The world according to Bloomberg

The story currently being peddled by the folks at Bloomberg [ht: ja] is that the American middle-class is currently suffering, as the enormous wealth they managed to accumulate during the past few years is now dwindling. And that crisis—the end of their “once-in-a-generation wealth boom”—is what they will take into the midterm elections.

There is a kernel of truth in that story but it is overshadowed by all that it leaves out.

The small sliver of truth?

Yes, as we can see in this chart, the average real wealth (in July 2022 dollars) of the middle 40 percent of Americans did in fact increase from January 2017 (when Donald Trump first took office) until March of 2022; now it has begun to fall and is projected to continue declining (according to data provided by Realtime Inequality).*

That should come as no surprise. It is the result of years of cheap money, which has fueled increases in the value of the two major components of middle-class wealth: house prices and the stock market. Now, while the price of real estate continues to rise (as anyone knows who has attempted to purchase a house in recent months), the stock market has taken a tumble (with the Fed policy of increasing interest-rates, on top of disruptions in global supply chains and the war in Ukraine).

So, yes, middle-class wealth is falling. But that’s only part of the what is going on out there, beyond Bloomberg’s narrow lens.

Another important part of the story, which I discussed on Wednesday, is the plight of the bottom 50 percent of American workers. Yes, their average wealth also increased during the same period but not by much more than a rounding error: a total of $13.8 thousand for each person. Their average wealth at the most recent peak reached $12 thousand, and not it too is beginning to fall.

What else is left out of the Bloomberg story? Well, it only refers to the absolute level of middle-class wealth.

As is clear from the chart above, the average wealth of the middle-class (the blue line) is much closer to that of the bottom 50 percent (the green line) than it is to the wealth of the top 1 percent (the brown line): $366.5 thousand compared to $11.9 thousand and $17.5 million, respectively. That doesn’t look like much of a bonanza to me, certainly not in relative terms.

Indeed, the third major part of the missing story has to do with the changes over time in the shares of wealth owned by each of the the classes.

The fact is, the middle-class share of total wealth has been steadily declining since the mid-1980s (falling from 35.7 percent to 28.9 percent), while that of the entire bottom 50 percent has also decreased (from a minuscule 2 percent to a barely perceptible 1.2 percent). Meanwhile, the share of wealth owned by the top 1 percent has soared dramatically (from 21.8 percent to 34.6 percent).

If we add those three elements to Bloomberg’s story, we end up with a very different narrative about the U.S. economy. American workers—both poor and middle-class—have been losing out to those at the top for decades now.

Yes, along the way, there have been minor peaks and troughs in their accumulation of wealth (just as has been the case for those at the top) but the long-term trajectory is clear: a growing gulf between those at the top and everyone else. Under both Democratic and Republican administrations.

It’s a problem that will not be solved in this midterm election, not with the candidates and campaigns we’re seeing from both political parties.

It’s a fundamental problem with American capitalism. But that, alas, does not fit into the Bloomberg story either.

———

*The middle 40 percent is the population whose wealth falls between the 50th and 90th percentiles.

What’s wealth got to do with it?

In a recent article in The Intercept, Jon Schwarz [ht: db] arrives at a perfectly reasonable conclusion—but, unfortunately, he makes a real hash of the data concerning changes in wealth ownership in the United States.

Schwarz starts with the fact that the total amount of wealth owned by the bottom 50 percent of the U.S. population has doubled since the first quarter of 2020 (in other words, during the pandemic). He then takes issue with the idea that economic growth needs to be slowed (for example, by the Fed’s raising of interest-rates) in order to help the poorest who presumably have been most hurt by inflation. And his conclusion?

According to the actual numbers, these are good times for many, many Americans in the poorer 50 percent. That doesn’t mean that millions aren’t struggling, but the financial prospects for most were even worse in the past in a lower-inflation world, a situation that did not excite the warm concern of the corporate media. What we should concentrate on now is keeping the streak going, not bludgeoning the workforce into submission.

I agree, at least in part: what policymakers are attempting to do (in a move supported by mainstream economists, large corporations, and the top 1 percent) is to bludgeon workers into submission. And there’s no reason to do so, especially when other policies—such as regulating prices, raising taxes on the rich, and imposing windfall profits taxes on large corporations—exist.

