Sunday, February 5, 2012

Wondering about Wealth

The Synchroblog topic this month is “extreme economic inequality”. Since I’m not an economist, don’t really like numbers, have other things I’d much rather write about, I was tempted to let this topic pass.

But I’m afraid, as I think and pray about it, that this may be one of the most important topics of this election cycle, this decade, maybe of my remaining lifetime.

Economic inequality isn’t a new thing. There have always been rich and poor.

But we seem to be in a new place. The income gap between rich and poor is the greatest it’s been in decades. There are plenty of statistics on this –Forbes, Reuters, the Economist. Choose your favorite financial source and take a look at the troubling graphs.

But the real issue, from what I can see, isn’t income, but wealth. Wealth - net worth - can be defined as financial assets (stocks, bonds, savings) plus real assets (primarily housing) minus debt. Credit Suisse, a multinational finance group, provides some interesting data in their 2011 Global Wealth Report: 
  • The average net worth, globally, in 2011 was $51,000 USD (that’s US dollars).
  • But the median net worth, globally, was $4,200. In other words, half of the world’s population has a net worth of $4,200 or less.
  • The top 10%, globally, has net worth of $82,000 or more.
  • The top 1% has net worth of  $712,000 or more.
  • The richest 10% owns 84% of the world’s assets.
  • The top 1% owns 44% of the world’s assets.
  • The bottom half owns just 1% of the world’s assets. 
The report discusses “Ultra High Net Worth individuals”  (UHNW), noting, without explanation, that “to assemble details of the pattern of wealth holdings above USD 1 million requires a high degree of ingenuity. The usual sources of wealth data – official statistics and sample surveys – become increasingly incomplete and unreliable at high wealth levels.”  Is this because the very wealthy hide their assets and their earnings? Is it because their wealth is in off-shore tax havens, invisible to all eyes but their own?

For those with net worth from 50 million and upward, “very little is known about the global pattern of asset holdings.” What is known is that “the United States has by far the  greatest number of members of the top 1%  global wealth group, accounting for 41% of those with wealth exceeding USD 10 million and 32% of the world’s billionaires. The number of UHNW individuals with wealth above USD 50 million is six times that of the next country . . .Although comparable data on the past are sparse, it is almost certain that the number of UHNW individuals is considerably greater than a decade ago. . . [N]otwithstanding the credit crisis, the past decade has been especially conducive to the establishment of large fortunes.”

I’m not an accountant, economist, or historian. But what seems clear, in these terse financial statistics, is that a small handful of very wealthy Americans have been busily consolidating their wealth at the expense not only of their fellow Americans, but at the expense of the poor and struggling in nations around the globe.

In trying to understand this, I came across a Bill Moyer interview with Jacob Hacker and Paul Pierson, authors of Winner Take All Politics, a recent book investigating this consolidation of wealth. Here’s just a hint of what the authors, and book, have to say:
JACOB HACHER: these large shifts in our economy had been propelled in part by what government has done, say deregulating the market, the financial markets, to allow wealthy people to gamble with their own and other peoples' money, and ways to put all of us at risk, but allow them to make huge fortunes.
And at the same time, when those risks have become apparent, there has been a studious effort on the part of political leaders to try to protect against government stepping in and regulating or changing the rules.
BILL MOYERS: You write, we have a government that's been promoting inequality, and at the same time, as you just said, failing to counteract it. This has been going on, you write, 30 years or more. And here's the key sentence: Step by step, and debate by debate, our public officials have rewritten the rules of the economy in ways that favor the few at the expense of the many.
The Price of Big Oil
As Hacker and Pierson make clear, as has been made clear by others before them, money equals influence equals power equals money, and as money, influence and power become more and more concentrated in the hands of the few, real democracy, real justice, real opportunity disappear.              

Picture a Monopoly game. Your opponent owns the utilities, the railroads, all the properties, and has two hotels on each property. He’s rewritten the rules so every time he passes GO he collects $20,000, while every time you pass GO you collect $20.  There’s no money left in the bank, so he’s written elaborate IOUs from the bank to himelf. Each time around the board he writes another IOU.

Are you having fun? Do you have a come-back plan? Are you ready to quit?

Profit comes from somewhere. Assets have some connection back to the material world.  What happens when foreign investors own the best farm land in Africa? What happens when foreign corporations determine what happens to mountains, forests, oil fields in small hungry nations?

Bolivia v. Bechtel
What happens when international financiers pressure desperate countries to open their markets to companies like Monsanto, or to sell their water supply to private corporations? What happens when debt-ridden communities sell their hospitals, airports, bridges, schools, prisons?

Are we really hoping the new owners and investors will, from the goodness of their hearts, subsidize these efforts to serve the common good? A short reading of the water wars of Bolivia might be instructive, and a growing body of research makes clear what should be obvious to all but the most determined libertarian: privatization of public resource yields unchecked profit for the investor, higher cost for the public, greater suffering for those already struggling to survive.

I don’t hear our Christian leaders speaking out on this, but the Old Testament prophets had plenty to say about justice and injustice, and about those who become wealthy at the expense of the poor:
“Woe to those who make unjust laws, to those who issue oppressive decrees, to deprive the poor of their rights and withhold justice from the oppressed of my people.”
“The plunder from the poor is in your houses. What do you mean by crushing my people and grinding the faces of the poor?” 
“You do as you please, and exploit all your workers.”
 “The people of the land practice extortion and commit robbery; they oppress the poor and needy and mistreat the foreigner, denying them justice."
“They sell the innocent for silver, and the needy for a pair of sandals. They trample on the heads of the poor as on the dust of the ground and deny justice to the oppressed. “
“You take interest and make a profit from the poor. You extort unjust gain from your neighbors.”
“The people of the land practice extortion and commit robbery; they oppress the poor and needy and mistreat the foreigner, denying them justice.”
Is this something we should be talking about, praying about?
Should we be asking our representatives to explain their preferential treatment of the rich?

Should we be organizing as citizens to demand justice – not for ourselves – but for those being forced out of their homes, bankrupted by their hospital bills?

Should we be paying attention to the ultra high net worth individuals whose profits are maximized at the expense of child slavery, sweat shops, misuse of resources stolen from indigenous people who lack the power to stop them?

Should we be wondering where those graphs will end? Where the consolidation of income and power will lead? What happens when not just 44%, but 100%, of the assets are held in the hands of the wealthiest one percent?

In Isaiah 1 the prophet, himself a grandson, nephew, cousin of kings, one of Judah’s wealthy one percent, explains to his people that God is not convinced by their offerings, their spiritual words, their observance of feasts, their religious gatherings. According to Isaiah, here’s what God has to say. The words echo across thousands of years, timeless, clear, convicting:

Stop doing wrong: Learn to do right; seek justice.
   Defend the oppressed.
Take up the cause of the fatherless;
   plead the case of the widow.

I’m not sure yet how to do that, but, as Isaiah says, maybe it’s time to learn.

As always, your comments are welcome. Click on the ___comments link for the comment box to appear.

This post is part of Synchroblog, a group of Christian bloggers posting on a common topic. Other posts about extreme income inequality are listed below:

Glenn Hager - Shrinking The Gap
Jeremy Myers - Wealth Distribution
K. W. Leslie -  Wealth, Christians, and Justice. 
Abbie Watters – My Confession