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99 to 1

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Over the past thirty years, we’ve seen a radical redistribution of wealth upward to a tiny fraction of the population. Here, activist Chuck Collins explains how it happened and marshals wide-ranging data to show exactly what the 99/1 percent divide means in the real world and the damage it causes to individuals, businesses, and the earth. Most important, he answers the burning question, what can be done about it? He offers a common-sense guide to bringing about a society that works for everyone: the 100 percent. This is a struggle that can be won. After all, the odds are 99 to 1 in our favor.

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1 Coming Apart at the Middle

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An imbalance between rich and poor is the oldest and most fatal
ailment of all republics.
—Plutarch (c. 46–120 CE)

For more than three decades, the United States has undertaken a dangerous social experiment: How much inequality can a democratic self-governing society handle? How far can we stretch the gap between the super-rich 1 percent and everyone else before something snaps?

We have pulled apart. Over a relatively short period of time, since the election of Ronald Reagan in 1980, a massive share of global income and wealth has funneled upward into the bank accounts of the richest 1 percent—and, within that group, the richest one-tenth of 1 percent.

This has been not just a U.S. trend but a global tendency, as the wealthiest 1 percent of the planet’s citizens delinked from the rest of humanity in terms of wealth, opportunity, life expectancy, and quality of life.

There has always been economic inequality in the world and within the United States, even during what is called the “shared prosperity” decades after World War II, 1947 to 1977. But since the late 1970s, we’ve entered into a period of extreme inequality, a dizzying reordering of society.

 

2 Who Is the 1 Percent?

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We can have concentrated wealth in the hands of a few or
we can have democracy. But we cannot have both.
—Louis Brandeis (1856–1941)

The “1 percent” framework is a useful lens for understanding the dramatic changes that have occurred in the last several decades. It is a real demographic we can pinpoint and picture as well as a symbolic reference to those primarily responsible for the polarization of wealth in our Union.

The “1 percent” icon has obvious limitations, too. It suggests we should focus on wealthy individuals when we also should be thinking about the role of the wealthiest corporations, sometimes summarized as “Wall Street.” In chapter 5, we will discuss the Wall Street inequality machine and the interaction between the individual 1 percent and corporations.

The other limitation with the concept “99 to 1” is it presumes that everyone in the 1 percent thinks and acts the same. Within the 1 percent are some people who have dedicated their lives to building a better world for the 100 percent. The focus of our wrath should be on the segment of the 1 percent—the game riggers and rule fixers—who use their wealth and power selfishly to perpetuate their own privilege, wealth, and power.

 

3 How the 1 Percent Rigs the Rules of the Economy

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A State divided into a small number of rich and a large number of poor will always develop a government manipulated by the rich to protect the amenities represented by their property.
—Harold Laski (1893–1950)

How does the 1 percent use its power?

Within the 1 percent, there are people who use their economic and political power differently. In one respect, the 1 percent is not much different from the population at large in that only a small segment is engaged in politics and actively advocating on policy matters. Some in the 1 percent care about the 100 percent and work for a fair and sustainable economy. Others are rule fixers, focused on rigging government policies in their favor to get more wealth and power. But the majority are unengaged and happy to watch their wealth accumulate without weighing in one way or another.

The game fixers maintain a worldview that justifies using every tool at their disposal to perpetuate and expand their wealth. Most believe they are the engines of the economic train, creating enterprises and wealth that pull everyone else along. This worldview is well captured in the introduction to the 2010 Forbes 400 survey.

 

4 Life in the 99 Percent

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Great accumulations of wealth cannot be justified on the basis of personal and family security… . In the last analysis, such accumulations amount to the perpetuation of great and undesirable concentration of control in a relatively few individuals… . Such inherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our government.
—Franklin Delano Roosevelt

The bottom 99 percent in the United States represents about 310 million people and over 150 million households.

The bottom 99 percent includes a wide spectrum of people, from those who are homeless and destitute all the way to relatively affluent households with a couple of million dollars in wealth. The higher they are in the 99 percent, the more they have benefited from rule changes in the economy that propelled the 1 percent. The further they are from the top, the less they have benefited.

Those in the 99 percent have seen their national share of income decline from 91 percent in 1976 to 79 percent in 2010.1 The share of wealth owned by the bottom 90 percent declined from 19.1 percent in 1962 to 12.8 percent in 2009.2 It is worth repeating that during 1983 and 2009, no wealth gains went to the bottom 60 percent of the U.S. population. In fact, their wealth declined since 1983. Meanwhile, 82 percent of all wealth gains flowed to the richest 5 percent.

 

5 The Wall Street Inequality Machine

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The priority of the money system shifted from funding real investment for building community wealth to funding financial games designed solely to enrich Wall Street without the burden of producing anything of value.
—David Korten

When we talk about the 1 percent, it is tempting to personalize it, envisioning individual millionaires and specific people in the bottom 99 percent. This is reinforced by the photographs that thousands of people have posted on websites with their “I am the 99 percent” stories.

