The super rich, the less than 1 percent of the population who own the lion's share
of the nation's wealth, go uncounted in most income distribution reports. Even
those who purport to study the question regularly overlook the very wealthiest
among us. For instance, the Center on Budget and Policy Priorities, relying on
the latest U.S. Census Bureau data, released a report in December 1997 showing
that in the last two decades "incomes of the richest fifth increased by 30
percent or nearly $27,000 after adjusting for inflation." The average income
of the top 20 percent was $117,500, or almost 13 times larger than the $9,250
average income of the poorest 20 percent.
But where are the super rich? An average of $117,500 is an upper-middle income,
not at all representative of a rich cohort, let alone a super rich one. All
such reports about income distribution are based on U.S. Census Bureau surveys
that regularly leave Big Money out of the picture. A few phone calls to the
Census Bureau in Washington D.C. revealed that for years the bureau never interviewed
anyone who had an income higher than $300,000. Or if interviewed, they were
never recorded as above the "reportable upper limit" of $300,000,
the top figure allowed by the bureau's computer program. In 1994, the bureau
lifted the upper limit to $1 million. This still excludes the very richest who
own the lion's share of the wealth, the hundreds of billionaires and thousands
of multimillionaires who make many times more than $1 million a year. The super
rich simply have been computerized out of the picture.
When asked why this procedure was used, an official said that the Census Bureau's
computers could not handle higher amounts. A most improbable excuse, since once
the bureau decided to raise the upper limit from $300,000 to $1 million it did
so without any difficulty, and it could do so again. Another reason the official
gave was "confidentiality." Given place coordinates, someone with
a very high income might be identified. Furthermore, he said, high-income respondents
usually understate their investment returns by about 40 to 50 percent. Finally,
the official argued that since the super rich are so few, they are not likely
to show up in a national sample.
But by designating the (decapitated) top 20 percent of the entire nation as
the "richest" quintile, the Census Bureau is including millions of
people who make as little as $70,000. If you make over $100,000, you are in
the top 4 percent. Now $100,000 is a tidy sum indeed, but it's not super rich--as
in Mellon, Morgan, or Murdock. The difference between Michael Eisner,
Disney CEO who pocketed $565 million in 1996, and the individuals who average
$9,250 is not 13 to 1--the reported spread between highest and lowest quintiles--but
over 61,000 to 1.
Speaking of CEOs, much attention has been given to the top corporate
managers who rake in tens of millions of dollars annually in salaries and perks.
But little is said about the tens of billions that these same corporations distribute
to the top investor class each year, again that invisible fraction of 1 percent
of the population. Media publicity that focuses exclusively on a handful
of greedy top executives conveniently avoids any exposure of the super rich
as a class. In fact, reining in the CEOs who cut into the corporate take would
well serve the big shareholder's interests.
Two studies that do their best to muddy our understanding of wealth, conducted
respectively by the Rand Corporation and the Brookings Institution and widely
reported in the major media, found that individuals typically become rich not
from inheritance but by maintaining their health and working hard. Most of their
savings comes from their earnings and has nothing to do with inherited family
wealth, the researchers would have us believe. In typical social-science fashion,
they prefigured their findings by limiting the scope of their data. Both studies
failed to note that achieving a high income is itself in large part due to inherited
advantages. Those coming from upper-strata households have a far better opportunity
to maintain their health and develop their performance, attend superior schools,
and achieve the advanced professional training, contacts, and influence needed
to land the higher paying positions.
More importantly, both the Rand and Brookings studies fail to include the super
rich, those who sit on immense and largely inherited fortunes. Instead, the
investigators concentrate on upper-middle-class professionals and managers,
most of whom earn in the $100,000 to $300,000 range--which indicates that the
researchers have no idea how rich the very rich really are.
When pressed on this point, they explain that there is a shortage of data on
the very rich. Being such a tiny percentage, "they're an extremely difficult
part of the population to survey," pleads Rand economist James P. Smith,
offering the same excuse given by the Census Bureau officials. That Smith finds
the super rich difficult to survey should not cause us to overlook the fact
that their existence refutes his findings about self-earned wealth. He seems
to admit as much when he says, "This [study] shouldn't be taken as a statement
that the Rockefellers didn't give to their kids and the Kennedys didn't give
to their kids." (New York Times, July 7, 1995) Indeed, most of
the really big money is inherited--and by a portion of the population that is
so minuscule as to be judged statistically inaccessible.
The higher one goes up the income scale, the greater the rate of capital
accumulation. Economist Paul Krugman notes that not only have the top 20 percent
grown more affluent compared with everyone below, the top 5 percent have grown
richer compared with the next 15 percent. The top one percent have become richer
compared with the next 4 percent. And the top 0.25 percent have grown richer
than the next 0.75 percent. That top 0.25 owns more wealth than the other 99¾
percent combined. It has been estimated that if children's play blocks
represented $1000 each, over 98 percent of us would have incomes represented
by piles of blocks that went not more than a few yards off the ground, while
the top one percent would stack many times higher than the Eiffel Tower.
Marx's prediction about the growing gap between rich and poor still haunts
the land--and the entire planet. The growing concentration of wealth creates
still more poverty. As some few get ever richer, more people fall deeper into
destitution, finding it increasingly difficult to emerge from it. The same pattern
holds throughout much of the world. For years now, as the wealth of the few
has been growing, the number of poor has been increasing at a faster rate than
the earth's population. A rising tide sinks many boats.
To grasp the true extent of wealth and income inequality in the United
States, we should stop treating the "top quintile"--the upper-middle
class--as the "richest" cohort in the country. But to do that, we
need to look beyond the Census Bureau's cooked statistics. We need to catch
sight of that tiny, stratospheric apex that owns most of the world.
Michael Parenti is a noted author and political commentator. Among his
widely read books are "The Terrorism Trap," "Democracy For the
Few," "History as Mystery," and "Against Empire." His
most recent forthcoming book is "The Assassination of Julius Caesar: A
People's History of Ancient Rome." For more information, visit his web
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