Watch Opportunity Skyrocket As Wealth Concentrates With The 0.00001%
NEW YORK, NEW YORK - DECEMBER 04: Jeff Bezos, founder and executive chairman of Amazon and owner of ... More the Washington Post, takes the stage during the New York Times annual DealBook summit at Jazz at Lincoln Center on December 04, 2024 in New York City. The NYT summit with Ross Sorkin returns with interviews on the main stage including Sam Altman, co-founder and C.E.O. of OpenAI, Jeff Bezos, founder and executive chairman of Amazon and owner of the Washington Post, former U.S. President Bill Clinton and Prince Harry, The Duke of Sussex, among others. The discussions will touch on topics such as business, politics and culture. (Photo by Michael M. Santiago/Getty Images)
'It took four decades for the top 0.00001% of Americans' share of total U.S. household wealth to grow from 0.1% in 1982 – when 11 households made up that rarefied group – to 1.2% in 2023.' The previous statistics come from the Wall Street Journal's Juliet Chung, and are based on an analysis by Cal-Berkeley economist Gabriel Zucman. Zucman is plainly aghast at the growing wealth gap, and he's also plainly wrong in his disgust.
The simple, undeniable truth that evades economists is that as wealth at the top soars, so grows opportunity for those not at the top. The greater the gap, the much greater the opportunity.
This statement of the obvious confuses economists because they studied for years to master a mode of thought that worships at the altar of consumption. Economists believe consumption powers economic growth, which reveals the problem…with economists. They don't grasp that consumption is an effect of economic growth. As in consumption is what happens after the growth. Production always and everywhere precedes consumption, which explains the endless bullishness of the stats that give Zucman, Thomas Piketty, and countless other PhDs the vapors.
Still, it's useful to address what gives Zucman et al discomfort on their terms to see precisely why their thinking is so backwards. Let's start with consumption. A major reason economists prefer tax cuts directed at low and middle earners has to do with what's undeniably true: low and middle earners will be much more likely to spend (think consume) what governments don't take.
Conversely, economists struggle with reductions in tax rates for the rich for the exact reasons they cheer them for the poor and middle classes: the rich, by virtue of already being rich, won't spend what governments don't take. And since economists once again view consumption as the instigator of growth, they fear so much wealth being 'controlled' by individuals who couldn't possibly spend even a fraction of what they have. Except that the joke is on economists. No act of saving ever subtracts from demand, rather it just shifts it into the hands of others. The previous truth is crucial.
To see why, never forget that there are quite simply no jobs, no companies and no entrepreneurs without unspent wealth. Stating the obvious, someone must not spend so that businesses can expand and 'impossible' ventures envisioned by the entrepreneurial can be given life. Similarly, the explosion of work opportunities that correlates with unspent wealth being matched with businesses and new vision similarly can't materialize without unspent wealth.
In other words, the concentration of wealth in the hands of the few that scares economists precisely because the wealth won't be consumed is the surest sign that enormous opportunity and progress is in the process of being created. For technological, transportation and health advances to morph from idea into reality, existing wealth must be consumed less so that new ideas can attain capital.
The simple, beautiful truth is that the richest of the rich only 'control' their wealth as Zucman et al imagine so long as they spend it. If they don't, and they don't because they can't reasonably spend tens to hundreds of billions on themselves, their only real option is to place the money in banks, brokerage accounts, private equity and venture capital funds where financial intermediaries can direct what's copious to its highest perceived use.
