January 23

Alan Caron: Concentrated wealth puts our economy, democracy at risk

The heart of the problem is the fact that the nation’s super-rich are taking far more than they’re giving.

Of all the challenges that our nation faces, from global economic competition to a changing climate to radicals bent upon our destruction, none is a greater than the widening gap between the super-rich and the rest of us. Robert J. Stiller, 2013 Nobel-winning economist and Yale professor, calls it “the most important problem we are facing today.”

A recent report prepared for the World Economic Forum by the international relief organization Oxfam contained some startling and sobering facts. One percent of the world’s population now owns 67 times what the bottom half owns, while just 85 individuals control the same wealth as the poorest 3.5 billion people in the world.

A recent study by the Congressional Budget Office showed that incomes for the top 1 percent of households in America increased by 275 percent between 1979 and 2007, while the middle class gained just 40 percent. This leaves the top 1 percent now controlling 40 percent of the wealth in this country.

Why does this matter? If you look around the globe at places with concentrations of wealth at the very top, you invariably find a weak or nonexistent middle class, paralyzing social unrest, autocratic dictatorships, rampant corruption and widespread violence. Prosperity, healthy populations and functioning democracies almost never survive those conditions.

None of this is meant as some kind of rant against capitalism or rich people in general. Among our greatest heroes are the people in our communities and in our history who had the courage and the drive to build companies and create jobs and wealth. Good for them, and let’s have more of it. As my mother once said to me, “There’s nothing wrong with rich people – it’s the filthy rich that are the problem.”

Nor is this a partisan issue. When enormous wealth is accumulating at the top, it undermines our entire social and political structure. We Americans should know this well. It was why so many of our ancestors fled to these shores to escape the permanent poverty of aristocratic Europe and why we eventually declared our independence from not only England but from concentrated power itself.

Since then, we’ve had to make periodic course corrections in America to ensure that a new aristocracy couldn’t arise here.

In the early 1900s, the Progressive movement swept through the country, reining in the so-called robber barons and breaking up their concentrated power. Later, during the 1930s Depression, a wave of regulations and new programs like Social Security helped level the playing field, producing a 40-year period in which the gap between the rich and the poor remained stable.

Since the mid-1970s, though, America has been on a binge of income redistribution, with wealth being vacuumed to the top. Part of the reason is an excessive infatuation in politics with the “filthy rich” that began with Ronald Reagan’s “trickle-down” economics experiment and continues today.

Too many elected officials talk breathlessly, with stars in their awestruck eyes, about how the “job producers” need to be adoringly protected from pesky social responsibilities like taxes and regulation so they can, through their investments and toil, raise the tide for the rest of us.

It turns out that they don’t invest and toil very much. What we have to show for all that one-sided love is historic concentrations of wealth at the top, a declining middle class, falling wages, growing poverty and increasing pressure on government to help the millions of Americans who are being pushed toward the abyss.

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