Mitt Romney’s now infamous comments about ‘the 47 per cent’, together with the publication of several new research documents, have raised debate about wealth and inequality in America.
The US Census Bureau recently released statistics detailing poverty rates in America. This came shortly after Forbes released details of the richest 400 people in the United States.
Some interesting figures emerged:
• The collective wealth of the 400 richest Americans totaled $1.7 trillion in 2011.
• The wealth of the richest 400 has grown at 13 per cent, far in excess of the national economic growth of 1.7 per cent.
• The average rate of tax paid by the 400 richest people in America in 2011 was 19.9 per cent.
• The average net worth of a member of the Forbes 400 hit $4.2 billion, up from $3.8 billion last year.
• The median net worth of the average American household fell 40 percent between 2007 and 2010.
• Since 1982 the net worth of those on the Forbes 400 list has grown 15-fold.
• Collectively, the wealthiest five individuals are worth $34 billion more than one year ago.
• Before the recession, from 2002 to 2007, the richest 1 per cent enjoyed a generous 65 per cent of the gain in total national income. In 2010, it was a startling 93 per cent
• New figures released by the US Census Bureau on Wednesday reveal that 46.2 million Americans, including 16.1 million children, are poor, and that median household income declined in 2011. Income inequality increased to its highest level in 45 years
• 46.2 million Americans living in poverty- nearly 1 out of every 6 people- represents the highest absolute number since the Census Bureau began compiling such statistics 53 years ago.
• Real median household income in the United States fell 1.5 percent. Median household family income dropped 1.7 percent. Real median household income was 8.1 percent lower than it was in 2007 and 8.9 percent below its 1999 peak.
So, despite the economic crash that has plunged millions into financial uncertainty, the rich are getting substantially richer.
This startling observation brought to mind ‘The Great Money Trick’, as outlined by Robert Tressell (real name Robert Noonan) in his famous book ‘The Ragged Troused Philanthropists’.
Tressell was born on Dublin’s Wexford Street in 1870 and although he lived only a short life, dying at the age of 41, his novel is still regarded as a classic look at the failings of the capitalist system.
In the following extract, the main character, Frank Owen, explains the model to his work colleagues. Somehow, with all the world has seen since the economic crash began in 2008, it seems very apt today.
The Great Money Trick
“I’ll show you how the Great Money Trick is worked.”
Owen opened his dinner basket and took from it two slices of bread, but as these where not sufficient, he requested that anyone who had some bread left should give it to him. They gave him several pieces, which he placed in a heap on a clean piece of paper, and, having borrowed the pocket knives of Easton, Harlow and Philpot, he addressed the,
“These pieces of bread represent the raw materials which exist naturally in and on the earth for the use of mankind; they were not made by any human being, but were created for the benefit and sustenance of all, the same as were the air and the light of the sun.”
“Now,” continued Owen, “I am a capitalist; or rather I represent the landlord and capitalist class. That is to say, all these raw materials belong to me. It does not matter for our present argument how I obtained possession of them, the only thing that matters now is the admitted fact that all the raw materials which are necessary for the production of the necessaries of life are now the property of the landlord and capitalist class. I am that class; all these raw materials belong to me.”
“Now you three represent the working class. You have nothing, and, for my part, although I have these raw materials, they are of no use to me. What I need is the things that can be made out of these raw materials by work; but I am too lazy to work for me. But first I must explain that I possess something else beside the raw materials. These three knives represent all the machinery of production; the factories, tools, railways, and so forth, without which the necessaries of life cannot be produced in abundance. And these three coins” – taking three half pennies from his pocket – “represent my money, capital.”
“But before we go any further,” said Owen, interrupting himself, “it is important to remember that I am not supposed to be merely a capitalist. I represent the whole capitalist class. You are not supposed to be just three workers, you represent the whole working class.”
Owen proceeded to cut up one of the slices of bread into a number of little square blocks.
“These represent the things which are produced by labour, aided by machinery, from the raw materials. We will suppose that three of these blocks represent a week’s work. We will suppose that a week’s work is worth one pound.”
Owen now addressed himself to the working class as represented by Philpot, Harlow and Easton.
“You say that you are all in need of employment, and as I am the kind-hearted capitalist class I am going to invest all my money in various industries, so as to give you plenty of work. I shall pay each of you one pound per week, and a week’s work is that you must each produce three of these square blocks. For doing this work you will each receive your wages; the money will be your own, to do as you like with, and the things you produce will of course be mine to do as I like with. You will each take one of these machines and as soon as you have done a week’s work, you shall have your money.”
The working classes accordingly set to work, and the capitalist class sat down and watched them. As soon as they had finished, they passed the nine little blocks to Owen, who placed them on a piece of paper by his side and paid the workers their wages.
“These blocks represent the necessaries of life. You can’t live without some of these things, but as they belong to me, you will have to buy them from me: my price for these blocks is,one pound each.”
As the working classes were in need of the necessaries of life and as they could not eat, drink or wear the useless money, they were compelled to agree to the capitalist’s terms. They each bought back, and at once consumed, one-third of the produce of their labour. The capitalist class also devoured two of the square blocks, and so the net result of the week’s work was that the kind capitalist had consumed two pounds worth of things produced by the labour of others, and reckoning the squares at their market value of one pound each, he had more than doubled his capital, for he still possessed the three pounds in money and in addition four pounds worth of goods. As for the working classes, Philpot, Harlow and Easton, having each consumed the pound’s worth of necessaries they had bought with their wages, they were again in precisely the same condition as when they had started work – they had nothing.