As for the rest of Schwarz’s argument, there are serious problems.

Let’s start with the idea that, in his view, these are good times for many Americans in the poorest 50 percent. This is based entirely on recent data concerning the net worth of those at the bottom has risen.

As is evident in the chart above, Schwarz’s claim about the rising wealth of the bottom 50 percent (the blue line) is in fact correct. It has been going up in absolute terms for more than a decade (since 2011), and it has gone up particularly quickly in the past two years.

Here’s the problem: the rising net worth of the bottom 50 percent is almost entirely due to the increase in housing prices (which therefore raises the net worth of those who own houses). But that doesn’t say anything about how well-off they are. They don’t get any extra income from those higher-priced homes. They therefore can’t purchase more or better commodities. And they can’t sell their homes to buy other ones because the other ones will also have increased in price.

So, that part of Schwarz’s argument doesn’t hold water. An increase in net worth based on higher housing prices doesn’t improve the well-being of those in the bottom 50 percent.

There’s nothing to rest his case on in terms of the absolute amount of wealth. What about in relative terms?

As it turns out, the increase in the net worth of the bottom 50 percent (again, the blue line in the chart immediately above) does lead to an increase in its share of total net worth—but only by 1 percent point, from 1.8 percent to 2.8 percent. It’s still below the share it had two decades ago. It only looks like an improvement because the share had fallen so low (to 0.3 percent, in 2011).

And compared to the top 1 percent (the red line in the chart)? The gulf between their respective shares has actually risen in the past two years. As of the first quarter of 2022, the share of total worth of the top 1 percent was 31.9 percent compared to the tiny (2.8-percent) share of the bottom 50 percent.

So, the bottom 50 percent is no better off in terms of net worth either in absolute or relative terms. In fact, against what Schwarz argues, the last several years have in fact been an economic disaster for the bottom half of U.S. households. Whatever improvement they’ve seen in terms of net worth is a chimeric dream.

I want to make one final point about the issue of net worth, which is often treated synonymously with wealth (including by Schwarz). As I argued above, whatever tiny bit of wealth those at the bottom have is almost entirely in the form of their houses. They don’t own any real wealth—call it financial or business wealth—of the sort that would allow them to have any role in making decisions about their economy.*

The top 1 percent do in fact have such a role, because they are able to convert their share of the surplus into real wealth, which allows them both to get more distributions of the surplus (through, for example, their ownership of equity shares in businesses) and to make the decisions (through their positions within those businesses, the financing of political campaigns, and the like) that do determine the trajectory of the economy and economic policy-making.

I’m entirely on Schwarz’s side in terms of opposing the current bludgeoning of workers on behalf of the 1 percent. But the better argument, it seems to me, is not to say that things should continue as before because the poorest households in the United States were better off, but to show that American workers have increasingly been beaten down, in both absolute and relative terms, precisely because of the pandemic and the profoundly unequal terms of the economic recovery.

Enough is enough. We have to adopt alternative economic policies in the short term, policies that don’t transfer all the costs of inflation-fighting onto the backs of workers. And then imagine and create a radically different form of economic organization moving forward.

———

*As I showed back in 2018, the top 1 percent owned almost two thirds of the financial or business wealth, while the bottom 90 percent (not just the poorest 50 percent) had only six percent.

How to lie with inequality statistics

In the world according to Paul Krugman, “most Americans” have gotten considerably richer over the past two years (even if “the gains have been especially big at the top”), “lower-income Americans [have] seen relatively large income gains,” and “the simple story that the pandemic has been great for the wealthy and bad for the working class doesn’t hold up.”

Really?

To support his argument, Krugman trots out a series of charts from Realtime Inequality, which is in fact an eye-opening set of statistics on wealth and income inequality in the United States. But not in the way Krugman uses them. The two biggest problems in Krugman’s treatment are (a) he excludes the bottom 50 percent (so that “most Americans” refers only to the middle 40 percent) and (b) he focuses on growth rates and not levels or shares of income and wealth (so that, once again, we have that pesky problem of large percentage increases on a low base yields small increases).

That’s how you lie with inequality statistics.

