* The wealthiest 1 percent of Americans held 33.4 of the wealth in 2004. . . The top 5 percent collectively held 55.5 percent of the wealth in 2004.
* The poorest 50 percent of the American population collectively held 2.5 percent of the wealth . . . the very wealthiest 1 percent of Americans own a bigger piece of the pie (33.4 percent) than the poorest 90 percent put together (30.4 percent) . . . .
* The wealthiest 1 percent of Americans owned 62.3 percent of the business assets in 2004.
* The wealthiest 5 percent collectively owned 88.7 percent of business assets.
* The wealthiest 5 percent also owned 93.7 percent of the value of bonds, 71.7 percent of the nonresidential real estate, and 79.1 percent of the value of stock.
The family net worth cutoffs referenced above are:
99th percentile at $6,006,000
95th percentile at $1,393,000
90th percentile at $827,600
50th percentile at $92,900
. . . About 8% of Americans are millionaires. . . .
Unrealized, and hence, untaxed, capital gains make up 31% of the wealth of the top 1% and come mostly in investment assets for these families. . . .
Among African-Americans . . . the 75th percentile is $97,000, and the 90th percentile is $248,000. Among Hispanics . . . the 75th percentile is $103,200, and the 90th percentile is $304,100.
Last time I emphasized the fact that the distribution of wealth makes estate taxation, and tort reform damage caps relevant only to the a small percentage of Americans. This is still true. The forgiveness of tax liability on unrealized capital gains taxes at death is also a huge boon to the top 1% and of very little benefit to most people.
About Business Regulation
Today, I want to make a bigger point about business regulation and government efforts to secure social equality. As the facts above indicate, the vast majority of business assets in America are owned by 5% of the families in America, both big business which is owned through stocks and bonds, and privately held business (those referred to as "business assets" above).
Depending on how you count it, between 10% and 20% of Americans own privately held businesses or farms. But, most of those businesses aren't worth very much, and most of those businesses are either essentially one man or one woman shows that basically sell the services of the proprietor (whatever the form of business organization) or very small, single location, no middle manager, low capital investment type businesses like single location coffee shops or restaurants or food carts or tiny construction subcontractor operations, or "lifestyle" farms.
At the level of the economy as a whole, business regulation overwhelmingly impacts the rich and the near rich. Almost everyone who owns a business large enough to make worrying about unionization an issue (and clearly it is for business lobbies, who have made unprecedented efforts to oppose Colorado's HB 1072, a moderate pro-union bill this legislative session now awaiting a decision of the Governor), is in the top 5% of the wealth distribution in this country.
The Limits Of Soaking the Rich
This is not to say that liberals should overregulate or overtax business.
Republican style trickle down economics is largely a myth. Economic growth in the past thirty years has done far less to help "the rest of us" than would be expected. The United States is the only major developed country where the income of those at the top has risen greatly while the income of those at the bottom has fallen, in recent years.
But, while economic growth and prosperity for the nation as a whole is not a sufficient condition to make the majority of the population better off, it is a necessary condition. The only ways to make average people wealthier are to increase the size of the economic pie, or to seize wealth from the rich and to give it to the poor.
Seizing wealth from the rich, wholesale, may sound attractive. But, it doesn't work. Harsh efforts, in the alleged interests of the masses, to crack down on the well off produce the economic and social disasters of Stalin's Russia, Pol Pot's Cambodia, and China's Cultural Revolution. Traumatic effort to redistribute wealth are counterproductive.
This isn't simply a matter of history book communism. Zimbabwe, which in the year 2000 confiscated the wealth of a 3,500 ultra-wealthy white plantation owners whose wealth was a legacy of apartheid, however just or unjust the government's cause for doing so may have been, has paid dearly for this policy.
Since 2000, the national economy has contracted by as much as 40%; inflation has vaulted to over 1000%, and there have been persistent shortages of foreign exchange, local currency, fuel, and food.
In 2006 alone, the GDP contracted by 4.7%. And, while wealth was certainly concentrated in Zimbabwe before the land seizure, "whites made up less than 1% of the population but held 70% of the country's commercially viable arable land" in 1999, compared to the numbers above for the United States, it really wasn't so different when it comes to economic assets (60% of the population is engaged in agriculture, even after a collapse of the agricultural economy in Zimbabwe since the land seizure).
Examples Of Wealth With Greater Economic Equality
This isn't to say that the stark inequalities we see in the United States are necessary to prosperity either.
Japan and almost all of Europe has far smaller contrasts in wealth between the rich and the the rest of the population than the United States. Indeed, the United States distribution of wealth looks more like a Third World country than it does like a modern industrialized democracy.
Also, wealth distribution isn't terribly closely tied to usual suspects like tax policy and state regulation of the labor market. While Europe has largely chosen to organize its economy to work fewer hours than Americans do and impose higher taxes to support a stronger social safety net, Japan has taken a very different approach. Japan is neck and neck with the United States in both its high number of hours worked per person, and its low tax levels as a perecentage of GDP. Yet, the only country in the world with less income inequality than Japan is Denmark.
Government policy can foster an "ownership society" where the middle class has greater wealth, this wealth heightens social equality, and this shift fosters a sense of national solidarity because far more people have an economic stake in the system. But, the kinds of policies that the Bush Administration has fostered don't move us in that direction.
The most effective "ownership society" transitions in American history have been characterized by massive government largess for average people. The first was the Homestead era, when the government gave away tracts of land to anyone looking for a fresh start in the West.
The second was the post-World War II era whose signature policy was the G.I. Bill. The G.I. Bill provided government aid that allowed veterans (who made up a huge share of the adult male population) to get higher education and own homes. Federally sponsored corporations created the modern middle class mortgage market, also vastly expanding home ownership. Unions were strong which gave large numbers of working and middle class Americans jobs that paid a decent wage with benefits and relatively fair conditions of employment. Widespread employer provided health insurance and pensions (both, in part, creations of lingering war era wage controls) came into existence.
The benefits of the Social Security safety net, created in the Great Depression, became more noticable as more people lived to retirement age and people had fewer children. A massive reduction in poverty among the elderly had the side effect of allowing making some meaningful inheritance something most middle class families experienced, as opposed to something restricted to a privileged few.
Achieving progress now will take new efforts. But, we know from these experiences that it can be done.