Billionaires are not the (only) bad guys
The way we talk about income inequality is totally wrong, which is exactly as the super-rich want it.
Howard Schultz, Starbucks CEO and man who absolutely, positively should not run for President, came under fire in early February when he was asked whether billionaires have too much power, and responded that he preferred terms like “people of means,” and “people of wealth.” Most responses assumed Schultz was suggesting euphemisms — Elle proclaimed that “the B-word” makes Schultz sad, and Twitter of course had a field day — but I think his meaning was misunderstood, and more importantly, I think Howard Schultz is right.
America has a problem with wealth inequality. Actually, that’s an understatement. Along with gun violence, climate change, and systemic racism, wealth inequality belongs on the short list of existential threats to our nation. It undermines our democracy, tears at our social fabric, and literally kills our citizens. Unfortunately, the way we talk about it is fundamentally broken, and makes the path to a solution far more difficult.
The problem begins with the word “billionaire” Not because it’s pejorative, or inaccurate, but because it is too narrow.
Since the “Republican Revolution” of the 1980s radically altered US tax policy and corporate regulation, American wealth has consolidated more than ever among our wealthiest people. That isn’t news. It’s been nearly a decade since the Occupy Movement got America talking about “the One Percent.” But that term, too, is wrong: it encompasses nearly a million and a half households, with annual incomes starting below $500,000 — undeniably rich, yes, but not enough to buy the votes of politicians, or fund think-tanks to export policy, or buy yourself the Presidency. Half a million dollars is not “fundamentally breaking democracy” rich.
So where does the problem lie? Howard R. Gold, at the University of Chicago, makes a compelling case that our attention should be on the top 0.01%, the one-percent of the one-percent. Compiling research from several other economists, Gold shows that within those 1.6 million American households that make up “The One Percent,” income has risen at a relatively modest rate for all but a tiny fraction — 16 thousand households.
That’s about 48,000 humans, since wealthier Americans average 3 people per household, fewer than attend an average NFL game. If you put them all in the Dallas Cowboys’ home stadium, you’d still have enough room to fit almost everyone attending the Bengals game.
From 1950 to 2015, those households saw their average income rise from $3 million a year (in 2015 dollars) to more than $30 million, and their share of American wealth rise from 3 percent to nearly 12 percent. Today, those 16,000 households — about 48,000 humans, enough to half-fill the Dallas Cowboy’s control about as much wealth as the combined populations of 22 US states.
That’s the population destroying our democracy. Even the next highest bracket, the top ten percent of the top one percent, only saw their income rise from $1 million to $4 million in the same period — again, definitely wealth, but not nation-destroying wealth. Not “My boat has another boat inside it” wealth.
OK, so that’s a lot of numbers and statistics, but we’re still talking about billionaires, right? Well, no. There simply aren’t that many billionaires — just over 2,200 in the world, according to Forbes, and only 540 who call the United States home.
Incidentally, of those 540 American billionaires, exactly three are African-American or Black. This reflects a larger, less-well-known form of American inequality, the Racial Wealth Gap. For every dollar of wealth held by white Americans as a collective population, Black Americans have a nickel. Latino households are only slightly wealthier, and thanks to disparities in income, this gap is expected to widen in the coming years. This is one reason it’s important to discuss not only income inequality, but wealth inequality as an American crisis.
So while “Every billionaire is a policy failure,” the motto of Alexandra Ocasio-Cortez’s policy advisor, might be true, it doesn’t extend far enough. And Howard Schultz is correct to say that “billionaire” is not the right word. Among the top 0.01 percent, net worth begins at only about $100 million, one-tenth of a billion dollars, and annual income starts around $10 million. Not coincidentally, that happens to be the level at which Ocasio-Cortez, and many economists, suggest a 70 percent income tax rate should kick in.
Poor terminology harms efforts to correct the problem, and benefits those who would preserve the status quo. By focusing on billionaires, we overlook the vast majority of super-rich Americans pulling levers behind the scenes. Worse, we risk mistaking them for allies. Among those 16,000 families in the 0.01% are four members of Congress. More than 40 Senators and Representatives have net worths above $10 million, including House Speaker Nancy Pelosi, who has scoffed at Ocasio-Cortez’s tax policy suggestions.
On the other end of the spectrum, “One Percent” language risks focusing too much on those at the low-earning end of that spectrum. As long as Thousandaires fight Hundred-thousandaires, we aren’t talking about those whose wealth accumulation truly breaks our system.
The truth is that 99.99% of Americans are getting screwed — if not by harm to personal wealth, then by aggregate harm to our environment, our economy, and our society. Some are harmed more than others, of course, but if we’re going to achieve meaningful change, we can’t be fighting among ourselves.
Whatever terminology we use, it bears repeating that Howard Schultz is a part of the problem and that he should absolutely, definitely not be running for President. But he just might be right about how we talk about inequality.
Image at top: Johns Rockefeller, Sr and Jr, from Wikimedia Commons.