Incomes Flat in Recovery, but Not for the 1% by Annie Lowrey Feb 15, 2013 The New York Times http://www.nytimes.com/2013/02/16/business/economy/income-gains-after-recession-went-mostly-to-top-1.html?nl=todaysheadlines&emc=edit_th_20130216
[Excerpted] — Incomes rose more than 11 percent for the top 1 percent of earners during the economic recovery, but not at all for everybody else, according to new data. The numbers, produced by Emmanuel Saez, an economist at the University of California, Berkeley, show overall income growing by just 1.7 percent over the period. But there was a wide gap between the top 1 percent, whose earnings rose by 11.2 percent, and the other 99 percent, whose earnings declined by 0.4 percent....Excluding earnings from investment gains, the top 10 percent of earners took 46.5 percent of all income in 2011, the highest proportion since 1917, Mr. Saez said, citing a large body of work on earnings distribution over the last century that he has produced with the economist Thomas Piketty of the Paris School of Economics....
After accounting for inflation, median family income has declined over the last two years. In 2011, it stagnated for the poorest and dropped for those in the middle of the income distribution, census data show. Median household income, which was $50,054 in 2011, is about 9 percent lower than it was in 1999, after accounting for inflation.
Majia here: Growing inequality has transformed US society. It no longer resembles a democracy, but rather is a plutonomy.
Citigroup described the US as a
Plutonomy in a document dated October 16, 2005 titled, “Equity Strategy:
Plutonomy: Buying Luxury, Explaining Global Imbalances.”
The document describes a world “dividing
into two blocs—the plutonomies, where economic growth is powered by and largely
consumed by the wealthy few, and the rest” (p. 1).
The U.S. is a “key” plutonomy
characterized by
[quote from document] "...disruptive technology-driven productivity gains, creative financial innovation, capitalist-friendly cooperative governments, an international dimension of immigrants and overseas conquests invigorating wealth creation, the rule of law, and patenting inventions." (pp. 1-2) [end quote]
[Paraphrasing] The productive and consumptive capabilities of the larger population within plutonomies wane in significance relative to the wealth accumulated by the few through technology that replaces workers, financial “innovations” capable of accumulating wealth outside of production (e.g., through securities transactions), and through overseas colonial exploitation of resources and labor.
More recently, The International Forum on Globalization (IFG) issued a report
in 2001 critically describing the evolving “plutonomy” characterized by
corporate power and the unfettered influence of “a new dangerous class of
politically dominant billionaires”:
[begin quote] “Plutonomy.” A newer threat cited for the first time by the board was the astonishing emergence of a new dangerous class of politically dominant billionaires. Operating on a global scale, as well as within countries, these oligarchs are increasingly able to relate to the world nearly as if it was their own feudal enterprise, generally out of view, and with few controls. Recognizing the realities of resources limits, many of these individuals now see their profit opportunities as no longer solely dependent on corporate economic growth, but equally on systemic control of vital resources, including food and water."
[begin quote] “Plutonomy.” A newer threat cited for the first time by the board was the astonishing emergence of a new dangerous class of politically dominant billionaires. Operating on a global scale, as well as within countries, these oligarchs are increasingly able to relate to the world nearly as if it was their own feudal enterprise, generally out of view, and with few controls. Recognizing the realities of resources limits, many of these individuals now see their profit opportunities as no longer solely dependent on corporate economic growth, but equally on systemic control of vital resources, including food and water."
Ownership of the world’s resources,
including stock in the powerful industries of banking and energy, tends to be
very consolidated.
Globally, in 2006, prior to the
Great Recession, one percent of the world’s population was believed to control
forty percent of the world’s wealth.
One analysis of 43,000 global
corporations revealed a core group of 1318 corporations with interlocking
ownerships.
The study, conducted by Stefania Vitali, James B. Glattfelder, and
Stefano Battiston, used network analysis to explicate the degree of
consolidation of corporate control.
[paraphrasing] Their findings revealed
unprecedented global consolidation of corporate ownership and control. Each of
the core 1318 corporations had ownership links to two or more other companies,
although most were linked to twenty other corporations.
The 1318 corporations
owned through their shares the majority of blue chip and manufacturing
companies, controlling sixty percent of global revenues.
Further analysis
revealed a tightly linked “super entity” of 147 corporations, mainly in
finance, with interconnected ownership. Consequently, less than one percent of
corporations essentially controlled forty percent of the entire network.
Furthermore, the study found that 734 “top holders of stock accumulate 80% of
the control over the value of all TNCs.” The authors conclude: “this means that
network control is much more unequally distributed than wealth. In particular,
the top ranked actors hold a control ten times bigger than what could be
expected based on their wealth.”
References
Citigroup (2005, October 16). Equity strategy: Plutonomy: Buying luxury,
explaining global imbalances. Retrieved from http://www.scribd.com/doc/6674234/Citigroup-Oct-16-2005-Plutonomy-Report-Part-1
International
forum on globalization. http://www.ifg.org/pdf/IFG-2011-Strategic-Program-Plan-8pg.pdf
40% of world's wealth owned by 1% of
population. CBCNews (December 5, 2006), http://www.cbc.ca/news/business/story/2006/12/05/globalwealth.html
James Randerson. World's richest 1% own 40% of all wealth, UN report
discovers. The Guardian (December 6, 2006), http://www.guardian.co.uk/money/2006/dec/06/business.internationalnews.
S. Vitali, J.B. Glattfelder, and S.
Battiston, “The Network of Global Corporate Control,” Swiss Federal Institute of
Technology (arXiv:1107.5728v1 [q-fin.GN], 28 Jul 2011), available http://www.scribd.com/doc/72201631/Network-of-Global-Corporate-Control-Swiss-Federal-Institute-of-Technology-in-Zurich.
PREVIOUS POSTS
Chomsky: "Who Owns the World" and Some
Empirical Data http://majiasblog.blogspot.com/2012/10/chomsky-who-owns-world-and-some.html
Also see 1 in 2 Americans is Low
Income
"The US is a Plutonomy, Here
Comes Neofeudalism"
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