[PEN-L:1336] "Keeping the Rich Invisible"

["James Michael Craven" <cravjm@xxxxxxxxxxxxx>]

"Keeping the Rich Invisible" quoted from "America Besieged" by
Michael Parenti, City Lights Books, San Francisco, 1998

"When a middle-aged acquaintance of mine bragged that he weighed the
same today as he did in his youth, I reminded him that weight
resembles wealth: it's not merely the aggregate accumulation that
counts, it's the distribution. But wealth differs from weight in that
it tends to accumulate at the top. Karl Marx had it right: wealth is
becoming increasingly concentrated in the hands of the few, while
poverty spreads ever more widely among those below.

Some opinion makers disagree strongly. They insist that ours is a
prosperous middle-class society and that our economy is performing
well. But, again, look at the distribution. Cui bono? Who benefits?
During the Reagan-Bush-Clinton era, the share of the national income
going to those who work for a living shrank by over 12 percent. The
share pocketed by those who live principally off their investments
increased almost 35 percent. The "New York times" (June 6, 1996)
reported that income disparity in 1995 'was wider than it has been
since the end of World War II.' Over the last two decades, the
average income for the top 20 percent jumped from $73,254 to $105,945
in constant dollars, while the bottom 20 percent moved only from
$7,202 to $7,762. But these figures greatly understate the problem.

Put simply, the "Times" story is based on a Census Bureau study that
completely excludes the income of the very rich. An average income
for the top quintile of $105,945 hardly represents a rich, let alone
super-rich, cohort. What goes on here? What has happened to the
really rich people?

The remarkable thing is that for years the Census Bureau never
interviewed anyone who had an income higher than $300,000; or if
interviewed, they were never recorded as above the 'reportable upper
limit' of $300,000, the top figure allowed by the bureau's computer
program. In 1994, the bureau lifted the upper limit to $1 million.
this still leaves out the richest 1 percent, the hundreds of
billionaires and thousands of multimillionaires who make many times
more than $1 million a year--and who own most of the nation's wealth.

By designating the (decapitated) top 20 percent of the entire nation
as the 'richest', the Census Bureau is including literally millions
of professionals and others who make as little as $70,000 or so,
people who are anything but the 'richest', while excluding the really
big money. The super-rich are concentrated in a portion of the
population so minuscule as to be judged statistically insignificant.
Despite their tiny numbers, they own the lion's share of everything
there is to own and enjoy an income advantage thousands of times
greater than the spread allowed by the bureau's figures. The
difference between a multibillionaire who takes in $100 million in
any one year and a janitor who makes $8,000 is not 14 to 1 (the
usually reported spread between the highest and lowest quintiles) but
over 14,000 to 1.

When asked why this sampling procedure was used, a bureau official
told my research assistant that the bureau's computers could not
handle higher amounts. A most improbable excuse, since once the Census
Bureau decided to raise the upper limit from $300,000 to $1 million
it did so without any difficulty, and it could do so again.

Another reason the official gave was 'confidentiality'. Given place
coordinates, someone with a very high income might be identified.
Furthermore, he said, high income respondents understate their
income. The earnings they report are only about 50 to 60 percent of
actual investment returns. In any case, since their actual numbers
are so few, they are likely not to show up in a national sample. In a
word, studies of this sort give us no idea how rich the very rich
really are.

Of late, much media attention has been given to the CEO's who rake in
tens of millions of dollars annually in salaries and perks. But
little is said about the tens of billions these same corporations
distribute to their affluent shareholders each year. Publicity that
focuses exclusively on a handful of greedy top managers conveniently
avoids exposure of the super-rich. In fact, reining in the CEOs who
cut into the shareholders' take would well serve the shareholders'
interests.

Marx's prediction about the growing gap between rich and poor still
haunts the land--and the entire planet. The number of persons living
below the poverty level in the United States climbed from 24 million
in 1977 to over 35 million by 1995, with tens of millions living just
barely above the poverty level. And what is called 'the poverty
level' itself is set at an unrealistically low level that does not
take into account the full effect of inflation on basic essentials
such as food, fuel, housing, and health, the things that compose a
disproportionate amount of the income of low-wage households.

The concentration of wealth creates more poverty. As some few get
richer, more people are falling more deeply into poverty than in
earlier times and finding it increasingly difficult to emerge from
it. The same pattern holds throughout most of the world. For years
now, as wealth concentrates globally, the number of poor has been
increasing at a faster rate than the earth's population.

Rather than declaring Marx outdated--a pronunciamento that has been
bouncing around the free-market world for over a hundred years--we
should note that on some questions he is more relevant than ever. But
to understand how so, we have to move beyond the U.S. Census Bureau's
cooked statistics."

Jim Craven

 James Craven
 Dept. of Economics,Clark College
 1800 E. McLoughlin Blvd. Vancouver, WA. 98663
 jcraven@xxxxxxxxx; Tel: (360) 992-2283 Fax: 992-2863
------------------------------------------------------------------------------------------------------
"The utmost good faith shall always be observed towards Indians; their land and
property shall never be taken from them without their consent."
(Northwest Ordinance, 1787, Ratified by Congress 1789)

"Labor is prior to and independent of capital. Capital is only the fruit of labor
and could not have existed had not labor first existed. Labor is the superior of
capital and deserves much the higher consideration." (Abraham Lincoln)

*My Employer  has no association with My Private and Protected Opinion*
--------------------------------------------------------------------------------------------------------