How 10% of Americans Got to Control 91% of the Wealth
Disparity in America has reached an all time high. It can be measured by this one simple sentence. The top 10% of Americans control 91% of the wealth. This includes stocks, bonds, trust funds and business equity. To put this in perspective consider this. The top 1% of Americans have a combined income greater than the Japanese GDP.
This distribution of wealth has mainly transpired over the last 10 to 15 years. One might ask how such a disparity occurred. Here is part of the answer.
They did it while creating massive job loss. The unemployment rate is the highest it has been in 14 years. One of the quick fixes executives turn to when trying to improve stock payout is to reduce cost. For the most part this is done by laying-off workers.
Labor costs along with benefits are generally the largest corporate expense. So the best way to improve the bottom line has been to increase unemployment. This year alone Americans have been losing their jobs to the tune of a half million per month. This computes to a total amount of Americans out of work at close to 16 million which is the highest it has been in 25 years.
Further, they did it while lobbying congress to the tune of hundreds of Billions of dollars over the past 10 years. There are approximately 22,000 lobbyist and 12,000 clients. It has been estimated that a company the size of AIG has donated over 5 billion dollars to lobby the government in the last 10 years. If all thirty companies on the DOW had the same budget then one could imagine what 150 billion dollars can buy.
In the first half of 2008 GM spent 7.3 million dollars of lobby money. Ford spent 3.8 million and Chrysler spent 3.3 million, for a total of 14.4 million. It they consistently spent these types of dollars for the past 10 years then conservatively speaking their estimated combine lobbying dollars would be somewhere in the neighborhood of 288 million dollars.
In 2008 Exxon Mobile spent 29 million dollars lobbying. If they consisting invested these types of dollars over the past 10 years this would equate to an additional 290 million dollars. In 2008 Bank of America and Citibank spent 1.7 billion dollars on lobbying for a projected estimated total of 17 billion over a 10 years period. All these numbers are scandalous when one considers some of funds were supported by government bailouts.
They continued to consolidate their power by reducing their own tax liabilities. Tax rates on corporate accumulated income from 1998 to 2008 are shown in the following table:
2000 and prior years 39.6%
This effectively shows over the past 10 years the corporate accumulated taxable income rate has been slashed to more than half since 2002. These tax breaks were supposed to result in more jobs and prosperity for all Americans.
Instead corporate America continued to consolidate its wealth while systematically reducing the matching dollar for dollar to 401k programs. When 401k plans first started out, to encourage everyone to participate some companies were not only matching dollar for dollars for the first 6% of an individuals contribution many were doing slightly better. Now the typical matching fund is 50 cents to zero.
Again, they continued to seize wealth by systematically closing American manufacturing plants and moving them overseas or just closing them. America has the worldÂs most dramatic decline in manufacturing jobs of any developed nation in history. According to some statistics in 1997 the US had approximately 18 million manufacturing jobs. By the year 2007 the number of manufacturing jobs is estimated to have dropped to 13 million. Most of the jobs were male dominated.
The United State continues to lose jobs in areas historically dominated by males. These numbers are growing at an alarming rate. Some believe if the trend is not reversed the lost will have a profound impact on the countryÂs social fabric. We may see an unprecedented rise in violent crime and domestic violence since men more than woman are prone to act out in this fashion.
They did it while Wall Street systematically took back what was suppose to be the answer to a deficient social security system and gambled with 401k plans. Companies practiced a strategy of increasing vestment periods and then carrying out a form of forfeiture. Such practices resulted in employees losing a large portion of their 401k because they were terminated before that segment of their funds became fully vested.
They continued to seize control of wealth by doling out billions in corporate bonuses. In 2006 Exxon Mobile paid one of its top executives 37 million dollars in cash at retirement. The whole package was rumored to be worth in excess of 400 million dollars.
In 2006 when GM had big loses due to falling sales their top executives were given lucrative stock packages. One executive was reported to have received restricted shares valued at 3 million dollars and other stock options on top of his 2.2 million dollar salary.
In 2008 Goldman Sachs paid 20 billion dollars in bonus to its employees. Shortly, there after Goldman Sachs was forced to merge with City Group. These are just a few examples. The practice of giving out lucrative bonuses appears to be the norm more than the exception even when a companyÂs performance is not stellar.
