Extrapolating the Ideas of Occupy Wall Street
The Occupy Movement is centered on financial inequality, yet it misses half of the picture. Politicians, protestors and the press frequently speak on the topic of income inequality, but hardly ever about wealth inequality.
Additionally, there are two other important details which are also frequently missed. First, Occupy has been focusing on the richest one percent, as it should. But it should not restrict its focus to the top one percent; the country needs to look at the top five and 10 percent, too. The numbers attached to the one percent are staggering, but so are those of the decadal elite. When it comes to tax policy or economic analysis, this larger group cannot be overlooked.
The difference in wording between wealth and income inequality is subtle but the difference in socio-economic effects is huge. It is true that income inequality is very high and growing. According to census data, income inequality has not been so large since the 1920s. Congressional Budget Office reports show that average incomes after taxes of poorest 20 percent of the population have grown only about 15 percent over the last 30 years. That number is in stark contrast to the doubling in income of the richest quintile, gained over the same time frame.
These numbers are astounding, but wealth inequality is even more skewed. That’s because wealth (assets minus debts) is cumulative, and it tends to grow like compound interest – exponentially. The richest one percent of Americans hold approximately 35 percent of the country’s wealth. The same group takes home 22 percent of the country’s income. That’s a significant difference. Really unnerving is the fact that the bottom half of Americans, combining everything they own, accounts for less than three percent of the nation’s assets. The income inequality in the U.S. is higher than that of most other industrialized nations, but overall, we fall somewhere in the middle of the pack. Wealth inequality, however, is a different story. The U.S. ranks fourth worst in the entire world.
The top one percent earns and owns more than the top five or 10 percent. But that’s not a reason to exclude other percentiles from scrutiny. Popular discourse has made an arbitrary cut-off at one percent. With this rationale, we might as well look exclusively at the top tenth of a percent, or even the hundredth of a percent. After all, families in the top one percent make, on average, only 1.1 million a year. The top tenth of a percent make 3.2 million and the top hundredth of a percent – the super-rich – make more than 27 million. Or we could just talk about Philippe Dauman, the CEO who received the largest compensation of 2010 – 84 million. The point is, the top one, five, and 10 percentiles are all important.
I hope that global inequality is added to the current discourse. Living in a land of plenty makes us forget how good we have it. Inequality within the U.S. is very real and very important; it has a definite impact on the psyche of the individual and the nation as a whole. Inequality among nations, however, is also very real and has a significant influence in the way all citizens of the globe perceive their wealth. Interestingly, wealth within the U.S., as measured by the Gini Coefficient (a mathematical formula which boils inequality down to a single number), is spread out at a rate very similar to wealth among all the world’s people. And when one looks at the numbers comparing different nations, the United States looks awfully familiar to the condemned one percent Wall Street CEOs and investment bankers.
As discourse continues and the Occupy movement catches the conscience of the American people, the following must not be forgotten: firstly, it is the one percent, but it’s not just the one percent. Secondly, income inequality is important, but wealth inequality is even more important and out of whack. Lastly, financial inequality within the United States is a problem, but so is the inequality between the U.S. and developing nations of the world.
Johannes Holger Raatz is a Collegian columnist. He can be reached at email@example.com.