What happens if you look at other statistics? Let’s start with wealth.

Here, I’ve depicted the shares of wealth for various deciles of the U.S. population: top 0.01 percent, top 0.1 percent, top 1 percent, middle 40 percent, and bottom 50 percent. Lo and behold, we can see that, starting in 1979, the shares of wealth held by those at the very top have soared, the share of the middle 40 percent has fallen, and the share of the bottom 50 percent hasn’t budged.

What about for the most recent period (which is what Krugman focuses on), from the end of 2019 to the end of 2021. Same thing: the shares of wealth of the top 1 percent (and subsets of that group) have continued to rise, the share of the middle 40 percent has fallen, and the share of the bottom 50 percent has actually risen.

Wow! The share of wealth owned by the bottom 50 percent (which consists mostly of housing they may own) has gone up. By how much? From a minuscule amount to another minuscule amount—from 0.3 percent to 0.8 percent. Or, in absolute terms, from an average wealth of $2.9 thousand to $7.9 thousand—a difference of $5 thousand. You might even say such an increase means a lot to the 125 million people in the bottom 50 percent of the U.S. population but it’s certainly no more than a drop in the bucket in terms of closing the gap with the wealth of those at the top (for example, the $19 million of wealth owned by those in the top 1 percent).

What about income? Same problem.

The growth rate of post-tax income for those in the bottom 50 percent was, in fact, much higher than for those in the middle 40 percent and top 1 percent—8.5 percent compared to 3.8 percent and 4.1 percent, respectively.

And that proves what? Not much. Those in the bottom 50 percent gained $2.8 thousand (mostly from transfer payments), which is similar to the gain for those in the middle 40 percent ($3.2 thousand). And those in the top 1 percent? Well, they managed to capture an extra $48 thousand during the period from late 2019 to late 2021.

So, sure, wages for those at the bottom are growing at a faster rate than those at the top. But they’re still barely staying ahead of inflation. And they’re not such as to even put a dent in the gap that separates them from the incomes captured by those at the top. The share of post-tax income taken home by all those workers in the bottom 50 percent only increased from 20.1 percent to 20.9 percent, while the share of income captured by the 2.5 million people in the top 1 percent is still 14.4 percent.

All of which means what? That the gap between workers at the bottom (including those in the middle) and the small group at the top continues to be enormous—in terms of both wealth and income. And no policy of keeping existing interest-rates or increasing them will help close that obscene gap.

It’s time we stop lying with inequality statistics and focus on the real culprit: all the ways contemporary capitalism, both before and during the pandemic, has managed to funnel most of the surplus to those at the top of the economic pyramid, leaving barely enough wealth and income to get by for everyone else.

It’s a “simple story,” with clear political implications. Maybe that’s the reason the Krugmans of the world don’t want to tell it. . .

Chart of the day

U.S. billionaires have recouped all of their wealth—and more—during the Pandemic Depression. Meanwhile, since May, the number of poor Americans has grown by about 8 million. And the number of American workers applying for and receiving unemployment benefits continues at record levels.

According to Forbes,

Pandemic be damned: America’s 400 richest are worth a record $3.2 trillion, up $240 billion from a year ago, aided by a stock market that has defied the virus. 

When the Covid-19 pandemic began to sweep the world earlier this year, the wealth of U.S. billionaires plummeted in lockstep with the stock market. Yet, just six months after the market bottomed out—with hundreds of thousands Americans dead and the coronavirus still to be contained—the wealthiest Americans are doing better than ever. In other words, the pain, at least for the ultra-rich, was remarkably short lived.

Meanwhile, more and more American workers, who have lost their jobs or been furloughed, are attempting to survive on meager unemployment benefits. And many of them and their families—especially Black people and children—are now falling below the poverty line.

Part of the reason for this obscene growth in poverty is the expiration of the CARES Act’s $600 per week unemployment supplement. The other reason is that the number of American workers who are applying for unemployment benefits continues at elevated levels.

This morning, the U.S. Department of Labor (pdf) reported that, during the week ending last Saturday, another 898 thousand American workers filed initial claims for unemployment compensation. While initial unemployment claims remain well below the peak of about seven million in March, they are far higher than pre-pandemic levels of about 200 thousand claims a week.

