Wednesday, April 24, 2013
It's a "No Lose World" Once You Have Captured the Political Process
The Great Recession of 2008 devastated broad swathes of the population of the developed world. Foreclosures, unemployment, insolvency, homelessness, the gamut of economic misery. For most but not for all, not for some.
A new report from the Pew Research Center finds that the first two years of the recovery were Manna from Heaven for those who had already cemented their capture of both economic and political power, the richest of the rich. Nowhere was this more apparent than in the United States.
During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%, according to a Pew Research Center analysis of newly released Census Bureau data.
From 2009 to 2011, the mean wealth of the 8 million households in the more affluent group rose to an estimated $3,173,895 from an estimated $2,476,244, while the mean wealth of the 111 million households in the less affluent group fell to an estimated $133,817 from an estimated $139,896.
These wide variances were driven by the fact that the stock and bond market rallied during the 2009 to 2011 period while the housing market remained flat.
From the end of the recession in 2009 through 2011 (the last year for which Census Bureau wealth data are available), the 8 million households in the U.S. with a net worth above $836,033 saw their aggregate wealth rise by an estimated $5.6 trillion, while the 111 million households with a net worth at or below that level saw their aggregate wealth decline by an estimated $0.6 trillion.
Because of these differences, wealth inequality increased during the first two years of the recovery. The upper 7% of households saw their aggregate share of the nation’s overall household wealth pie rise to 63% in 2011, up from 56% in 2009. On an individual household basis, the mean wealth of households in this more affluent group was almost 24 times that of those in the less affluent group in 2011. At the start of the recovery in 2009, that ratio had been less than 18-to-1.
When was the last time your net worth ballooned 28 per cent in the midst of a severe recession? Now that wouldn't happen when government is "of the people, by the people, for the people." It's more than just likely, however, when you have government of a few people, by a few people, for a few people. This is not market-driven inequality but politically engineered inequality, the very sort of affliction documented by Stiglitz in The Price of Inequality.