A Most Fatal Ailment

The ancient Greek historian and essayist Plutarch is said to have written that “an imbalance between rich and poor is the oldest and most fatal ailment of all republics.” If such is true, then the United States has fallen deathly ill. Consider the following report by Paul Harris in The Observer:

Welcome to Richistan, USA

On the surface, Mark Cain works for a time-share company. Members pay a one-off sum to join and an annual fee. They then get to book holiday time in various destinations around the globe.

But Solstice clients are not ordinary people. They are America’s super-rich and a brief glance at its operations reveal the vast and still widening gulf between them and the rest of America.

Solstice has only about 80 members. Platinum membership costs them $875,000 to join and then a $42,000 annual fee. In return they get access to 10 homes from London to California and a private yacht in the Caribbean, all fully staffed with cooks, cleaners and ‘lifestyle managers’ ready to satisfy any whim from helicopter-skiing to audiences with local celebrities. As the firm’s marketing manager, Cain knows what Solstice’s clientele want. ‘We are trying to feed and manage this insatiable appetite for luxury,’ Cain said with pride.

America’s super-rich have returned to the days of the Roaring Twenties. As the rest of the country struggles to get by, a huge bubble of multi-millionaires lives almost in a parallel world. The rich now live in their own world of private education, private health care and gated mansions. They have their own schools and their own banks. They even travel apart – creating a booming industry of private jets and yachts. Their world now has a name, thanks to a new book by Wall Street Journal reporter Robert Frank which has dubbed it ‘Richistan’. There every dream can come true. But for the American Dream itself – which promises everyone can join the elite – the emergence of Richistan is a mixed blessing. ‘We in America are heading towards ‘developing nation’ levels of inequality. We would become like Brazil. What does that say about us? What does that say about America?’ Frank said.

In 1985 there were just 13 US billionaires. Now there are more than 1,000. In 2005 the US saw 227,000 new millionaires being created. One survey showed that the wealth of all US millionaires was $30 trillion, more than the GDPs of China, Japan, Brazil, Russia and the EU combined.

The rich have now created their own economy for their needs, at a time when the average worker’s wage rises will merely match inflation and where 36 million people live below the poverty line. In Richistan sums of money are rendered almost meaningless because of their size. It also has other names. There is the ‘Platinum Triangle’ used to describe the slice of Beverly Hills where many houses go for above $10m. Then there is the Jewel Coast, used to describe the strip of Madison Avenue in Manhattan where boutique jewellery stories have sprung up to cater for the new riches’ needs. Or it exists in the MetCircle society, a Manhattan club open only to those whose net worth is at least $100m.

The reason behind the sudden wealth boom is, according to some experts, the convergence of a new technology – the internet and other computing advances – with fluid and speculative markets. It was the same in the late 19th century when the original Gilded Age of conspicuous wealth and deep poverty was spawned by railways and the industrial age. At the same time government has helped by doling out corporate tax breaks. In the Fifties the proportion of federal income from company taxes was 33 per cent, by 2003 it was just 7.4 percent. Some 82 of America’s largest companies paid no tax at all in at least one of the first three years of the administration of President George W Bush. [full text]

About these ads

2 thoughts on “A Most Fatal Ailment

  1. No. This is not a “sudden wealth boom.” This is the result of concerted, intentional class warfare, waged from the top down.

    There are two things happening. More wealth is being created while the division of that wealth has become increasingly skewed. An imbalance of this magnitude comes from those at the top getting a bigger share of a bigger pie.

    The other thing that is happening is that those below the top, especially the bottom 80%, are being deliberately held down. Those solid middle class jobs that lifted millions of people out of the proletariat and put them in the middle class are gone. We are becoming a two-tiered society: very highly paid, or $10 per hour–without benefits.

    This is the result of Reagonomics. The wealthy–as amply represented by the Republicans–have never, ever given up on their dream of turning back the New Deal. The income disparity is the direct result of 25-plus years of cutting taxes for the wealthiest among us, while systematically destroying all the institutions that made the “Great Compression” of wealth possible in the years 1948-1973.

    What we’re seeing is record corporate profits, translated into huge stock options, vast capital gains taxed at 15%. The return to capital is skyrocketing because of deliberate policy, while the return to labor shrivels–also because of deliberate policy. In years past, these corporate profits were used to increase wages for most workers. Not any more. It’s all sticking at the top.

    And it’s happening in the US, Germany, and Japan–the three largest economies in the world. Unemployment has fallen by 15-27% since 2003/4 in each of these countries, but this has not translated into upward pressure on wages. Rather, the pressure is down. That is not what is “supposed” to happen in a free market. As the supply of labor tightens, the price is supposed to rise. That it hasn’t happened is the best proof that the market is rigged to benefit those at the top.

    And the glib response is that it’s about education. Not true. Wages for college-educated persons have been stagnant. Rather, it’s the result of a winner-take-all tournament, in which a few, lucky, well-connected individuals reap all the rewards.

    It’s class warfare, people. And it’s deliberate.

Comments are closed.