The number of continued claims for unemployment compensation, while also below its peak, was still more than 25 million workers—a figure that includes workers receiving Pandemic Unemployment Assistance.*

To put this number in perspective, consider the fact that the highest number of continued claims for unemployment compensation during the Second Great Depression was 6.6 million (at the end of May 2009), and in the week before the Pandemic Depression began there were only 1.6 million continued claims.

In the meantime, at least 1,011 new coronavirus deaths and 59,751 new cases were reported in the United States yesterday. As of this afternoon, more than 7.9 million Americans have been infected with the coronavirus and at least 217.1 thousand have died—more than any other country in the world, grotesque outcomes that continue to receive barely a mention from Trump or anyone (aside from Dr. Anthony Fauci) in his administration.

Meanwhile, many colleges and universities that have attempted to reopen with students in residence are reporting hundreds of (and, in some cases, more than a thousand) novel coronavirus infections.

The result will be new waves of business slowdowns and closures, which in turn will mean millions more U.S. workers furloughed and laid off. Unless there is a radical change in economic policies and institutions, Americans can expect to see steady streams of new COVID-19 infections and deaths, initial and continued unemployment claims, and growing poverty in the weeks and months ahead.

As for those at the top: during the first six months of the pandemic, the United States added more than 29 more billionaires, increasing from 614 to 643. The Pandemic Depression has been a boon to their fortunes.

———

*This is the special program for business owners, the self-employed, independent contractors, and gig workers not receiving other unemployment insurance.

Billionaires—pandemic edition

2019 was a very good year for the world’s wealthiest individuals. The normal workings of global capitalism created both more billionaires and more combined wealth owned by those billionaires.

According to Wealth-X, which claims to “have developed the world’s most extensive collection of records on wealthy individuals and produce unparalleled data analysis to help our clients uncover, understand, and engage their target audience,  as well as mitigate risk,” the size of the global billionaire population increased strongly in 2019, rising by 8.5 percent
to 2,825 individuals, while their combined wealth increased by 10.3 percent to $9.4 trillion.

To put that into perspective, the world’s real Gross Domestic Product grew by only 2.9 percent (International Monetary Fund) in 2019—while the value of global equities, which is key to billionaires’ wealth, soared by more than 25 percent (MSCI World Index).

The United States still leads the list of the world’s billionaire population and their wealth. In 2019, the number of American billionaires rose by almost 12 percent to 788 individuals, accounting for 28 percent of the global billionaire population (China has the next highest share at 12 percent). Cumulative billionaire wealth in the United States increased by 14 percent to $3.4 trillion, more than the combined net worth of the next eight highest-ranked countries and equivalent to a 36 percent share of global billionaire wealth.*

What about the novel coronavirus pandemic?

According to Bloomberg, only two of the world’s 10 richest people have seen their wealth decline in 2020: luxury mogul Bernard Arnault and Berkshire Hathaway Inc.’s Warren Buffett. Everyone else, whose wealth is tied to technology holdings (except for Mukesh Ambani, the Indian billionaire who chairs and runs oil and gas giant Reliance Industries), has seen their individual and collective wealth increase—none more so than Jeff Bezos (the Amazon.com Inc. founder who has seen his net worth soar by $63.6 billion this year) and Elon Musk (whose net worth has more than doubled to $69.7 billion on the back of surging Tesla Inc shares).**

On a global level, billionaires tied to technology businesses have outperformed all others, especially those whose wealth is tied to the automotive, shipping, media, textiles and apparel, and aerospace (less so defense) industries. They, of course, are the ones who most want to see a quick solution to the pandemic and a reopening of economic activity around the world.

In general terms, wealthier billionaires are more exposed to the ebbs and flows of the stock market, while those at lower tiers tend to have more of their wealth in private holdings, likely to be their primary business. For example, those in the two highest billionaire wealth tiers—above $10 billion— hold between almost half and more than three-quarters of their assets in public holdings. These individuals have withstood significant volatility in their wealth as stock markets first fell considerably and then rebounded equally dramatically—this past Friday, to a new record high in the United States—since the beginning of the pandemic.

