The polarity of wealth in America – the gap between the rich and the rest of us – is staggering. History has shown that when the wealth of a society is this polarized, that society can’t remain stable. It has to transform into something new.
The figures are mind-blowing. In 1980, families in the bottom 90 percent averaged $30,446 in annual income, while families in the top 0.01 percent averaged $5.4 million. In 2006, the bottom 90 percent averaged $30,374 (slightly less than in 1980, in other words), and the top 0.01 percent averaged $29.6 million in annual income. The top 20 percent of wealthy individuals now own about 85 percent of the wealth, while the bottom 40 percent own very near zero percent. Between 2002 and 2007, 65 percent of all income growth in the United States went to the top 1 percent of the population. In 2009, the top 25 hedge-fund managers were paid, on average, more than $1 billion each.
The corporations are flush with money, too. In the third quarter of 2010, US firms earned profits at an annual rate of $1.659 trillion. US corporations are reportedly sitting on some $2 trillion in cash. This means they have plenty of money to cover government budget gaps! Meanwhile, as Bob Herbert wrote in the New York Times, nearly 44 million people were living in official poverty in 2009, which was more than 14 percent of the American population and a jump of four million from the previous year. Some 17 million of the poor are living on incomes of $11,000 a year or less. That is half of the official poverty line.
More than 15 million children are poor — one of every five kids in the United States. More than a quarter of all Blacks and a similar percentage of Hispanics are poor. And welfare “reform” means public aid helps far fewer people than it used to.
The wealth gap is rooted in the withdrawing of labor power from the production process. As technology has replaced workers, permanent unemployment has grown and wages have fallen for those still working. At the same time, profits have skyrocketed for the wealthy and the corporations, in part because of increased productivity and in part because of huge investments in speculation. Technology replacing labor means there is less and less profit to be made investing in actual production, so the rich speculate. The creation of derivatives, credit default swaps and all kinds of other exotic financial instruments has allowed the wealthy to make vast sums essentially by gambling. None of this speculative investment produces any useful goods or services, and none of it creates jobs, yet on paper, at least, it makes the rich richer. And the speculation leaves economic destruction in its wake because it devalues money.
As poverty grows, the economy gets worse because few people have money to buy anything. Profits will eventually begin to fall. The corporations will try to boost profits by replacing more workers with technology—which will only add to the poverty and make things worse.
There is no way out of this vicious cycle under a system based on private property, where a few capitalists and corporations own society’s wealth and the tools of production, and the rest of us have to sell them our labor power to live. This kind of system will no longer work in an era when technology is replacing labor. The only way to finally end the crisis is to build a new society where the people own and control the tools of production, and the necessities of life are distributed according to need, not money. We can no longer tolerate a system that is enriching a few and impoverishing millions.
Those of us who seek fundamental social change are engaged in a battle to win the hearts and minds of the people. This can’t be done without a revolutionary press. For 40 years, the People’s Tribune has brought our readers the stories of those who are struggling to move forward in a world where corporate power is threatening to crush them. Along with those stories, we try to offer some strategic perspective to help put the struggle in context and point the way toward victory. We need your help to continue doing this. The People’s Tribune gets no grants and has an all-volunteer staff. We rely completely on subscriptions and donations from our readers to enable us to go on telling the truth. Please donate whatever you can. See the subscription/donation form on the right. You can also donate using Pay Pal on our web site, http://www.peoplestribune.org.