Where Does the Real Problem Reside? Two Charts Showing the 0.01% vs. the 1%

While I always supported the overall message and energy that encompassed the Occupy Wall Street movement, I never backed the slogan of the 1% vs. the 99%. From my own personal experience, it is entirely clear that the actual problem is a far smaller group within the 1%, the 0.1% or the 0.01% (although I recognize “We Are the 99.9%” isn’t catchy).

This is why you’ll never hear me demonize “the 1%”, rather I always try to use the term oligarch, which refers a small handful of people who benefit most disproportionately from Federal Reserve handouts, D.C. corruption, tax code loopholes and the destructive trend of financialization generally.

This is is also why I became so disgusted by Sam Zell’s ignorant and destructive comments on Bloomberg television earlier this year that decided to pen an open letter to him.

Thanks to The Atlantic, we now have two charts that show what I have been writing about for many years now. It is not the 1% that is the problem, it’s actually a much smaller slice within that group that is thieving and pillaging at will from the rest of American society.

From The Atlantic:

I’ve written, over and over, that the most important divide in our wealth disparity was between the 1 percent and the 99 percent. For example, when I compared the evolution in investment income since the late 1970s, I often imagined a graph like this from the Economic Policy Institute, showing the 1 percent flying away from the rest of the country.

It turns out that that graph is somewhat misleading. It makes it look like the 1 percent is a group of similar households accelerating from the rest of the economy, holding hands, in unison. Nothing could be further from the truth.

A few weeks ago, I shared this graph (from the World Top Incomes Database) showing how the top 0.01 percent—that’s the one percent of the 1 percent—was leaving the rest of the top percentile behind.

Screen Shot 2014-03-29 at 9.23.25 PM

It’s even more egregious than that. An amazing chart from economist Amir Sufi, based on the work of Emmanuel Saez and Gabriel Zucman, shows that when you look inside the 1 percent, you see clearly that most of them aren’t growing their share of wealth at all. In fact, the gain in wealth share is all about the top 0.1 percent of the country. While nine-tenths of the top percentile hasn’t seen much change at all since 1960, the 0.01 percent has essentially quadrupled its share of the country’s wealth in half a century.

houseofdebt_SaezZucman21

It turns out that wealth inequality isn’t about the 1 percent v. the 99 percent at all. It’s about the 0.1 percent v. the 99.9 percent (or, really, the 0.01 percent vs. the 99.99 percent, if you like). Long-story-short is that this group, comprised mostly of bankers and CEOs, is riding the stock market to pick up extraordinary investment income. And it’s this investment income, rather than ordinary earned income, that’s creating this extraordinary wealth gap.

The mainstream is finally starting to figure it out. From crony capitalistic corporate welfare (even the New York Times covered oligarch welfare last week) to the 0.01% problem. Now if the nine tenths of the 1% would stop complacently continue to tread water and challenge the oligarchs we might actually be able to change things.

Full article here.

In Liberty,
Michael Krieger

Like this post?
Donate bitcoins: 1LefuVV2eCnW9VKjJGJzgZWa9vHg7Rc3r1


 Follow me on Twitter.

13 Comments

 Add your comment
  1. Professor William Black-Epic Epidemic of Fraud

    Fraud expert and former regulator Professor William Black says, “Even today, we are well into 2014, and the Department of Justice record is intact. There have been zero prosecutions of the elite officers who led the epic epidemic of fraud. It was the most destructive in world history, zero of them even unsuccessfully prosecuted, much less prosecuted.”

    What is the result of massive rampant unprosecuted fraud? Professor Black says, “If you don’t have any accountability, you not only make certain that there is going to be a next blow-up, but it will be worse. . . . We have effectively removed the criminal laws for a particular elite class of frauds.”

  2. The System: Deserving Contempt, Resistance and Undermining–

    Let’s face it, the system is pathologically broken, designed to hurt and exploit the middle class. it is contemptible. The courts are contemptible, the Judges are contemptible, the politicians– almost all of them– are contemptible, the political parties are contemptible. The mainstream media are contemptible. The vast legion of police and police leaders who violate the law or protect lawless cops are contemptible. The laws that are passed by lobbyist-bought or intolerant fundamentalist influenced politicians are contemptible.

    So where do we turn to fight back, to bravely move forward towards hope and progress?

    http://www.opednews.com/articles/The-System-Deserving-Cont-by-Rob-Kall-Bottom-up_Resistance_Revolution_The-Machine-140331-587.html

  3. Mike,

    I basically accept your premise–it is a much smaller than 1% that is the real problem.

    Still, from that second chart I see that the top 1% controls 28% of wealth. Far from my ideal.

    As you’ve pointed out, pumping the stock market up is welfare for the top 1%. Why is it so important to keep the top 1% happy? Because in general, they are a support network and buffer for those richer than them. 1%, of course, is a line in the sand. Keep the top 1%-10% relatively happy and the top 0.01% have little to fear.

    • Have you ever heard of the Pareto Principle? It states that 20% of people account for 80% of results. If you apply this to income distribution then the top 20% would own 80% of the wealth. Extrapolate this further and you end up that the top 0.8% of people should hold about 50% of wealth. So income inequality is the natural state of affairs

  4. Thanks for this. As one of the “1%” and maybe even verging on the 0.1%, I assure you *I* am NOT the problem. I don’t have any Washington connections; don’t have any access to Federal Funds rate money; and have seen my income decline in the last ten years. I’m one of those archaic capitalists who actually manufactures real things and, as a reward, gets to pay 50%+ (state+fed) ordinary income tax rates on nearly everything he makes (not stock exchange listed so can’t ask for a $1 annual ordinary income in exchange for $100 million in stock options).