So, what are the world’s billionaires, in the United States and around the globe, doing with their wealth in the midst of the pandemic? We know they’re not particularly worried with the same problems as their predecessors, the Robber Barons, whose enormous economic power in the United States created a fierce counter-reaction, in militant labor unrest and the adoption of reforms that once seemed radical, like the Sherman Antitrust Act and a federal income tax.

At least so far. . .

Instead, according to Wealth-X, they are

working with their wealth advisors and planners to ensure their financial holdings and wealth plans (whether concerned with investment diversification, wealth transfer or philanthropic aims) remain up to date and in the best possible state given the evolving global situation.

They’re also concerned about their own safety and new forms of luxury consumption. According to the Wealth-X Global Luxury Outlook 2020. “The wealthy’s mindset around what luxury is has changed—their priorities have shifted towards their families,” Jaclyn Sienna India, CEO of luxury travel company Sienna Charles, said in the report. “Luxury now includes a second passport, access to healthcare and the freedom to go when and where they feel safe and secure.”

“Quite a few wealthy people are looking for exclusive safe havens in the form of second homes—safety has become a priority for them,” Alistair Brown, CEO of Alistair Brown International Real Estate. “But with this purchase, they expect access to established locations often via residency and additional passports as well as access to medical help.”

Additionally, the wealthy have become increasingly accustomed to purchasing luxury goods online since the pandemic, as high-end brands expand their digital offerings, the report said.

“The wealthy continue to value luxury as they did prior to Covid-19. However, the way they buy luxury has changed, with more having moved to making their purchases online,” Winston Chesterfield, principal of luxury watch company Barton.

Meanwhile, what is everyone else supposed to do? Well, they have to stay as safe as they can at home and on the job—as they are subjected to the second or third wave of the pandemic—and try to obtain sufficient food, remain in their shelter while not being able to keep up with their rents and mortgages, and pay for their healthcare—in the midst of widespread pay cuts and soaring unemployment.

And, perhaps, begin to sharpen the twenty-first century equivalent of pitchforks. . .

———

*That’s my quick (and, I understand, overly simplistic) argument against the rise of fascism in the United States: billionaires and the other members of the group of ultra-wealthy individuals don’t need it, since they’re doing quite well the way things are.

**Currently, five of the largest American tech companies—Apple, Amazon, Alphabet, Facebook, and Microsoft—have market valuations equivalent to about 30 percent of U.S. gross domestic product. That’s almost double what they were at the end of 2018.

Generation screwed—and screwed again

You know your generation’s screwed when even Monopoly is mocking you.

Back in 2016, I argued that Millennials were in fact generation screwed.

For example, in 2010 (when some of them were 20 to 24 years of age), their unemployment rate was 17.2 percent, much higher than the already high national average of 9.9 percent.*

Partly because of the difficulty they had finding jobs, but also because they have been saddled with high student and healthcare debt, the typical Millennial family lost ground between 2010 and 2016, falling further behind the typical wealth lifecycle than any other birth cohort. According to the Federal Reserve Bank of St. Louis (pdf), a typical 32-year-old family respondent in 2016 (born in 1984) was 34 percent ($12,000) below the 32-year-old benchmark established by earlier generations.

No wonder Hasbro decided to lampoon their inability to purchase real estate.

Still, the authors of the report thought there were grounds for optimism, since “These families have many more years to earn, save and accumulate wealth.”

Except now, according to Vox (first in early April and now in May), Millennials have been screwed again.

As someone on the tail end of the millennial generation, I was lucky enough to still be in school when the 2008 recession hit. Yet financial anxiety has been an omnipresent part of how I see the world. It feels as though the one-time hallmarks of adulthood — buying a house, having kids, stability, even thinking about these things — are no longer milestones, but irresponsible dreams. Meanwhile, millennials older than me, many of whom are in their 30s and began their job searches in the thick of the 2008 recession, are even more financially fragile.

In fact, Millennials have every reason to be concerned, about their present and their future. They (and the next younger cohort) appear to have been most affected by furloughs, layoffs, and pay cuts in the midst of the current economic crisis. Moreover, we know that those making less money and those working in certain sectors (such as hospitality, restaurant services, and retail trade) have been more likely to be laid off than other, often older workers. And yet still Millennials have to continue to pay off their student loans and healthcare debts and make their rent payments.

