% 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: 42.7%. Table 1 and Figure 1 present further details drawn from the careful work of economist Edward N. Wolff at New York University (2010).
|Table 1: Distribution of net worth and financial wealth in the United States, 1983-2007|
|Total Net Worth|
|Top 1 percent||Next 19 percent||Bottom 80 percent|
|Top 1 percent||Next 19 percent||Bottom 80 percent|
|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).
|Figure 1: Net worth and financial wealth distribution in the U.S. in 2007|
In terms of types of financial wealth, the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% 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.
|Table 2: Wealth distribution by type of asset, 2007|
|Top 1 percent||Next 9 percent||Bottom 90 percent|
|Stocks and mutual funds||38.3%||42.9%||18.8%|
|Non-home real estate||28.3%||48.6%||23.1%|
|TOTAL investment assets||49.7%||38.1%||12.2%|
|Housing, Liquid Assets, Pension Assets, and Debt|
|Top 1 percent||Next 9 percent||Bottom 90 percent|
|TOTAL other assets||12.0%||33.8%||54.2%|
|From Wolff (2010).|
|Figure 2a: Wealth distribution by type of asset, 2007: investment assets|
|Figure 2b: Wealth distribution by type of asset, 2007: other assets|
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 for the benefit of less than 1% of the population. (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-conservatives behind the effort will benefit from it in any material way.)
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 a New York Times opinion piece published in July 2010 by Boston College law professor Roy 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).
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, 2010) 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.|
Besides illustrating the significance of home ownership as a measure 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 2007, the average white household had 15 times as much total wealth as the average African-American or Latino household. If we exclude home equity from the calculations and consider only financial wealth, the ratios are in the neighborhood of 100:1. Extrapolating from these figures, we see that 70% of white families’ wealth is in the form of their principal residence; for Blacks and Hispanics, the figures are 95% and 96%, respectively.
And for all Americans, things are getting worse: as the projections to July 2009 by Wolff (2010) make clear, the last few years have seen a huge loss in housing wealth for most families, making the gap between the rich and the rest of America even greater, and increasing the number of households with no marketable assets from 18.6% to 24.1%.
Numerous studies show that the wealth distribution has been extremely concentrated throughout American history, with the top 1% already owning 40-50% in large port cities like Boston, New York, and Charleston in the 19th century. It was very 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 3 and Figure 4 present the details from 1922 through 2007.
|Table 3: Share of wealth held by the Bottom 99% and Top 1% in the United States, 1922-2007.|
|Bottom 99 percent||Top 1 percent|
|Sources: 1922-1989 data from Wolff (1996). 1992-2007 data from Wolff (2010).|
|Figure 4: Share of wealth held by the Bottom 99% and Top 1% in the United States, 1922-2007.|
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 4.
|Table 4: Percentage of wealth held in 2000 by the Top 10% of the adult population in various Western countries|
by top 10%
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 5a and 5b 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 2007.
|Table 5a: Concentration of stock ownership in the United States, 2001-2007|
|Percent of all stock owned:|
|Table 5b: Amount of stock owned by various wealth classes in the U.S., 2007|
|Percent of households owning stocks worth:|
|Wealth class||$0 (no stocks)||$1-$10,000||More than $10,000|
|Both tables’ data from Wolff (2007 & 2010). 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 2007 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 we would expect by chance, and so we infer 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 6 shows, it is not as concentrated as the wealth distribution, but the top 1% of income earners did receive 17% of all income in the year 2003 and 21.3% in 2006. 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 6: Distribution of income in the United States, 1982-2006|
|Top 1 percent||Next 19 percent||Bottom 80 percent|
|From Wolff (2010).|
The rising concentration of income can be seen in a special New York Times analysis 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, the Times author 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).
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 an analysis by David Cay Johnston — recently retired from reporting on tax issues at the New York Times — 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 (Johnston, 2010). (For another recent revealing study by Johnston, check out “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 $105,000 of a person’s income is taxed for Social Security purposes, so it would clearly be a boon to the Social Security Fund if everyone — not just those making less than $105,000 — paid the Social Security tax on their full incomes.
A key factor behind the high concentration of income, and another likely reason that the concentration has been increasing, can be seen by examining the distribution of all “capital income”: income from capital gains, dividends, interest, and rents. In 2003, just 1% of all households — those with after-tax incomes averaging $701,500 — received 57.5% of all capital income, up from 40% in the early 1990s. On the other hand, the bottom 80% received only 12.6% of capital income, down by nearly half since 1983, when the bottom 80% received 23.5%. Figure 5 and Table 7 provide the details.
|Figure 5: Share of capital income earned by top 1% and bottom 80%, 1979-2003 (From Shapiro & Friedman, 2006.)|
|Table 7: Share of capital income flowing to households in various income categories|
|Top 1%||Top 5%||Top 10%||Bottom 80%|
|Adapted from Shapiro & Friedman (2006).|
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 by Business 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 6, which is based on data from several hundred of the largest corporations.
|Figure 6: 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 7.
|Figure 7: CEOs’ average pay, production workers’ average pay, the S&P 500 Index, corporate profits, and the federal minimum wage, 1990-2005 (all figures adjusted 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 all industries 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.
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, Section 3, p. 1).
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.)
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 worker side, it reflects an increasing lack of power following the all-out attack on unions in the 1960s and 1970s, which is explained in detail by the best expert on recent American labor history, 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.
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. (It’s really not much different than that old children’s game, except it’s played out in profit-oriented bureaucratic hierarchies, with no other sector of society, like government, willing or able to restrain the winners.)
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.