by Russell Mokhiber and
As the Dow Jones industrial average shoots past 11,000 on its
way to the stratosphere, could we pause for a moment of silence to recognize the wealth
disparity that has resulted and the threat it poses to our fragile democracy?
If you read and listen to the corporate pressthe Wall Street cheerleaders at
Bloomberg, the Wall Street Journal, Investors Business Daily, or the other major
corporate news servicesyou might think that the market boom has resulted in wealth
For the most part, the corporate press, caught up in their euphoria over this bubble
economy, has ignored the reality on the ground.
They generally ignored, for example, the bit of reality recently presented in succinct
detail by the Boston- based United for a Fair Economy.
Last month, the group issued "Shifting Fortunes: The Perils of the Growing Wealth
Gap in America," a report that features the latest findings of economist Edward Wolff
of New York University, a leading authority on wealth distribution.
This is what the report found:
Most households have lower net worth, adjusting for inflation, than they did in
1983, when the Dow was still at 1,000.
From 1983 to 1998, the S&P 500 grew a cumulative 1,336 percent. But the
wealthiest households reaped most of the gains.
Since the mid-1970s, the top 1 percent of households have doubled their share of
the national wealth. The top 1 percent of U.S. households now have more wealth than the
entire bottom 95 percent.
The top 1 percent of households control 40 percent of the wealth. Financial
wealth is even more concentrated. The top one percent control nearly half of all financial
wealth (net worth minus equity in owner-occupied housing).
Microsoft CEO Bill Gates owns more wealth than the bottom 45 percent of American
households combined. In the fall of 1997, Gates was worth more than the combined Gross
National Product of Central America for you geography buffs, thats Guatemala,
El Salvador, Costa Rica, Panama, Honduras, Nicaragua and Belize. By the fall of 1998,
Gates $60 billion was worth more than the GNPs of Central America plus Jamaica and
The boom has been a bust for millions of Americans. The inflation-adjusted net
worth of the median household fell from $54,600 in 1989 to $49,900 in 1997. Nearly one out
of five households have zero or negative net worth (greater debts than assets), an
increase from the 1980s.
Workers are earning less, adjusting for inflation, than they did when Richard
Nixon was president. Average weekly wages for workers in 1998 were 12 percent below 1973,
adjusting for inflation. Productivity grew nearly 33 percent in the same period.
Families have sunk deeper into debt. Household debt as a percentage of personal
income rose from 58 percent in 1973 to an estimated 85 percent in 1997. Total credit card
debt soared from $243 billion in 1990 to $560 billion in 1997. Credit card limits have
risen to the point that the average person can charge more than eight times what they
already owe. As of 1997, almost 60 percent of American households carried credit card
balancesbalances that average more than $7,000, costing these households more than
$1,000 per year in interest and fees.
There is little question that wealth concentration presented in this report is being
fueled by corporate greed. And the resulting wealth inequality poses serious threats to
our democracy and civic life.
"The wealth gap reinforcesand is reinforced bywidening disparities in
education, economic opportunity, and quality of life," says Chuck Collins,
co-director of United for a Fair Economy, and a co-author of the report. "Even the
affluent lose from inequality as it hurts life expectancy for rich and poor, fuels
violence, and denies all of us the contributions of people whose opportunities are
Another co-author of the report, Juliet Schor, argues that "health, well-being and
satisfaction appear to be heavily influenced by the ways in which economic resources,
prestige and social position are distributed."
"In more unequal societies, human well-being and quality of life appear to be
lower," Schor says. Wolff makes the point that "wealth, more than income,
directly translates into political power." To counter the wealth threat to democracy,
Wolff proposes a wealth tax on the richest Americans.
As an act of capitalist self-preservation, we think Gates and his buddies should agree.
Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter.
Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor. Together,
they are authors of Corporate Predators: The Hunt for MegaProfits and the Attack on
Democracy (Common Courage Press, 1999, http://www.corporatepredators.org). (c) Russell Mokhiber and Robert