2021: Another Year of Success at Increasing Wealth Inequality

You were wrong if you spent this past year fretting about the government, led by Biden, harming the prospects of our wealthy comrades—the “job creators.” If an increase in their wealth is used to determine success, 2021 may have been a less successful year than 2020 but, despite the pandemic, our wealthy friends were doing alright.

According to the Federal Reserve Board, the bankers’ bank, as of the end of the third quarter of 2021, the wealth of the wealthiest 1% had grown since the fourth quarter of 2020 by $4.98 trillion from $38.96 trillion to $43.94 trillion for a 12.78% gain in the first nine months of 2021, outstripping the inflation rate for the whole year of around 7%. This increase in their wealth of $4.98 trillion would cover more than twice the amount of the watered-down Build Back Better legislation.

Additionally, according to the Fed, the share of the country’s total wealth held by the 1%, as of the end of the third quarter in 2021 was 32.1%, the second quarter in a row it was over 32%. These are all-time highs since the Feds 1989 starting point when the wealth holdings of the 1% stood at a “mere” 23.6% of the country’s total wealth.[1]

During the fourth quarter of 2021, the wealth of the 1% presumably continued to grow. In the last quarter of the year, the Dow Jones Index was up over 7% and the NASDAQ was up over 8%, a time in which, according to the Federal Reserve Board, they held 53.8% of corporate equities and mutual fund shares.

Biden v. Trump

Below are figures from the Federal Reserve Board that can be used to compare the changes in the holdings of the 1% during the first nine months of the Trump regime with the same period of time of Biden’s presidency.

If one starts with the last quarter of their predecessor, the wealth of the 1% after nine months was up $1.84 trillion when Trump was in the oval office while it was up $4.98 trillion in the same time period for Biden.

If one compares the first quarter of the first year of each to the third quarter, Trump is also outdone by almost three times as much, $.95 trillion to $2.84 trillion.

Before becoming president, Biden reportedly told wealthy donors that “nothing would fundamentally change” if he is elected.[2] Well, that depends on how one defines “fundamentally change” because what happened this last year could be interpreted by some as a fundamental change, especially given the increase in the holdings of the wealthiest 10, the filthiest of the filthy rich. Here are the increases in their wealth during the last two years provided by Bloomberg.[3]

What these numbers indicate is that in two years, their wealth doubled. And many of their wealthy colleagues are presumably complaining about how much the wages of workers have increased!

Progress in the Number of Seats on a Rocket Ship needed for holding People Worth $1 Trillion

For centuries, one of the burning questions facing humanity has been how many angels can dance on the head of a pin. That is a question for which an agreed upon answer is forever unlikely especially since some people do not believe in the existence of angels.

An important question that can be answered, thanks to the Bloomberg list of the wealthiest among us, is how many seats need to be on a rocket ship to carry people worth a trillion dollars? An answer to this question will change over time, perhaps soon requiring only one seat if Musk continues to accumulate wealth at the same rate as he has done during the last two years.

Great progress has been made in reducing the number of needed seats. Using the Bloomberg figures, in the beginning of 2020, 16 seats were required. At the beginning of 2021, the number needed had declined to 9. The “good news” is that as of the end of 2022, the number has been further reduced to only 7. That represents more than a 50% reduction in just two years–an impressive rate of progress.

Unfortunately, given the recent decline in the stock market, that number may, sadly, be going up. As of January 24, the combined wealth of the wealthiest 7 fell $9 billion short of reaching a trillion.

Poor Elon Musk was Hit with a Big Tax Bill-However

Some might see Musk as having had a rough year in 2021. He is expected to pay some $11 billion in taxes.

$11 billion is a lot of money. Musk is probably paying more than any individual has ever paid. However, $11 billion comes to less than 10% in the increase in his wealth during 2021, a percentage that many people would be happy to be taxed at. Additionally, Musk and his companies have received government subsidies and contracts probably worth far more than the $11 billion he is contributing to the treasury.[4] Furthermore, his tax amount represents just a little over 4% of the size of his fortune as of the end of 2021. Noteworthy is that his fortune is 900 times the amount of money Bob Dylan is estimated to be receiving on the sale of his song writing catalog for a “paltry” $300 million.

