JOHN BUELL

1% Market Fake American Dream

Numbers one chooses to describe and explain the social pyramid are always a bit arbitrary, but the Occupy Wall Street movement certainly made a sensible choice.

By any reckoning, the greatest gains in wealth and income over the last three decades have gone to the top 1%.

But if anything, OWS may have been too cautious.

Even within the top 1%, wealth and income inequality have become exceptionally concentrated.

If one imagines an arena with 10,000 fans representing the US population, 100 fans would represent the top 1%. They are all very affluent, but differences between the top ten and their 90 lesser colleagues are surprisingly extreme.

Though the 90 on the bottom of the 1% club are not going to need food stamps any time soon, they differ from the super elite substantially in sources of income, life styles, and especially political power. These considerations have important political implications. G William Domhoff, a sociologist who has devoted much of his life to US class analysis, recently posted on his blog an item from a financial advisor acquaintance of his.

The analyst chose to remain anonymous, but the perspective and information strike me as compelling. He wrote:” I’ve had many discussions in the last few years with clients with “only” $5M or under in assets, those in the 99th to 99.9th percentiles, as to whether they have enough money to retire …

“While income and lifestyle are all relative, an after-tax income between $6.6k and $8.3k per month today will hardly buy the fantasy lifestyles that Americans see on TV and would consider ‘rich.’

“In many areas in California or the East Coast, this positions one squarely in the hard working upper-middle class, and strict budgeting will be essential ...

“Plus, watching retirement accounts deplete over time isn’t fun, not to mention the ever-fluctuating value of these accounts and the desire of many to leave a substantial inheritance. Our poor lower half of the top one percent lives well but has some financial worries.”

As Domhoff’s friend puts it: “Unlike those in the lower half of the top 1%, those in the top half and, particularly, top 0.1%, can often borrow for almost nothing, keep profits and production overseas, hold personal assets in tax havens, ride out down markets and economies, and influence legislation in the US. …

Most of those in the bottom half of the top 1% lack power and are essentially well-compensated workhorses for the top 0.5%, just like the bottom 99%. In my view, the American dream of striking it rich is merely a well-marketed fantasy that keeps the bottom 99.5% hoping for better and prevents social and political instability.”

The primary way the top 0.1% ride out storms is through control of government, the use of government as a bailout machine when their bets go wrong. According to a new study by the Sunlight Foundation, these 26,783 individuals — 71% of whom are executives, lawyers, or lobbyists—contributed $774 million to federal political campaigns in 2010.

That’s $28,913 each — more than the median individual income in America by $2,549. This data makes the arguments raised by the Occupy movement all the more compelling:  a small fraction of the one percent have immense power over the political process.

The major investment banks are a perfect example. After constructing a set of financial instruments that not only failed to add value but also nearly crushed the whole economy, the major banks were bailed out by both parties and now control even more of the financial industry. Even affluent professionals must worry about the loss of dividends and or clients in this turbulent economy and are thus inclined to become even more workaholic. These behaviors take a toll on Americans at all levels of the income pyramid.

Juliet Schor points out that “members of more economically egalitarian societies, such as Sweden and Japan, lead less stressful, healthier lives — an improvement that holds true for every segment of the population — including the wealthy.”

Politically, bringing more of the lower one percenters into the reform cause could lend it a considerable boost.

That may well be difficult but is hardly impossible.

Showing that the machinations of the 0.1% have closed the door on almost everyone to the wealth and power celebrated in the American Dream may be one key.

Some may come to suspect that the dream of riches itself may be hollow.

John Buell is the author of Politics, Religion, and Culture in an Anxious Age. He lives in Southwest Harbor, Maine. Email jbuell@acadia.net.

From The Progressive Populist, February 1, 2012