By: James Bagley
Since 1978, American workers’ productivity has almost doubled and real GDP has tripled. Growth has occurred relatively steadily in both measures, despite the second-worst financial crisis in American history within the past two decades. In the same 40-year period, real wages for workers in the bottom 99 percent of the income distribution have stagnated, and the poverty rate has mostly remained in the high teens and low twenties despite hovering around 15 percent in the late 60s and early 70s following the implementation of President Lyndon Johnson’s great society programs.
So if the wealth generated by economic growth is not going to the poor, middle class or even the upper middle class, where is it going? It is going to those at the very top of the income distribution.
Professor Thomas Piketty’s World Inequality Report showed that the richest 1 percent of people in America controlled about 25 percent of the country’s assets in 1980 but that figure rose to over 40 percent in 2017. And this is not a result of gains to everyone being distributed slightly unevenly: an analysis done by the Economic Policy Institute showed that had income growth between 1979 and 2007 been distributed equally across all workers, the poverty rate would have declined by almost four percentage points, but the rise in income inequality over that same period added five and a half percentage points to the poverty rate.
This is not news. Inequality has been the unspoken goal of conservative economic policy since the Reagan era, couching drastic tax cuts for the wealthy in the rhetoric of “job creators” and wealth “trickling down.” Following the 2016 presidential campaign, there has been an increase in public interest around the issue of economic inequality. Yet, even since then, most policy prescriptions are about finding ways to reduce income inequality moving forward. This would, of course, be a good step, but it wrongly treats the disastrous outcomes of the past 40 years as immutable.
Those responsible for the past few decades of American economic policy are scientists performing a failed experiment that causes human suffering. The appropriate response is not simply to stop the experiment, but also to do whatever possible to counter its harmful effects. Deliberate policy choices have created a society in which more than half of the population cannot afford a $500 emergency expense, such as replacing tires on a car, without borrowing money while over 500 individuals have personal wealth in excess of $1 billion. Things like a more progressive income tax, stronger labor unions, Medicare for all, and a federal job guarantee are all critical components to improve the situation moving forward, but they will not do nearly enough to redistribute the wealth currently being hoarded by plutocrats.
One fairly small potential step is the billionaire’s tax. The concept is simple: If you are hoarding over $1 billion of personal wealth, you are taxed until you are not. The moral case for the tax is straightforward. It is inhumane for some to live with extravagant fortune while others die from a lack of basic necessities. Any moral philosophy that suggests otherwise is devoid of morality and has replaced it with an absolute fealty to a spurious free market that cannot exist in reality. The amount of money necessary to lift every American living in poverty in 2017 above the poverty line is slightly over $171 billion.
Assuming every billionaire in America remained in America and paid the tax, it would bring in over $2.4 trillion. In other words, simply by asking 569 people to live on the meager sum of $999 million each, we could eliminate poverty in America 14 times over.
Of course, there are tons of political and logistical barriers to implementing the tax, and while eradicating poverty is a noble goal, there are many other positive ends toward which that money could be put. With that in mind, it is best to view this not as a direct policy proposal, but rather a more concrete demonstration of exactly how much wealth simply sits in the offshore tax havens of the ultra-wealthy and how much human misery could be lessened by using it to help people who desperately need it.
Perhaps next time Jeff Bezos can’t think of a single way to use his immense wealth that isn’t space travel, he could consider the millions of people on his own planet who don’t even have the means to feed and clothe themselves.