Top Heavy: The Increasing Inequality of Wealth in America and What Can Be Done about It

This is a must read for anyone interested in economic inequality. Excellent social science and readable.

No feature of American political life astonishes me more than the almost complete silence of politicians and journalists and the media concerning the most pressing problem is contemporary American life: the dramatically increasing inequality between the haves and have nots in the United States. According to Federal Reserve figures the share of the national wealth held by the top 1% of the population has risen from 20$ in 1979 to 37% by 1997. I have not seen figures since that date, but after Clinton continued the deregulation started by Reagan and continued by Bush 41 and then Bush 43 engaged on an inconceivably lavish give-back program in the nation's history, it would be impossible to imagine that the figures have improved since then. What is the figure now? 40%? 45%? 48%? Here is what frightens me: Edward Wolff published the revised version of his novel in 2002, submitting the manuscript to the publishers before Bush's incredible largesse to the rich took place in 2002. The problem was, in Wolff's view (and in the view of most responsible economists), pressing and dire in 2001. How much worse has it gotten since a string of tax cuts and policy changes that have unquestionably have made a serious problem vastly worse? Wolff's concern in this well-documented work are twofold: first, he wants to delineate the nature of the economic inequality that currently pervades the United States to a degree found in no other developed country; second, he wants to suggest one way partially to rectify the problem: for the United States to adopt a wealth tax similar to one that exists in several other nations. Most people, when they think of economic inequality, think in terms of income inequality. Such inequality does indeed exist, but Wolff shows that the most damaging inequality is wealth inequality. The point, once stated, is obvious. Two families with the same income could nonetheless have very significant differences in economic well-being if one has far more wealth than the other, i.e., property and durable goods and other holdings. The problem in the United States, as demonstrated by the Fed statistics I noted above, is that virtually all the wealth is held by the top 20% of the populace, with the top 1% holding a disproportionate amount of that. Wolff proposes one way to close the growing and vast gap between the wealthy and the mass of Americans: taxing wealth. Even the most conservative of taxes on aggregate wealth would, based on 1998 figures, generate approximately $52 billion dollars in tax revenue. The goal in Wolff's conception is to shift the tax burden more fairly toward the ones who possess the greatest wealth. He notes that in 2001 the United States had only two forms of wealth tax in place, both of which Bush has assaulted with impassioned intensity: estate taxes and capital gains taxes. Eliminating both of these are regressive taxes in that they ease the tax burden on the wealth while doing nothing to aid the po

Edward N. Wolff's study is an extremely clear statistical analysis of a for many reasons rather misty affair: wealth distribution in the US. His conclusion is that 'in 1989 the top 1 % of US families owned 48 percent of total US wealth'. His book confirms the ground-breaking sociological studies of William G. Domhoff. As Richard C. Leone remarks in his excellent introduction: ' We Americans have always flattered ourselves that we have more of two good things than almost anyone else: democracy and opportunity. To be sure, neither is simple.' For, beneath the top heavy wealthy lays the vast majority of US citizens with their burdens of debt, while a lower part hasn't even social security. In order to rectify the skewed situation, the author proposed a modest wealth tax, which at the top would not have been more than 10 %. Unfortunately, US fiscal policy went the other way round: taxation on the wealthy was further reduced. This short study (with many illustrative tables) is a must read for economists and laymen.

This study of the distribution of wealth in America is disheartening indeed. Though it only surveys the economic scene until 1989 (a postscript brings it up to 1992), it is not hard to believe that things haven't changed much since then. Basically, it concludes that the gap between the rich and the poor has increased to a greater extent than at any time since before the Great Depression, and that the gap between the rich and the poor is greater than in most European countries.Not only does this book outline the problem in detail, but it proposes a restructured tax system similar to that existing in many European countries, a tax system which would ease the burden on the poor, while placing little extra tax burdens on the rich-- and still raise billions more in tax revenue. Though this book is filled with statistical analyses, it is slim (fewer than a hundred pages), and those not mathematically inclined can skip to the conclusions here and there, which are written in clear, understandable prose. Well worth reading, and certain to be a wake-up call to anyone who has suspected that the middle class has been disappearing in this country.

Ed Wolff's book--a review of his earlier work on wealth, with some new additional material added--documents that the United States today is a more unequal society than at any time since the Great Depression. According to his numbers--which are lousy, but are nevertheless the best we have or are likely to acquire-- in 1929 the richest one percent of households had about 41 percent of the economy's total wealth. But the leveling associated with the Depression and World War II had reduced the richest one percent's share to about 22 percent by 1945. Thereafter, the leveling trend continued. By the mid-1970s, the richest one percent's share--including the implicit value of rights and claims on the Social Security system. of total wealth was down to 13-16 percent of the economy's total wealth. But by the late 1980s, the richest one percent's' wealth was back up to 21 percent of the economy's total wealth. And scattered pieces of information suggest that the trend toward increasing inequality has continued into the 1990s.Increasing inequality is not due to a surge in entrepreneurial activity: economic growth was unusually low in the 1980s (in substantial part because of the drain on investment resulting from the Reagan deficits). The fortunes made were, for the most part, not to any unusual extent the by-product of especially rapid economic growth.Rising inequality is cause for alarm for two reasons: First, in a time of high inequality politics becomes nasty and democracy becomes less secure and stable. Second, an unequal economy--an economy in which the chances of striking it rich are larger and the chances of failing to maintain middle-class incomes are larger--fails to provide adequate social insurance. Risk-averse people would, if given a choice when young, overwhelmingly prefer to live in an equally rich overall but more equally distributed society.