Article 43


Friday, August 30, 2013

Gilded Age 100 Years Later

Wealth distribution in US rivals a modern day Gilded Age
In 2013 wealth inequality at record levels. 72 percent of wealth in US held by 5 percent of the population.

By mybudget360
August 30, 2013

Americans continue to live through a modern day Gilded Age. 

Wealth INEQUALITY is at its HIGHEST LEVELS since the Great Depression, when names like Mellon and Morgan plastered the headlines.  Yet this time around, the availability of debt provides the illusion that the playing field is even.  Americans are massively in debt and when we look at actual wealth, we find that many have very little to their name.  In fact, millions of young Americans are in a negative net worth situation thanks to their student debt.  Wealth inequality has reached record levels because the system is now operating under a dysfunctional corporate and banking welfare structure.  The public is forced to deal with compressed wages, weak benefits, and basically what we know as economic austerity.  While this is happening, big banks use the Fed to their advantage and even when they lose, they win.  This is how 72 percent of all the wealth in the US is held in the hands of 5 percent of the population (with 42 percent of this in the hands of 1 percent).

Top 1 percent share of income

You would think that the Great Recession would impact this distribution but it has only accelerated it:


In regards to income, the top 1 percent are now earning 20 percent of all US income.  This is the same level that was experienced in 1920. Compare this to about 10 to 13 percent between 1948 through the 1980s when the US had the biggest booming middle class.  It should come as no surprise that the middle class has suffered mightily during this “recovery” even as the stock market hovers near record levels.

A variety of measures beyond income share are also showing this growing in economic disparity.

Gini Ratio

The Gini Ratio highlights income disparity in a country.  The US is seeing generational highs when it comes to looking at this measure:


As you will notice, the recession did push this ratio lower (more income equality) but that has now washed away.  Income inequality in the US is now at record levels.  Again, we would have to go back to the Gilded Age and the days prior to the Great Depression to find this kind of income and wealth disparity.  People realize that there will always be income disparity in a free market but not to these unbalanced levels.

Even one of the places where most Americans keep their wealth, housing is now being sucked away from big banks leveraging easy money from the Fed.

Stocks and real estate


Most Americans own their home.  When we say own, we mean with a mortgage but this is where most Americans gain their wealth.  However, the recent rise in real estate values is being driven by investor demand.  This is how you can have a big drop in homeownership while investors buy up nearly half of all real estate in 2013.  Is this positive?  What appears to be happening is more and more asset classes are being funneled into the hands of a very few.  This helps to explain why incomes are down for most and how we now seem to have a permanently large group of Americans on food stamps (something like 1 out of 6).

A massive amount of this wealth aggregation to the top has happened over the last few decades.

Where is wealth growing?

The bottom 80 percent have been punished in the last generation (even the bottom 90 percent have not done so well in context):


The top 5 percent has captured over 74 percent of all wealth growth.  This tied in with all the other data demonstrates how uneven this wealth distribution has become.  And dont think many of these top winners are doing things that are good for the economy.  Many are hedge fund leaders that have actually placed bets on the failure of Americans and made money on complicated derivatives that helped destabilize the system.  Instead of being ғjob creators these people are job destroyers yet are rewarded by the system.  Austerity for the masses and corporate welfare up to the top.  Many are starting to realize they are living in a new Gilded Age controlled by student debt, massive healthcare bills, and hidden inflation that eats away at their paychecks.



Gilded Age

During the “Gilded Age,” every man was a potential Andrew Carnegie, and Americans who achieved wealth celebrated it as never before. In New York, the opera, the theatre, and lavish parties consumed the ruling class’ leisure hours. Sherry’s Restaurant hosted formal horseback dinners for the New York Riding Club. Mrs. Stuyvesant Fish once threw a dinner party to honor her dog who arrived sporting a $15,000 diamond collar.

While the rich wore diamonds, many wore rags. In 1890, 11 million of the nation’s 12 million families earned less than $1200 per year; of this group, the average annual income was $380, well below the poverty line. Rural Americans and new immigrants crowded into urban areas. Tenements spread across city landscapes, teeming with crime and filth. Americans had sewing machines, phonographs, skyscrapers, and even electric lights, yet most people labored in the shadow of poverty.

To those who worked in Carnegie’s mills and in the nation’s factories and sweatshops, the lives of the millionaires seemed immodest indeed. An economist in 1879 noted “a widespread feeling of unrest and brooding revolution.” Violent strikes and riots wracked the nation through the turn of the century. The middle class whispered fearfully of “carnivals of revenge.”

For immediate relief, the urban poor often turned to political machines. During the first years of the Gilded Age, Boss Tweed’s Tammany Hall provided more services to the poor than any city government before it, although far more money went into Tweed’s own pocket. Corruption extended to the highest levels of government. During Ulysses S. Grant’s presidency, the president and his cabinet were implicated in the Credit Mobilier, the Gold Conspiracy, the Whiskey Ring, and the notorious Salary Grab.

Europeans were aghast. America may have had money and factories, they felt, but it lacked sophistication. When French prime minister Georges Clemenceau visited, he said the nation had gone from a stage of barbarism to one of decadence—without achieving any civilization between the two.


Posted by Elvis on 08/30/13 •
Section Dying America
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