According to the new census by Wealth-X and UBS, almost half (45 percent) of the world’s billionaires partially or fully inherited their wealth. In fact, over the past year, the number of billionaires with partly inherited wealth experienced the largest growth in both relative and absolute terms.
But, clearly, the largest number of billionaires (some 80 percent) acquired their wealth at least partly through their participation in either privately held or publicly held businesses. According to the report, 63 percent of billionaires’ primary businesses are private companies, compared to only 31 percent that are public companies and 6 percent that are other types of institutions (education, government, non-profit, and social organizations).
Opportunities for significant wealth gains can be found across most, if not all, industries. But certain industries have been particularly important sources of billionaires’ wealth generation. The largest share of the world’s billionaires have made their fortunes through finance, banking, and investment. But, outside of Europe and the United States—for Latin America and the Caribbean, Asia, Africa, and the Middle East—the largest proportion of new billionaires made their fortunes in industrial conglomerates.
In other words, most billionaires acquired their fortunes—either now or in the past—by helping themselves to the surplus created by their employees.
That’s right: during the first three years of the current “recovery,” the top 10 percent captured 116 percent of all income gains. That’s because incomes actually fell for the bottom 90 percent, even as they rose nicely for those at the top.
Even more striking is the fact that 95 percent of the income gains during the same period went to the top 1 percent, with only 5 percent left for everyone else.
In other words, the fruits of the current expansion have been captured almost exclusively by those at the very top—in contrast to every other period of economic recovery in the postwar period.
We have to face the fact that capitalism’s crises have become increasingly severe, and the solutions to those crises have increasingly involved redirecting the income gains to a tiny minority at the top. Everyone else is being left behind. Is it any wonder that the current economic system is facing a legitimation crisis?
Posted: 26 September 2014 in Uncategorized
Tags: billionaires, map
This map of the world’s billionaires—all 2,325 of them (an all-time record high), with a total wealth of $7.3 trillion (which is higher than the market capitalization of all the companies that make up the Dow Jones Industrial Average)—comes from the new census by Wealth-X and UBS [ht: sm].
The folks who run the “Building Human Capital and Economic Potential” project [ht: db] are right: the current recovery has not been broadly shared. Far from it.
Low-income families are still dealing with job losses, benefit cuts, depressed wage growth, a lack of affordable child care, and a shift toward part-time, variable-hours jobs that hamper efforts to find full-time work.
But the idea that new training and education systems is a movement in the direction of economic self-sufficiency makes no sense. It merely accepts and reinforces the idea that wage-labor is the only “pathway out of poverty for most non-elderly adults.”
That’s not self-sufficiency. It’s merely a different kind of dependence—not on government regulations (like a higher minimum wage) and programs (such as food stamps and tax credits) but on the whims and wishes of private employers. And the entire program is built around making members of low-income families more attractive to those employers, by improving their “human capital.”
There is no such thing as self-sufficiency in an economic system based on private property. Private property (and, with it, markets and wage-labor) merely makes one large group of people dependent on the decisions of another, much smaller group. Economic self-sufficiency is therefore a myth. It’s a false, narrow and restricted, promise of freedom—the freedom to sell one’s ability to work to someone else, who then gets to walk away with the profits, thereby strengthening the continued dependence of workers on their employers.
We all remember Matt Taibbi’s 2009 exposé of the “great American bubble machine” (aka Goldman Sachs, about which I’ve had many occasions to write over the years).
Throughout the day, many students and readers of this blog have been sending me the link to the Michael Lewis’s story about the secret Goldman Sachs tapes. Basically, ProPublica reporter Jake Bernstein has obtained 46 hours of tape recordings, made secretly by Carmen Segarra, a bank examiner for the Federal Reserve in New York, of conversations within the Fed and between the Fed and Goldman Sachs.
Bernstein’s report will be aired later today on This American Life.
Here’s the transcript [pdf] of the report.
Here’s a link to the story about Segarra’s being fired in 2012, after she complained that her Fed bosses asked her to change conclusions concerning Goldman’s evident violation of conflict-of-interest standards. (Segarra’s wrongful termination lawsuit was dismissed in April of this year.)
As Lewis reports,
1. You sort of knew that the regulators were more or less controlled by the banks. Now you know.
2. The only reason you know is that one woman, Carmen Segarra, has been brave enough to fight the system. She has paid a great price to inform us all of the obvious. She has lost her job, undermined her career, and will no doubt also endure a lifetime of lawsuits and slander.