But, as we’ve discussed, a key explanation for the lopsided distribution of wealth is how the 1 percent teams up with leaders of large transnational corporations in the United States and the rest of the world. In fact, many of the leaders of large transnational corporations are members of the predatory, rule-rigging 1 percent. This corporate 1 percent owns a gigantic percentage of the globe’s private assets and transmits it though ownership flows to shareholders, most of whom are in the top 1 percent of individuals.

 

6 How Inequality Wrecks Everything We Care About

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The reality is that U.S. society is polarizing and its social arteries are hardening. The sumptuousness and bleakness of the respective lifestyles of rich and poor represents a scale of difference in opportunity and wealth that is almost medieval—and a standing offense to the American expectation that everyone has the opportunity for life, liberty and happiness.
—Will Hutton (b. 1951)

Inequality is wrecking the world. Not just poverty, which is destroying the lives of billions of people around the planet, but also inequality—the accelerating gap between the 99 percent and the 1 percent.

According to research in dozens of disciplines, the extreme disparities of wealth and power corrode our democratic system and public trust. They lead to a breakdown in civic cohesion and social solidarity, which in turn leads to worsened health outcomes.

Inequality undercuts social mobility and has disastrous effects on economic stability and growth. The notion of a “death spiral” may sound dramatic, but it captures the dynamic and reinforcing aspects of inequality. And these inequalities were a major contributing factor to the 1929 and 2008 economic downturns. What follows is the case against inequality.

 

7 How Wealth Inequality Crashed the Economy

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An economy so dependent on the spending of a few is also prone to great booms and busts. The rich splurge and speculate when their savings are doing well. But when the values of their assets tumble, they pull back. That can lead to wild gyrations. Sound familiar? It’s no mere coincidence that over the last century the top earners’ share of the nation’s total income peaked in 1928 and 2007—the two years just preceding the biggest downturns.
—Robert Reich (b. 1946)

There are many theories about what triggered the 2008 economic meltdown. These explanations focus on bad actors such as the large banks and financial firms, the unregulated “shadow” financial sector, and unethical subprime mortgage pushers.1

But there is a missing lens to the story, one that shows how the economic meltdown was caused by excessive income and wealth inequality. The two triggers were consumption by the 99 percent based on borrowing rather than real wage growth, and reckless financial speculation by the 1 percent.

Real wages for the bottom 80 percent of households have remained relatively stagnant since the late 1970s. People survived these stagnant wages by working more hours, bringing more family members into the paid labor force, and borrowing more, thanks to easy access to credit. This put enormous stresses on many working families as they got caught on a work-consume-borrow treadmill. But for many, this was the only way to attain or maintain a middle-class standard of living.

 

8 The Sleeping 99 Percent Giant Wakes Up

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A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies… . A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth.
—Martin Luther King Jr. (1929–1968)

A sleeping giant has awoken. After being told that there is nothing we can do to stop the greed, looting, and growing inequalities, the 99 percent now knows the world doesn’t have to be this way.

The global 1 percent has recovered; their wealth is largely intact and they are back at the speculative gaming table. Meanwhile, the rest of the world is reeling from deep unemployment, anxious employment, diminished wealth, and insecurity.1

In January 2012, Time magazine named the protester as its Person of the Year. All around us are signs of emerging social movements, pointing the way toward a new economy. After seeing their dreams shattered, the 99 percent got organized.

Now the streets are filled with chants and signs: WALL STREET GOT BAILED OUT, WE GOT FORECLOSED. Vast numbers of Americans identify with the rallying cry “We are the 99 percent.”

 

9 Reversing the Inequality Death Spiral

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The form of law which I propose would be as follows: In a state which is desirous of being saved from the greatest of all plagues—not faction, but rather distraction—there should exist among the citizens neither extreme poverty nor, again, excessive wealth, for both are productive of great evil… . Now the legislator should determine what is to be the limit of poverty or of wealth.
—Plato (c. 424–348 BCE)

How can we reverse the inequality death spiral that is wrecking the world? What must we do? What actions and policies will make the biggest difference?

A century ago, people reversed the excessive inequalities of the first Gilded Age. People learned the truth about the economy, got organized, built powerful social movements, and pressed for change. It took a generation, just as it took a generation for present-day inequalities to reach extreme levels.

This time around will be very different, as the world has changed. We must not only press for policies that reduce inequality but also make a nimble transition to a new economy based on an entirely different model of economic growth.

 

10 Bold Rule Changes to Break Up Concentrated Wealth

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In a world of increasing inequality, the legitimacy of institutions that give precedence to the property rights of “the Haves” over the human rights of “the Have Nots” is inevitably called into serious question.
—David Korten (1937)

We must change the rules of the economy so that they serve and lift up the 100 percent, not just the 1 percent. Starting in the mid-1970s, the rules were changed to reorient the economy toward the short-term interests of the 1 percent. We can shift and reverse the rules to work for everyone.

There are three categories of policy changes that we need: rules and policies that raise the floor, those that level the playing field, and those that break up overconcentrations of wealth and corporate power. These are not hard-and-fast categories, but a useful framework for grouping different rule changes.

1.Rule changes that raise the floor

• Ensure the minimum wage is a living wage

• Provide universal health care

• Enforce basic labor standards and protections

2. Rule changes that level the playing field

 

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