Wealth Inequality Returns to 1920s Levels

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Think Progress: “Most people know about income inequality: the gap in earnings between the 1 percent and the rest of us that has been growing steadily since the 1970s. But there is also growing inequality when it comes to wealth — not just income, but a household’s total assets, such as savings, value stored in a house, pensions, or other sources of money, minus anything it owes. The difference between wealth held by the top 1 percent and the rest of us has climbed back up to levels not seen since the roaring 20s.”

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  • zappa24

    Great chart. You can see the stagflation in the 1970s that helped to set off the modern day “supply-side” movement. You can also see the lead ups to the Great Depression and Great Recession. The problem with supply-siders isn’t that they were wrong about the 1970s, it is that the 1970s were an anomaly. When the chart shows values of less than 10%, the supply curve is negatively affected. When the chart shows values of more than 20%, the demand curve is negatively affected. In the former, supply side solutions are needed. In the latter, it is demand side solutions that are required. If we look at the chart, it is demand that is taking the more negative hits, indicating that Keynesian solutions are more often needed than those put forth by the supply-siders.


    Regarding Zappa’s interesting comment above, another phenomenon taking place is the replacement of much former wealth by new wealth based upon new industries. In 1968, in the Rich and the Super-rich, Lundgren suggested 150 families controlled the vast majority of the industrial wealth in the country. These were generally old names well known to all: DuPont, Sloan, Morgan, Mellon, Rockefeller, Ford, etc. But in the intervening years Forbes has published their listing of the richest, and the individual names have changed often and considerably although some family listings sometimes continue (Rockefeller family, Duponts, etc.)

    For instance, in 1970 Walmart went public at $16.50. The company had 24 stores and opened their first distribution center the next year. The Waltons were not on the list. Today, the Walton family may be the wealthiest family in the country, and the big retailers of the time, Sears, Macy’s, K Mart, have been surpassed. How did this happen? Price cutting based upon cost cutting usually generated by constant streamlining of the distribution system as well as being slow in paying suppliers and employing many part-timers at minimum wage. The technology improvement is the distribution system.

    Their big threat, however, is Amazon which has upended the distribution system by directly distributing items to customers from the warehouse without needing the brick and mortar stores.

    The big family name in computing in 1970 was the Watson family of IBM. Today the big names in computing are Gates, Allen and Ballmer at Microsoft, Jobs and Woz at Apple, etc.

    Computers helped create Sheldon Adelson’s wealth. He created one of the first computer trade shows which he sold to Softbank and then invested in casinos, a business in which he has greatly increased his wealth. Indeed gambling was on no lists in the 1960s and 70s but since has made several huge fortunes, Steve Winn’s for instance.

    The bottom line is that much of this growth in the percentage of the wealth in the hands of the very very wealthy have come about because of the growth of new industries, re-imagination of existing industries, and the acceptance and further development of yet even other industries. Our economy is very dynamic and that vitality should not be sacrificed as we evolve our economic system. Whether politicans are capable or wise enough to do this is questionable, especially in light of the tumult of ACA.

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