Paul Krugman Reveals How the Super Rich Conceal Their Wealth and Perpetuate Staggering Inequality
At first glance, Paul Krugman's column in Monday's New York Times seems a bit counterintuitive. Entitled "The Invisible Rich," which is a play on a famous essay in the New Yorker fifty years ago, “Our Invisible Poor”, Krugman column makes a strong case that most Americans have no idea just how rarefied the existence of the tippy top of the elite .001 percent is. And that's just how the elite likes it.
Shows that give viewers the opportunity to ogle "Lifestyles of the Rich and Famous" and celebrity cribs don't really get to the heart of the matter. Rich celebrities are not as representative of the multi-billionaire class as one might think. Here's Krugman's evidence and argument that vast swaths of America have an out-dated conception of how much the greediest corporate chieftains make:
... a survey asking people in various countries how much they thought top executives of major companies make relative to unskilled workers. In the United States the median respondent believed that chief executives make about 30 times as much as their employees, which was roughly true in the 1960s — but since then the gap has soared, so that today chief executives earn something like 300 times as much as ordinary workers.
So Americans have no idea how much the Masters of the Universe are paid, a finding very much in line with evidence that Americans vastly underestimate the concentration of wealth at the top.
Is this just a reflection of the innumeracy of hoi polloi? No — the supposedly well informed often seem comparably out of touch. Until the Occupy movement turned the “1 percent” into a catchphrase, it was all too common to hear prominent pundits and politicians speak about inequality as if it were mainly about college graduates versus the less educated, or the top fifth of the population versus the bottom 80 percent.
And now that everyone's gotten used to the notion of the 1 percent, Krugman shows how all the money and spoils of the current system have flowed through an even narrower funnel, to the top .1 percent, the top one thousandth. He continues:
For those paying attention to the internecine conflict between Times columnists, that comment on college kids driving luxury cars is Krugman's direct swipe at his conservative fellow columnist David Brooks, who wrote a particularly inane column last week saying the main problem with inequality is that rich people are being too ostentatious with their wealth. In fact, it looks like Krugman has found fodder for his thoughts on "The Invisible Rich" from Brook's silly assertions.
Celebrity culture is what makes us think we know how the super rich live. But Robert Downey, Jr. made a fraction of "what the top 25 hedge fund managers took home, on average, almost a billion dollars each." Downey had to make do with $75 million, Krugman reports.
Keeping their true wealth under wraps is just what the super rich want. Secrecy fuels inequality, in fact. "Politically, it matters a lot," Krugman writes. "Pundits sometimes wonder why American voters don’t care more about inequality; part of the answer is that they don’t realize how extreme it is. And defenders of the superrich take advantage of that ignorance. When the Heritage Foundation tells us that the top 10 percent of filers are cruelly burdened, because they pay 68 percent of income taxes, it’s hoping that you won’t notice that word “income” — other taxes, such as the payroll tax, are far less progressive. But it’s also hoping you don’t know that the top 10 percent receive almost half of all income and own 75 percent of the nation’s wealth, which makes their burden seem a lot less disproportionate."
Krugman leaves us with this stinging observation: "Today’s political balance rests on a foundation of ignorance, in which the public has no idea what our society is really like."