Then there's Social Security, established in 1935 as a federal supplement for those in need who have also paid into the system through a tax on their wages. Today, all workers contribute 6.2% of their annual earnings and employers pay the other 6.2% (up to a cap of $132,900) into the Social Security system. Those making far more than that, specifically millionaires and billionaires, don't have to pay a dime more on a proportional basis. In practice, that means about 94% of American workers and their employers paid the full 12.4% of their annual earnings toward Social Security, while the other 6% paid an often significantly smaller fraction of their earnings.
According to his own claims about his 2016 income, for instance, President Trump "contributed a mere 0.002 percent of his income to Social Security in 2016." That means it would take nearly 22,000 additional workers earning the median U.S. salary to make up for what he doesn't have to pay. And the greater the income inequality in this country, the more money those who make less have to put into the Social Security system on a proportional basis. In recent years, a staggering $1.4 trillion could have gone into that system, if there were no arbitrary payroll cap favoring the wealthy.
Inequality: A Dilemma With Global Implications
America is great at minting millionaires. It has the highest concentration of them, globally speaking, at 41%. (Another 24% of that millionaires' club can be found in Europe.) And the top 1% of U.S. citizens earn 40 times the national average and own about 38.6% of the country's total wealth. The highest figure in any other developed country is "only" 28%.
However, while the U.S. boasts of epic levels of inequality, it's also a global trend. Consider this: the world's richest 1% own 45% of total wealth on this planet. In contrast, 64% of the population (with an average of $10,000 in wealth to their name) holds less than 2%. And to widen the inequality picture a bit more, the world's richest 10%, those having at least $100,000 in assets, own 84% of total global wealth.
The billionaires' club is where it's really at, though. According to Oxfam, the richest 42 billionaires have a combined wealth equal to that of the poorest 50% of humanity. Rest assured, however, that in this gilded century there's inequality even among billionaires. After all, the 10 richest among them possess $745 billion in total global wealth. The next 10 down the list possess a mere $451.5 billion, and why even bother tallying the next 10 when you get the picture?
Oxfam also recently reported that "the number of billionaires has almost doubled, with a new billionaire created every two days between 2017 and 2018. They have now more wealth than ever before while almost half of humanity have barely escaped extreme poverty, living on less than $5.50 a day."
How Does It End?
In sum, the rich are only getting richer and it's happening at a historic rate. Worse yet, over the past decade, there was an extra perk for the truly wealthy. They could bulk up on assets that had been devalued due to the financial crisis, while so many of their peers on the other side of that great wall of wealth were economically decimated by the 2007-2008 meltdown and have yet to fully recover.
What we've seen ever since is how money just keeps flowing upward through banks and massive speculation, while the economic lives of those not at the top of the financial food chain have largely remained stagnant or worse. The result is, of course, sweeping inequality of a kind that, in much of the last century, might have seemed inconceivable.
Eventually, we will all have to face the black cloud this throws over the entire economy. Real people in the real world, those not at the top, have experienced a decade of ever greater instability, while the inequality gap of this beyond-gilded age is sure to shape a truly messy world ahead. In other words, this can't end well.
Nomi Prins, a former Wall Street executive, is a TomDispatch regular. Her latest book is Collusion: How Central Bankers Rigged the World (Nation Books). She is also the author of All the Presidents' Bankers: The Hidden Alliances That Drive American Power and five other books. Special thanks go to researcher Craig Wilson for his superb work on this piece.
Follow TomDispatch on Twitter and join us on Facebook. Check out the newest Dispatch Books, John Feffer's new dystopian novel (the second in the Splinterlands series) Frostlands, Beverly Gologorsky's novel Every Body Has a Story, and Tom Engelhardt's A Nation Unmade by War, as well as Alfred McCoy's In the Shadows of the American Century: The Rise and Decline of U.S. Global Power and John Dower's The Violent American Century: War and Terror Since World War II.
Copyright 2019 Nomi Prins
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