They are invisible to most people . . . but not to the heroine of my new book, dEATH in dAVOS. She knows just how to find them â and how to kill them. Check out this opinion piece by Paul Krugman of The New York Times.
Our Invisible Rich
Half a century ago, a classic essay in The New Yorker titled âOur Invisible Poorâ took on the then-prevalent myth that America was an affluent society with only a few âpockets of poverty.â For many, the facts about poverty came as a revelation, and Dwight Macdonaldâs article arguably did more than any other piece of advocacy to prepare the ground for Lyndon Johnsonâs War on Poverty.
I donât think the poor are invisible today, even though you sometimes hear assertions that they arenât really living in poverty â hey, some of them have Xboxes! Instead, these days itâs the rich who are invisible.
But wait â isnât half our TV programming devoted to breathless portrayal of the real or imagined lifestyles of the rich and fatuous? Yes, but thatâs celebrity culture, and it doesnât mean that the public has a good sense either of who the rich are or of how much money they make. In fact, most Americans have no idea just how unequal our society has become.
The latest piece of evidence to that effect is a survey asking people in various countries how much they thought top executives of major companies make relative to unskilled workers. In the United States the median respondent believed that chief executives make about 30 times as much as their employees, which was roughly true in the 1960s â but since then the gap has soared, so that today chief executives earn something like 300 times as much as ordinary workers.
So Americans have no idea how much the Masters of the Universe are paid, a finding very much in line with evidence that Americans vastly underestimate the concentration of wealth at the top.
Is this just a reflection of the innumeracy of hoi polloi? No â the supposedly well informed often seem comparably out of touch. Until the Occupy movement turned the â1 percentâ into a catchphrase, it was all too common to hear prominentpundits and politicians speak about inequality as if it were mainly about college graduates versus the less educated, or the top fifth of the population versus the bottom 80 percent.
And even the 1 percent is too broad a category; the really big gains have gone to an even tinier elite. For example, recent estimates indicate not only that the wealth of the top percent has surged relative to everyone else â rising from 25 percent of total wealth in 1973 to 40 percent now â but that the great bulk of that rise has taken place among the top 0.1 percent, the richest one-thousandth of Americans.
So how can people be unaware of this development, or at least unaware of its scale? The main answer, Iâd suggest, is that the truly rich are so removed from ordinary peopleâs lives that we never see what they have. We may notice, and feel aggrieved about, college kids driving luxury cars; but we donât see private equity managers commuting by helicopter to their immense mansions in the Hamptons. The commanding heights of our economy are invisible because theyâre lost in the clouds.
The exceptions are celebrities, who live their lives in public. And defenses of extreme inequality almost always invoke the examples of movie and sports stars. But celebrities make up only a tiny fraction of the wealthy, and even the biggest stars earn far less than the financial barons who really dominate the upper strata. For example, according to Forbes, Robert Downey Jr. is the highest-paid actor in America, making $75 million last year. According to the same publication, in 2013 the top 25 hedge fund managers took home, on average, almost a billion dollars each.
Does the invisibility of the very rich matter? Politically, it matters a lot. Pundits sometimes wonder why American voters donât care more about inequality; part of the answer is that they donât realize how extreme it is. And defenders of the superrich take advantage of that ignorance. When the Heritage Foundation tells us that the top 10 percent of filers are cruelly burdened, because they pay 68 percent of income taxes, itâs hoping that you wonât notice that word âincomeâ â other taxes, such as the payroll tax, are far less progressive. But itâs also hoping you donât know that the top 10 percent receive almost half of all income and own 75 percent of the nationâs wealth, which makes their burden seem a lot less disproportionate.
Most Americans say, if asked, that inequality is too high and something should be done about it â there is overwhelming support for higher minimum wages, and a majority favors higher taxes at the top. But at least so far confronting extreme inequality hasnât been an election-winning issue. Maybe that would be true even if Americans knew the facts about our new Gilded Age. But we donât know that. Todayâs political balance rests on a foundation of ignorance, in which the public has no idea what our society is really like.
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