It’s no secret that the “one percent” have increased their wealth immensely over the past decade while the wages paid to those who work for them have remained stagnant. But new research from the University of California Berkeley and the London School of Economics shows that the richest .01 percent now hold over 11 percent of America’s wealth.
Why does this matter?
As economist Robert Reich wrote, it matters “because this explosion of wealth at the top has been accompanied by an erosion of the middle class and poor. In the mid-1980s, the bottom 90 percent of Americans together held 36 percent of the nation’s wealth. Now they hold less than 23 percent.”
Some people place the blame of the failure of the middle class on the very people who used to be a part of it, but the 0.01 percent have been pouring millions and millions of dollars into politics, and it has been “changing the game,” Reich said.
“In the 2012 election cycle (the last for which we have good data) donations from the top .01 accounted for over 40 percent of all campaign contributions,” said Reich. “This is a huge increase from 1980, when the top .01 accounted for ten percent of total campaign contributions.”
And the money hasn’t just been doled out to those on the Right, either.
“In fact, Democrats have increasingly relied on it,” Reich wrote. In 2012, “the top .01 percent’s donations to Democrats were more than four times larger than all labor union donations to Democrats put together.”
The donors haven’t been pouring out money for no reason, or simply because they strongly believe in any particular candidate. They donate because it helps them out financially.
“Their political investments have paid off in the form of lower taxes on themselves and their businesses, subsidies for their corporations, government bailouts, federal prosecutions that end in settlements where companies don’t affirm or deny any facts and where executives don’t go to jail, watered-down regulations, and non-enforcement antitrust laws.”
Compare this to the treatment that the rest of the country, especially the poorest citizens, receives from the judicial system and the IRS. Last year, Citigroup received $260 million in federal income tax returns. The average American gets nowhere near the equivalent of that kind of tax relief. And since the .01 percent benefits from these tax loopholes, they aren’t putting money into campaigns for candidates that would change them.
“If you want to know what’s happened to the American economy, follow the money. That will lead you to the richest .01 percent,” concluded Reich. “And if you want to know what’s happened to our democracy. Follow the richest .01 percent. They’ll lead you to the politicians who have been selling our democracy.”