The
richest Americans hold more of the nation’s wealth than they have in almost a
century. What do they spend it on? As you might expect, personal jets, giant
yachts, works of art, and luxury penthouses.
And
also on politics. In fact, their political spending has been growing faster
than their spending on anything else. It’s been growing even faster than their
wealth.
According
to new research by Emmanuel Saez of the University of
California at Berkeley and Gabriel Zucman of the London School of Economics,
the richest one-hundredth of one percent of Americans now hold over 11 percent
of the nation’s total wealth. That’s a higher share than the top .01 percent
held in 1929, before the Great Crash.
We’re
talking about 16,000 people, each worth at least $110 million.
One
way to get your mind around this is to compare their wealth to that of the
average family. In 1978, the typical wealth holder in the top .01 percent was
220 times richer than the average American. By 2012, he or she was 1,120 times
richer.
It’s
hard to spend this kind of money.
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Why
should we care?
Because
this explosion of wealth at the top has been accompanied by an erosion of the
wealth of the middle class and the poor. In the mid-1980s, the bottom 90
percent of Americans together held 36 percent of the nation’s wealth. Now, they
hold less than 23 percent.
Despite
larger pensions and homes, the debts of the bottom 90 percent – mortgage,
consumer credit, and student loan – have grown even faster.
Some
might think the bottom 90 percent should pull in their belts and stop living
beyond their means. After all, capitalism is a tough sport. If those at the top
are winning big while the bottom 90 percent is losing, too bad. That’s the way
the game is played.
But
the top .01 percent have also been investing their money in politics. And these
investments have been changing the game.
In
the 2012 election cycle (the last for which we have good data) donations from
the top .01 accounted for over 40 percent of all campaign contributions,
according to a study by Professors Adam Bonica, Nolan McCarty,
Keith Poole, and Howard Rosenthal.
This
is a huge increase from 1980, when the top .01 accounted for ten percent of
total campaign contributions.
In
2012, as you may recall, two largest donors were Sheldon and Miriam Adelson,
who gave $56.8 million and $46.6 million, respectively.
But
the Adelsons were only the tip of an iceberg of contributions from the uber
wealthy. Of the other members of the Forbes list of 400 richest Americans,
fully 388 made political contributions. They accounted for forty of the 155
contributions of $1 million or more.
Of
the 4,493 board members and CEOs of Fortune 500 corporations, more than four
out of five contributed (many of the non-contributors were foreign nationals
who were prohibited from giving).
All
this money has flowed to Democrats as well as Republicans.
In
fact, Democrats have increasingly relied on it. In the 2012 election cycle, the
top .01 percent’s donations to Democrats were more than four times larger than
all labor union donations to Democrats put together.
The
richest .01 percent haven’t been donating out of the goodness of their hearts. They’ve
donated out of goodness to their wallets.
Their
political investments have paid off in the form of lower taxes on themselves
and their businesses, subsidies for their corporations, government bailouts,
federal prosecutions that end in settlements where companies don’t affirm or
deny the facts and where executives don’t go to jail, watered-down regulations,
and non-enforcement of antitrust laws.
Since
the top .01 began investing big time in politics, corporate profits and the
stock market have risen to record levels. That’s enlarged the wealth of the
richest .01 percent by an average of 7.8 percent a year since the mid-1980s.
But
the bottom 90 percent don’t own many shares of stock. They rely on wages, which
have been trending downward. And for some reason, politicians don’t seem
particularly intent on reversing this trend.
If
you want to know what’s happened to the American economy, follow the money.
That will lead you to the richest .01 percent.
And
if you want to know what’s happened to our democracy, follow the richest .01
percent. They’ll lead you to the politicians who have been selling our
democracy.
ROBERT
B. REICH, Chancellor’s Professor of Public Policy at the University of
California at Berkeley and Senior Fellow at the Blum Center for Developing
Economies, was Secretary of Labor in the Clinton administration. Time Magazine
named him one of the ten most effective cabinet secretaries of the twentieth
century. He has written thirteen books, including the best sellers
“Aftershock" and “The Work of Nations." His latest, "Beyond
Outrage," is now out in paperback. He is also a founding editor of the
American Prospect magazine and chairman of Common Cause. His new film,
"Inequality for All," is now available on Netflix, iTunes, DVD, and
On Demand.