Plus they did this while systematically reducing interest rates on savings accounts and CD(s) while at the same time increasing interest rates on credit cards and instituting other predatory lending practices.
They did it while increasing their freedoms by getting the Glass-Steagall Act repealed opening up banking to a free-for-all while at the same time suppressing the middle class with freewheeling use of FICO into areas of employment, lending and insurance.
They did it while continuing to hide their money in offshore accounts. Although due to the nature of the privacy surrounding overseas banking it is difficult to get reliable data on the increase dollar amounts being sent outside the American banking system.
However one thing is certain there has been an expansion in the number of services that offer so called safe havens for money. The rise in activity has been so dynamic the US government is attempting to put pressure on these institutions to find such funds and tax them where possible. It is this increase attention that suggests the problem is getting out of hand.
They did it while systematically reducing company benefits especially healthcare. It is no surprise to those who have found their employer pulling back year after year the amount of their contribution to health care premiums. At the same time employeeÂs contribution has been increasing while deductibles have gone up and co-pays have gone up.
They did it while reducing salaries relative to inflation while at the same time increasing the cost of goods and services, education, fuel, food, clothing and durable items.
They did it by systematically reducing middle class wages and by replacing high paying positions once earmarked for Americans by getting Congress to support HB1 programs and replacing American professionals with foreigner who would work for less.
The HB1 visa sponsorship program was started in 1989. It was established to allow foreign workers to hold jobs where there was supposedly not enough qualified Americans. These jobs were generally good paying high tech jobs. Those foreigners in many cases took the position for less money than perhaps a US citizen would. This was done to effectively drive down salaries in these high price markets. At last count the list of companies participating in the program has jumped to 450 and growing.
The program not only takes good jobs away from US citizens and reduces salaries. It also acts to train highly educated foreigners in how to manufacture and produce products that once gave America her competitive edge. The HB1 program placed graduate level personal in key jobs throughout the high tech industry.
Often times more than not these same candidates took their education, skills and patent knowledge back to their country of origin and now are competing with US companies and in some cases out performing the companies that once employed them. Many think one reason why China has advance so fast in the areas related to aviation, defense and computer technology, some of the fault lies with the HB1 visa sponsorships.
They did it while driving up the cost of higher education and while promoting the high tech and engineering programs of some of the USÂs best colleges to overseas markets. Universities have always been more accessible to the rich but they targeted wealthy foreign students as well. And they did it while neglecting and dismantling the US secondary public school system.
They did this with the systematic diminution of American education by stopping direct federal funding from going to the states for the specific purpose of improving the public school system. In affect they, this top 1% to 10% have been waging a war on the middle class, its edification and its ability to rise out from underneath credit card and home ownership debt.
Finally, they did all this while controlling public images by buying up mass media and replacing good objective journalism with institutional broadcast cultural idealogs filled with political bias. Essentially killing the free press while labeling Americans and pitting them against one another.
For example Rupert Murdoch is chairman of the board, born in Australia has film, publishing, radio and television holding. He controls Fox television network.
ESPN and ABC are owned by Disney. John E. Pepper Jr. is the chairman of the board but it is thought that Steven Jobs is the largest stock holder.
NBC is owned by General Electric. Jeffrey Immelt is the current chairman of its board but Warren Buffet recently bought 3 billion dollars worth of General Electric stock.
The parent company of HBO and CNN is Time Warner. Jeffrey L. Bewkes is Chairman and Chief Executive Officer. Yahoo is considering combining its online operations with Time Warner's AOL and Rupert Murdoch's News Corp. is talking about joining Microsoft.
Showtime is owned by Viacom. The Wall Street Journal is owned by DOW Jones & Company. These names keep popping up. They represent approximately 80% of the visual media. Many may argue the United States still has a free press but it goes without saying the medium which some say is the forth branch of government is in the hands of a very few.
This is how they did it. This is how they continue to maintain their control of 91% of the wealth. America is a great country. It has become great not because of the free market system but it has become great because of the middle class and the American worker. If the media does not make this their core response to improving the countryÂs economic condition than their motives are suspect and should be scrutinized very closely.