    This commingling of doctors, dentists, and small businessmen with the oligarchs who are raping the country by manipulating PAPER and purchased loopholes is one of the core duplicities and evils of our age. And most of the bloggers who SAY they understand that (e.g., Charles Smith OfTwoMinds) persist in perpetrating the falsehood.

    • Obviously (well, obviously if you think – not something the powers that be encourage) “Capital Gains” should reasonably be taxed at a rate MUCH higher than “ordinary” income. After all, with ordinary income you are investing your life’s time and energy – something everyone only has a limited, and generally equivalent amount of and not anything you get refills on.

      But ‘capital gains’ are basically GAMBLING income with less and often NO connection whatsoever to time invested or real risk (if TARP taught us anything). What sort of warped logic has GAMBLING income treated preferentially to income derived from selling fruits of real production and real work?

      Yeah, I’ve made a lot of money on capital gains. And I have to tell you it’s nuts that I get taxed at vastly preferential rates for winning the lotto than I get for actually working and manufacturing.

      Yeah, and C corps shouldn’t be allowed, either — or should pay dearly for the special privileges they are granted. And I have one of those, too. There is a great reckoning and reordering coming. At least I hope there is if humanity is to have any real future. Just lets hope it comes about through more rational and reasonable means than previous new world orderings.

      • Great comments, thanks.

      • Most capital gains taxes come from money earned through work then invested . its not lotto winnings, if it was that easy to make millions in the market everyone would be a millionaire. Investing is difficult, that’s why most first, second, third, and fourth timers still lose more than they make.
        Capital gains is taxed lower because you were already taxed on the money when you earned it through ” fruits of real production and work”

      • Agreed on most points, but im assuming you are aware of how your time is becoming increasingly less valueable; to the extent of it becoming “not worth it.” Im sure at some point you have or almost stated that phrase. Secondly, this economy is generated by the people like you and I who have decided to dedicate our lives to the chance at a better future away from the hourly wage, to chase a dream that is embodied in our businesses. If u run a business that you opened, you understand that. If I got paid the same to work at McDonald’s…. then why work so hard for less of a gain at the sacrifice of my health and long nights of work when your people went home for the night so you can make payroll? Its not the system that flawed, its people who are, maybe one day we can work for the greater good, but the world revolves around the life of the simple mind… but ill tell you this, I love my country for the opportunity, but honestly, the money wasnt worth the trade off for my soul and time.

  5. So some cancer cells are more aggressive than others. You are still dealing with cancer. The problem with cancer is that it wields an unhealthy power over the entire body.

    Excessive wealth spread is a symptom of a sociopathic disease called Xtrevilism that destroys morality.

    Deception is the strongest political force on the planet.

  6. One thing that is left out of this equation is the philosophy of the Oligarchical society (i.e the top .01%) which is that they are born to rule and everyone else is born to serve some as in the top 1% are paid well but basically errand boys or Grocery clerks for the top ,01%. The rest of us including professionals such as myself are expendable human cattle to be disposed of as our numbers get too large. The oligarchs believe that the ideal world population level should be no more than 1-billion people vs. 6.5-billion on the planet today. Sad part is most on the left believe in this nonsense through the paid for environmental movement. Just remember you may be one of the 5.5-billion that gets eliminated.

  7. Occupy was a joke, and absolute fraud given to the people by the richest and most powerful people in America. No real protest would have the political, financial, and media backing the way the Occunut protests did.
    Look at the TEA party, they are despised by the left, the media, AND the establishment GOP. Whereas the Occunut rallies had millionaires such as mike Moore pretending to be part of the 99%. Hollywood elite and the political elite including the President all pretended they were part of the 99%.
    What bugs me the most though is the majority of so called protesters for financial equality, went on and on about people paying their fair share, when they paid ZERO.

Leave a Reply

8 Trackbacks

  1. The Homeless in NYC Are Now Living in Tiny Spaces in the Frame of the Manhattan Bridge | A Lightning War for Liberty (Pingback)
  2. New Report from Princeton and Northwestern Proves It: The U.S. is an Oligarchy | A Lightning War for Liberty (Pingback)
  3. Stunning Quote – Larry Summers to Elizabeth Warren in 2009: “Insiders Don’t Criticize Other Insiders” | A Lightning War for Liberty (Pingback)
  4. Poverty in the UK Doubles Over the Past 30 Years, Despite Robust “Economic Growth” | Liberty Blitzkrieg (Pingback)
  5. The Pitchforks are Coming…– A Dire Warning from a Member of the 0.01% | Liberty Blitzkrieg (Pingback)
  6. Introducing Ghost Skyscrapers – NYC Real Estate Goes Full Retard | Liberty Blitzkrieg (Pingback)
  7. “Three Lost Decades” – How the American Middle Class is 20% Poorer Now vs. 1984 | Liberty Blitzkrieg (Pingback)
  8. American Upper Middle Class Share of Wealth is Worse than Every Country Besides Russia and Indonesia | Liberty Blitzkrieg (Pingback)