The last time I analyzed the situation of Millennials, I discovered they were more inclined to identify as members of the working-class (and not, for example, as middle-class) and more critical of capitalism than previous generations.

I wonder now, when they’re being screwed a second time in their short lives, how they will identify and what economic and social arrangements they will end up criticizing.

Millennials still have plenty of time, if not to accumulate wealth, at least to change the world.

 

*For the sake of comparison, the difference between the two unemployment rates in 2007 was only 2.8 points.

Are we all in this together?

It must be confessed that though the plague was chiefly among the poor, yet were the poor the most venturous and fearless of it, and went about their employment with a sort of brutal courage; I must call it so, for it was founded neither on religion nor prudence; scarce did they use any caution, but ran into any business which they could get employment in, though it was the most hazardous. Such was that of tending the sick, watching houses shut up, carrying infected persons to the pest-house, and, which was still worse, carrying the dead away to their graves.

— Daniel Defoe, A Journal of the Plague Year

I’m almost sick of hearing the refrain, “We’re all in this together.”

I say almost, because I do think there’s a utopian moment in that phrase in the midst of the current pandemic. It speaks of solidarity, of being in common, of paying attention to and honoring healthcare workers and others who are currently laboring in “essential” activities while the rest of us are instructed to stay at home. In that sense, it betokens—or at least aspires to—a thinking about and caring for others.

Otherwise, and this is why I’m getting tired of it, the expression serves to deflect our attention from and to paper over the obscene inequalities that afflict American society. I’m referring not only to the pre-existing unequal condition in the United States—the sharp fissures and enormous chasms that have been highlighted by the pandemic—but also to the ways the gap between the haves and have-nots has played an important role in actually causing the spread of the dreaded disease, as well as to the possibility those inequalities will only get worse as a result of the pandemic and the way the response to it has been devised and implemented in the United States.

It has now become almost commonplace, at least within the liberal mainstream media, to note that the unfolding of the novel coronavirus pandemic and the ensuing economic crisis have focused a spotlight on the grotesque inequalities that preceded their onset. With every day that has gone by, it has become clearer that the spread of the virus has been profoundly lopsided and uneven—from access to testing and decent, affordable healthcare and who’s been able to shelter in place to the presence of underlying “comorbidities,” all of which have made the virus both more prevalent and more lethal among working-class Americans, including African Americans, who have been left behind.

The pandemic has also brought with it an economic crisis—and that too has reflected existing inequalities. On one hand, tens of millions of low-wage workers have been especially vulnerable to layoffs, with restaurant and retail workers especially at risk, increasingly obliged to acquire sustenance for themselves and their families in the country’s understocked food pantries. On the other hand, millions of other workers—who drive buses, care for hospital patients and the elderly, pack and transport commodities, take their places on the assembly-line in slaughterhouses—have been forced to have the freedom to continue to commute to and labor at their jobs in perilous conditions, increasing the risk of contagion to themselves, their families, and the communities in which they live.

Meanwhile, the former or current employers of those same workers have been lining up to receive loans from private banks and through the various government bailouts, with few of any restrictions (e.g., on stock buybacks and dividends payments to shareholders) and high-profile chief executives of corporations have announced voluntary salary cuts, which turn out to be nothing more than publicity stunts.

Not only do the consequences of the pandemic appear to reflect existing inequalities. It also seems to be the case that those same inequalities are acting as multipliers on the coronavirus’s spread and deadliness. It is no coincidence that the United States, with the most unequal distribution of income and wealth among rich countries, also has the highest number of confirmed cases of and deaths from the coronavirus. One reason is that, as inequality has increased, health disparities themselves have widened—and lower-income Americans are much likelier than those at the top to have one or more chronic health conditions, thus exposing them to more risk from the coronavirus. Moreover, those same people are the ones who have been continuing to work in their “essential” in-person jobs, which require more contact both with other workers and customers. In other words, workers, who have more health problems and less health care, are at greater risk of transmission.

The pandemic under extreme inequality thus involves a devastating feedback loop, for workers and society as a whole. The people who can least afford it, given their health and working conditions, are forced into the position of being more exposed to contagion and becoming agents of transmitting the disease to others—in their workplaces and households and in the wider community.

