January 22, 2023
As I write this the World Economic Forum, which brings together “2,700 leaders from government, business and civil society,” is underway in Davos, Switzerland. As it has for its decades-long history, the WEF has a profound agenda that will focus “on solutions and public-private cooperation to tackle the world’s most pressing challenges… energy, climate and nature; investment, trade and infrastructure; frontier technologies and industry resilience; jobs, skills, social mobility and health; and geopolitical cooperation…”
Those who attend are the rich and the famous; people who see themselves as the rightful rulers of our nation and our world, with our without formal government roles and portfolios.
So it is not surprising that missing from their agenda is the issue that underlies many of the topics their agenda lists– the hoarding of wealth by a small fraction of our world and our nation’s And that is why OXFAM, a global organization that fights inequality to end poverty and injustice, chose this timeframe to release its latest study, “Survival of the Richest.” Reading the report we learn that “the scale of wealth being accumulated by those at the top, already at record levels, has accelerated. The global polycrisis has brought huge new wealth to a tiny elite. Over the last 10 years, the richest 1% of humanity has captured more than half of all new global wealth.20 Since 2020, according to Oxfam analysis of Credit Suisse Data, this wealth grab by the super-rich has accelerated, and the richest 1% have captured almost two-thirds of all new wealth. This is six times more than the bottom 90% of humanity.21 Since 2020, for every dollar of new global wealth gained by someone in the bottom 90%, one of the world’s billionaires has gained $1.7m.”
At the same time, OXFAM joined with three other organizations, Patriotic Millionaires, the Institute for Policy Studies, and Fight Inequality Alliance, to release a companion study that puts in front of the DAVOS attendees and policymakers worldwide, a modest proposal for beginning to solve the problem. “Extreme Wealth: The growing number of people with extreme wealth and what an annual wealth tax could raise,” challenges us to confront directly the continuing growth of worldwide wealth inequality and an available way to begin to address it.
The report analyzed how wealth has been further concentrated in between 2012 and 2022. In our country, they found “For every $100 of wealth created in the United States over the past decade, $37.4 has gone to the top 1 percent, while the bottom 50 percent received only $2. In other words, the richest 1 percent has gained nearly nineteen times more wealth than the bottom half of the country’s population since 2012. The wealth of Americans worth $50 million and above – currently the richest 0.02 percent – has surged by 53.9 percent between 2012 and 2022. This calls attention to the extreme levels of wealth concentration and the astonishing inequality that persists in the country.”
The data they reported paints a stark picture of a very small part of the nation’s population controlling extraordinary amounts of wealth. Of our total population of 334 million people, just 1.47 million people (.4%) have accumulated a net worth of more than $5 million; together they have a combined net worth of $28.02 trillion. Of this group, only 64,500 men and women (.02%) have net worth of $50 million or more with a combined wealth of $12.5 trillion. And at the top of this heap are the 728 billionaires (.0002%) with a combined net worth of $4.5 trillion.
Importantly the report tells us that “for every $100 of wealth created in the United States over the past decade, $37.4 has gone to the top 1 percent, while the bottom 50 percent received only $2. In other words, the richest 1 percent has gained nearly nineteen times more wealth than the bottom half of the country’s population since 2012. (Emphasis added) The wealth of Americans worth $50 million and above …has surged by 53.9 percent between 2012 and 2022….as of November 2022, the wealth of the US billionaire class… has increased by 34.6 percent since the pandemic began in mid-March 2020.”
So, the DAVOS elite says they are considering how to solve the critical problems facing us but are they really?
Too often the mega-wealthy want solutions that are painless for them. Their mantra often sounds like “NIMBY…NIMBA” (not in my backyard…not in my bank account). The solutions they seek and advocate for too often inflict pain on others but not on their selves.
What OXFAM and its partners offered was a clear step forward but it called for the mega-wealthy to give up a portion of their wealth. “A wealth tax of 2 percent on millionaires with wealth over $5 million, 3 percent on those with wealth above $50 million, and 5 percent on American billionaires would raise $583.5 billion annually.” If imposed on the wealthy across the globe, “annual tax of this nature could have raised more than $1.7 trillion…”
These funds could go a long way toward solving many of the problems the gathering in Davos claims to be theirs to solve. The expanded child tax credit that was allowed to end in January 2022 and which lifted millions of children out of poverty cost $125.5 billion in its final year. It would be able to fund increased spending for health care or for education or housing. It would take away the argument that we are passing social programs with no source of funding, an approach that would bankrupt the nation.
And this tax solution would have only a minimal impact on wealth. At its highest level of 5% the proposal would still be below the level of earnings available to high-net-worth individuals. And even if it reduced net worth somewhat, it would have minimal impact on the living standard of wealthy people.
If the negative reactions that Senators Warren and Sanders got to their wealth tax proposals during the run-up to the 2020 presidential election are any indicator, there will be little support coming from the very powerful people who are gathering in Davos for such an idea.
The New York Times noted at that time “Lawrence Summers, who was President Bill Clinton’s Treasury secretary, warned in an article with Natasha Sarin, a law professor at the University of Pennsylvania, that wealth taxes would sap innovation by putting new burdens on entrepreneurial businesses while they are starting up. In their view, a country with more millionaires is a sign of economic vibrancy. ‘Turning the tax code into a vehicle for confronting what some call ‘oligarchic drift’ would undermine business confidence, reduce investment, degrade economic efficiency, and punish success in ways unlikely to be good for the country or even to be appealing to most Americans,’ they wrote.
“Corporate America has also come out against a wealth tax. At a recent briefing by the Business Roundtable, a lobbying group for large companies, Jamie Dimon, the chief executive of JPMorgan Chase, said he feared that the federal government would squander the additional revenue. ‘I know a lot of wealthy people who would be happy to pay more in taxes; they just think it’ll be wasted and be given to interest groups and stuff like that,’ Mr. Dimon said.”
And in that last comment is the gist. The wealthy and powerful believe that they know what is best for the rest of us. They can solve our problems. We, through our democratic systems, will only waste our resources and destroy our nation.
Under the banner of the Patriot Millionaires, more than 200 wealthy men and women issued their call to action to their peers asking them to put their money where their mouths are. “The current lack of action is gravely concerning. A meeting of the ‘global elite’ in Davos to discuss “Cooperation in a Fragmented World” is pointless if you aren’t challenging the root cause of division. Defending democracy and building cooperation requires action to build fairer economies right now – it is not a problem that can be left for our children to fix. Now is the time to tackle extreme wealth; now is the time to tax the ultra-rich.
“There’s only so much stress any society can take, only so many times mothers and fathers will watch their children go hungry while the ultra-rich contemplate their growing wealth. The cost of action is much cheaper than the cost of inaction – it’s time to get on with the job.
“Tax the ultra-rich and do it now. It’s simple, common-sense economics. It is an investment in our common good and a better future that we all deserve, and as millionaires, we want to make that investment.“
That we have not been solving the big problems we face does not seem to matter to the ultra-rich. That we are underfunding the systems that serve millions in need to live reasonable lives does not bother them even if some of their own, the Patriotic Millionaires, are raising their voices and calling for change.
It is time for those of us who are not part of this cabal of wealth and power to stop standing silent. We need to be demanding that we stop this slide toward the autocracy of the wealthy. We need to give up whatever fantasies we have that if the rules are changed to stop the growth of big wealth it will hurt our chances to join this club. A system that will be fairer and more equitable will help us all.