The taxes Musk is paying may have been withheld by Tesla, but if not and he pays the money owed to the government by writing a check, he will face some extra work. As a warning to readers of Counterpunch, on page 62 of the IRS 1040 instructions, we taxpayers are informed that “No check of $100 million or more accepted.” Why would the IRS have such a rule? Doesn’t the Pentagon yearly write many checks for more than $100 million to defense contractors? Fortunately, the IRS offers a solution for those writing checks. “If you are sending $100 million or more by check, you’ll need to spread the payment over 2 or more checks with each check made out for an amount less than $100 million.” If Elon pays his taxes by writing checks, assuming he has more than $11 billion in his checking account, he will be burdened with filling out 110 checks for $99,999,999.99 and a 111th check for $1.10.

Sad Days Ahead for the Rich?

Given that the stock market has recently been declining, 2022 may not be as successful for the wealthy as were 2020 and 2021. Warning: You might want to begin preparing now so you are better able to shed some tears on behalf of many of our wealthy friends.

Their prosperity, especially that of the obscenely wealthy, during the last two years has not necessarily trickled down to those among the poorest 90% of the population. The increasing wealth of the 1% has largely come from trickling up to them as a result of their success at exploiting workers in our free market system.

There is a good chance that what could be financial setbacks for the “job creators” in 2022 will come pouring down like a terrible storm on most everyone else. The result would be to burden many already exploited people with greater housing, food, health, and job insecurity while, at the same time, those with power will continue to allow the physical environment to further deteriorate. All of these problems could be reduced by people getting organized and resisting their exploitation and the further destruction of the environment.

NOTES

1. In 1989, their share of the nation’s wealth compared to the poorest 50% of the population was 6.41 times as great. In the 3rd quarter of 2021, it was 12.85 times as great—more than doubling.

2. Reported in https://www.vox.com/policy-and-politics/2019/6/19/18690910/biden-fundraiser-controversy-segregationists-donors Biden repeated his earlier remarks that he didn’t want to “demonize” the wealthy and added that, though “income inequality” is a problem that must be addressed, under his presidency, “no one’s standard of living will change, nothing will fundamentally change.” He went on: “I need you [wealthy donors] very badly. I hope if I win this nomination, I won’t let you down.”

3. From the article at: https://www.npr.org/2021/11/13/1054711913/progressives-wealth-tax-super-rich-elon-musk-jeff-bezos

“What’s happened during the pandemic is that the wealthiest of the wealthy seem to be reaping a huge percentage of the rewards,” says journalist Ben Steverman, who helps compile the Bloomberg Billionaires Index.”

My comment: Given the figures he helps produce; one might wonder how on earth could Steverman use the word “seem.”

While the wealth of the extremely wealthy improved dramatically in 2020, the official rate of poverty in the U.S. also went up from 10.5% of the population in 2019 to 11.4% in 2020. That percent increase represents 3.2 million more people bringing their total to 37.2 million. It included 11.6 million people under the age of 18. See pages 1, 53 https://www.census.gov/content/dam/Census/library/publications/2021/demo/p60-273.pdf

Recently reported was how, unlike the wealthiest ten, some people are not doing well financially: “Nearly 40% of US households have faced serious financial problems, including struggling to afford medical care and food, in the last few months, according to a survey…The problems were reported despite government assistance meant to lessen the financial burden of the Covid-19 pandemic. Of households surveyed, 67% said they had received financial assistance from the government in the past few months.”

https://www.theguardian.com/us-news/2021/oct/12/us-households-financial-problems-medical-care-food

4. see Business Insider article https://www.businessinsider.com/elon-musk-list-government-subsidies-tesla-billions-spacex-solarcity-2021-12

Rick Baum teaches Political Science at City College of San Francisco. He is a member of AFT 2121.

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