We need to reverse the trend. Otherwise, eventually, it will lead to violence, as many observers have predicted over the years (and it did lead to revolutions in many countries years ago, and even the Arab spring more recently).
Ways to do it:
- Stop restricting competition through laws that limit entry into various sectors (there's an absurd amount of laws which serve no use other than protecting big business interests)
- Heavy taxes on rent-seeking. There's an absurd amount of rent seeking in our economy, especially when it comes to commercial real estate in urban areas, patents, and many other behaviours (the tab above can be considered 'rent-seeking' since it introduces inefficiencies that favour incumbents)
- Estate taxes. While we love antidotes of the middle-class entrepreneur becoming a billionaire, it's the exception to the rule. While there is a lot of churn and mobility amongst the billionaire class, when you take the top 1% as a whole, they, as a group, are increasing their lead over the rest of society. Yes someone who has $50 million in the family can turn it into a billion. And someone with a billion can lose enough to go back to being a multi-millionaire. But the upper classes in general, due to their large real estate holdings and ability to seek rents, generally stay rich. If one family falls, those assets are likely incorporated into another family. Dynastic wealth doesn't always last, but the 1% generally stays the 1%, due to various dynamics.
- Real progressive taxation. While the lower classes pay lower percentages of income tax, it's stacked against them because their current rates still make up a larger percentage of their cost of living allowances. Not to mention, upper classes have more investment vehicles and tax avoidance vehicles at their disposal.
Anyhow, there's much more to say about it, but what it comes down to is, unless we stop the trend, nothing's going to get better, no matter how much we wish it.
1% is a catchy metric, but i think it hides the scale of inequality. $32000/year or so puts you in the top 1%. It really ought to be more like 0.0001%, but it doesn't have quite the same ring.
So, the 62 richest own as much as the poorest 3,652,500,000. Gates and Buffet are interesting, with the philosophy of, give your kids enough to make something of themselves, but not so much they make nothing of themselves. The waltons on the other hand, are definitely shooting for dynastic wealth.
There's a (very) rare chance of getting super rich. There's a possibility of being the kind of person that wants dynastic wealth, so some percent of those super rich are going to have super rich families. Kennedy, Rockefeller, Mellon. But it tends to be dilluting after a while, there are thousands of DuPonts as far as i can tell.
I guess the point i'm making, some superrich will be effective in creating dynastic wealth (they have so far anyway) That, in and of itself isn't a big deal. All the wealth in the world is around $240 trillion. How much of that are we ok with being locked up in a dynasty or 10? How tall can that spike be and have a working economy? In the US the dynasts only control 500 billion or so, so maybe not a big deal, it's not that big of a slice of the pie.
i guess it's more like $550,000,000,000 but it was just a casual observation. The rest of the list probably averages around $3,000,000,000 , so another $550 billion there.
I'd be curious what wealth levels they are looking at, what they consider 'rich', and at what point the wealth is 'lost'. Because I highly doubt the majority of families who are worth > $500 million run that down to 'zero'.
What holds true for families who have > $1 million, doesn't necessarily hold true for families who have > $500 million. Dynastic wealth in Europe usually means owning private banks, wineries, châteaux, lands, etc... In the US, I'd be thinking of families who are large landowners, and have massive amounts of private wealth.
We're not talking about people who gained wealth from a single business in the patriarch/matriarch's lifetime, but rather people whose entire wealth derives from rent-seeking/inheritance.
The 1% is more of a euphemism for the top 0.01%. We're not talking about anyone who, at any point, was ever 'working class'. Steve Jobs' and Bill Gates' wealth probably will disappear; the Rockefellers, Mellons and Rothschilds of this world have done a comparatively good job at holding on to wealth. And there's far more of them than there are rich entrepreneurs... When you talk about inherited wealth, there's plenty of families who aren't on the Forbes' list, still worth billions.
And one note - as many economists have stated, dynastic wealth is still rather young in the US. Historically, in Europe the upper classes derived much of their wealth from land and property, which in Europe is comparatively very expensive because of its scarcity relative to population. For most of the US' history, land has been comparatively cheap. Also, the US has at various times broken up monopolies and redistributed wealth much more radically than western Europe. The US' relative equality is due to its socialist tendencies at various points in history.
I think basic income would be a great idea. There's plenty of other things which I think need to come first. I'd hate for 'basic income' to become the new welfare, and for it to basically subsidize corporations who pay the lower classes minimum wage or less.
There's so many structural issues which serve to increase inequality right now...
Seriously though, during dinner last night my wife and I (and my parents in their late 50s/early 60s) watched the Fox News Town Hall with Sanders and Clinton. They could not fathom how worse off people our age (early 30s/late 20s) have it compared to them. Even after rattling off college costs, inability to secure a home, stagnant wages, poor job prospects, it was incredulous to them. "It can't possibly be that bad!"
Is it an education issue? Perhaps. I think it'll get fixed the hard way though: one obituary at a time. Until then, we'll need a whole lot more social activism out there.
