News & Politics

CORPORATE FOCUS: Wall Street Cheerleaders

"For the most part, the corporate press, caught up in their euphoria over this bubble economy, has ignored the reality on the ground: that today's massive inequality in wealth poses serious threats to our democracy and civic life."
As the Dow Jones industrial average shoots past 11,000 on its way to the stratosphere, could we pause for a moment of silence to recognize the wealth disparity that has resulted and the threat it poses to our fragile democracy?If you read and listen to the corporate press -- the Wall Street cheerleaders at Bloomberg, the Wall Street Journal, Investor's Business Daily, or the other major corporate news services -- you might think that the market boom has resulted in wealth all around.For the most part, the corporate press, caught up in their euphoria over this bubble economy, has ignored the reality on the ground.They generally ignored, for example, the bit of reality recently presented in succinct detail by the Boston-based United for a Fair Economy.Last month, the group issued "Shifting Fortunes: The Perils of the Growing Wealth Gap in America," a report that features the latest findings of economist Edward Wolff of New York University, a leading authority on wealth distribution.This is what the report found:* Most households have lower net worth, adjusting for inflation, than they did in 1983, when the Dow was still at 1,000.* From 1983 to 1998, the S&P 500 grew a cumulative 1,336 percent. But the wealthiest households reaped most of the gains.* Since the mid-1970s, the top 1 percent of households have doubled their share of the national wealth. The top 1 percent of U.S. households now have more wealth than the entire bottom 95 percent.* The top 1 percent of households control 40 percent of the wealth. Financial wealth is even more concentrated. The top one percent control nearly half of all financial wealth (net worth minus equity in owner-occupied housing).* Microsoft CEO Bill Gates owns more wealth than the bottom 45 percent of American households combined. In the fall of 1997, Gates was worth more than the combined Gross National Product of Central America -- for you geography buffs, that's Guatemala, El Salvador, Costa Rica, Panama, Honduras, Nicaragua and Belize. By the fall of 1998, Gates' $60 billion was worth more than the GNPs of Central America plus Jamaica and Bolivia.* The boom has been a bust for millions of Americans. The inflation-adjusted net worth of the median household fell from $54,600 in 1989 to $49,900 in 1997. Nearly one out of five households have zero or negative net worth (greater debts than assets), an increase from the 1980s. * Workers are earning less, adjusting for inflation, than they did when Richard Nixon was president. Average weekly wages for workers in 1998 were 12 percent below 1973, adjusting for inflation. Productivity grew nearly 33 percent in the same period.* Families have sunk deeper into debt. Household debt as a percentage of personal income rose from 58 percent in 1973 to an estimated 85 percent in 1997. Total credit card debt soared from $243 billion in 1990 to $560 billion in 1997. Credit card limits have risen to the point that the average person can charge more than eight times what they already owe. As of 1997, almost 60 percent of American households carried credit card balances -- balances that average more than $7,000, costing these households more than $1,000 per year in interest and fees.There is little question that wealth concentration presented in this report is being fueled by corporate greed. And the resulting wealth inequality poses serious threats to our democracy and civic life."The wealth gap reinforces -- and is reinforced by -- widening disparities in education, economic opportunity, and quality of life," says Chuck Collins, co-director of United for a Fair Economy, and a co-author of the report. "Even the affluent lose from inequality as it hurts life expectancy for rich and poor, fuels violence, and denies all of us the contributions of people whose opportunities are denied."Another co-author of the report, Juliet Schor, argues that "health, well-being and satisfaction appear to be heavily influenced by the ways in which economic resources, prestige and social position are distributed." "In more unequal societies, human well-being and quality of life appear to be lower," Schor says. Wolff makes the point that "wealth, more than income, directly translates into political power." To counter the wealth threat to democracy, Wolff proposes a wealth tax on the richest Americans.As an act of capitalist self-preservation, we think Gates and his buddies should agree.Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor. Together, they are authors of Corporate Predators: The Hunt for MegaProfits and the Attack on Democracy (Common Courage Press, 1999).
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