And there’s another feedback loop, or cycle of injustice—from existing inequalities through the uneven effects of the pandemic to even more inequality in the future. As Charlie Cooper has argued,

With social distancing here to stay for the foreseeable future, it’s becoming increasingly clear that the next stage of the pandemic is going to change many lives for the worse.

Specifically, it’s going to exacerbate existing inequalities, as the privileged buffer themselves against its pernicious effects while the world’s most vulnerable struggle not to fall through the rapidly widening economic fissures.

For one thing, even after recovery from the immediate affliction, the coronavirus infection may cause lasting damage throughout the body, thereby worsening both the health and economic activity of some (still unknown) portion of an entire generation.

On top of that, the effects of the economic crisis, with tens of millions of workers furloughed or laid off while banks and corporations are bailed out and the stock market is on the rebound, may be even worse than those of the Second Great Depression. Let’s remember that, aside from a brief hiatus (in 2009), the trend of growing inequality that preceded the crash of 2007-08 was quickly restored during and after the so-called recovery.

For example, in 2007, the top 1 percent of Americans captured 19.9 percent of pretax national income (the blue line in the chart on the left), while the bottom 50 percent had only 13.7 percent (the red line). By 2014 (the last year for which data are available), the percentages were 20.2 and 12.6, respectively. The story of wealth inequality is even more dramatic: while the share of wealth owned by the top 1 percent (the red line in the chart on the right) grew from 34.1 percent in 2007 to 36.6 percent in 2016, the tiny share owned by the bottom 50 percent (the blue line) barely changed, rising from 0.3 percent to 0.4 percent.

Since we’re only at the beginning of the current crisis, we still don’t know what the final results will be. Even a quick, V-shaped economic recovery (about which I have my doubts) would still be accompanied, according to current modeling, with millions of cases of coronavirus and 100 thousand or more deaths, spread unevenly within the U.S. population (especially now that the Trump administration is set to dismantle its coronavirus task force). While the effects of a longer and more severe downturn—a third economic depression, perhaps—will likely be characterized, especially since there have been no major policy changes compared a decade ago, by the same kind of unequalizing dynamic.

All signs, then, point to the fact that existing inequalities will give rise, on their own and through the consequences of the pandemic, to even more obscene levels of inequality in the future—unless, of course, there is a profound change in the way the American economy and healthcare system are currently organized.

Undoing those inequalities is the only way of ensuring that, in reality, “we’re all in this together.”

Chart of the day

A new report from the Institute for Policy Studies, “Billionaire Bonanza 2020: Wealth Windfalls, Tumbling Taxes, and Pandemic Profiteers,” reveals that the wealth of U.S. billionaires is indeed staying at home.

Since 10 April 2020, there’s been both an increase in the number of billionaires (to 629) and a surge in billionaire net worth. Billionaire wealth increased $282 billion, or 9.5 percent, in just 23 days, bringing the combined net worth of the billionaire class to $3.229 trillion.

That’s on top of a dramatic increase in both the numbers and total wealth of U.S. billionaires for the past three decades. In 1990, 66 U.S. billionaires held a total wealth of $118.8 billion, or $239.56 billion in 2020 dollars. The United States, by the beginning of this year, hosted 614 billionaires with a total wealth of $2.947 trillion.

And the rest of us? While U.S. billionaire wealth soared by 1,130 percent since 1990, median household wealth increased by only 5.37 percent.

As the authors of the report argue,

If expanding billionaire wealth “lifted all boats” and created, in effect, a society that worked well for everyone, we could perhaps afford to worry less about billionaire fortunes. But the number of households with zero or negative wealth. . .is increasing. Our society is most definitely not working for all of us. A high percentage of U.S. households are living on the edge, paycheck to paycheck. The current pandemic is exposing our central economic and social reality: Extreme wealth inequality has become America’s “pre-existing condition.”

The comorbidity of dramatically increasing wealth inequality and economic precarity for a larger and larger number of American workers has made it difficult, if not impossible, to mitigate the economic and social effects of the response to the novel coronavirus pandemic in the United States.

Cartoon of the day

Special mention

 

Cartoon of the day

Special mention