Put another way, if you want wealth created to reach as many people as possible to their certain economic and living standard betterment, cheer economic policies that reward the most creative and that relieve the creative of the fruits of their creativity the least. Once again, the greater the gap in wealth the greater the opportunity for those without it.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CBS News
24 minutes ago
- CBS News
Blue state governors to testify on "sanctuary policies" amid L.A. protests over immigration raids
Washington — Three Democratic governors are defending their responses to the migrant crisis and dispute claims of failing to cooperate with federal authorities, according to prepared remarks that will be delivered Thursday before a House oversight panel. New York Gov. Kathy Hochul, Illinois Gov. J.B. Pritzker and Minnesota Gov. Tim Walz are among the witnesses scheduled to testify before the House Oversight and Government Reform Committee on so-called "sanctuary policies". "Let me be clear: Sanctuary policies don't protect Americans. They protect criminal illegal aliens," Oversight Chair James Comer, a Kentucky Republican will say in his opening statement. The governors' appearances come as President Trump and California Governor Gavin Newsom remain embroiled in a legal and political standoff over the deployment of the National Guard troops and Marines to quell immigration protests in Los Angeles. Demonstrations have spread to other U.S. cities, including New York and Chicago following a series of deportation raids. "Minnesota is not a sanctuary state," Walz will tell lawmakers. "It is ridiculous to suggest that Minnesota — a state that is over 1,500 miles away from the Southern border and a thousand miles from lawmakers in Washington, D.C. who decide and implement border policy is somehow responsible for a failure of immigration enforcement." The former vice presidential candidate has drawn intense scrutiny not only over immigration policy but also for his handling of social justice protests that broke out in Minneapolis following the death of George Floyd in 2020. Trump administration officials have cited Walz' actions to justify the president's decision to federalize troops in California. While Walz does not appear to directly address the controversy in his testimony, he says he is "disappointed" in the federal government's overall approach. "As governor of Minnesota, it is incumbent on me to use the state's resources to help Minnesota families—not turn those resources over to the administration so they can stage another photo-op in tactical gear or accidentally deport more children without observing due process," Walz is set to say. Ahead of the hearing, the GOP-led panel released a video compilation of various news clips accusing the governors of "shielding" undocumented immigrants and "causing chaos" in their states. A memo from Hochul's office suggested the hearing could be "derailed by wild accusations" and "twisted characterizations" but noted the governor's position is "clear" when it comes to supporting strong borders and comprehensive immigration reform. "New York state cooperates with U.S. Immigration and Customs Enforcement (ICE) in criminal cases," Hochul says. "And our values as New Yorkers demand that we treat those who arrive here in search of a better life with dignity and reject policies that tear law-abiding families apart." Hochul also addresses the influx of more than 220,000 migrants to New York City since early 2022, many of whom were bussed from border states, calling it "an unprecedented humanitarian crisis." "We have responded to this crisis with both compassion and pragmatism," Hochul states."And as a result, we largely prevented what could have become an additional crisis — one of street homelessness and tent cities." Pritzker says Illinois also stepped up to the challenge, and blamed the lack of federal intervention and cooperation from border states for exacerbating the problem. "As governor, my responsibility is to ensure that all Illinoisans feel safe in their homes, their businesses, and their communities," Pritzker is prepared to say. "That is why my administration continued to make significant investments in public safety, even as our resources were strained because of the lack of federal support during the crisis — expanding our state police force and investing in efforts to reduce gun violence." Thursday's session follows a March hearing on sanctuary cities with four Democratic mayors: Eric Adams, of New York, Mike Johnston of Denver, Brandon Johnson of Chicago and Michelle Wu of Boston. Comer launched an investigation in January into "sanctuary jurisdictions", including states, counties or cities, to examine their impact on public safety and federal immigration enforcement. President Trump has vowed to crack down on localities that don't back his immigration agenda. Earlier this month, the Department of Homeland Security removed its list of sanctuary jurisdictions after several cities challenged the findings.
The Hill
an hour ago
- The Hill
Republicans lay groundwork for ‘total tax cliff' at end of Trump's term
Congressional Republicans are laying the groundwork for a tax cliff at the end of President Trump's term in office. While the conference is pushing to make the 2017 Trump tax cuts permanent, additional measures geared toward working-class Americans are being slated for expiration at the end of 2028. 'It means that's going to be an issue in the next presidential race,' House Freedom Caucus Chair Andy Harris (R-Md.) said Tuesday. The major expiring tax breaks in the House-passed version of Republicans' domestic agenda bill are boosts in the standard deduction, the deduction for seniors, and the child tax credit, along with the cancellation of taxes on tips, overtime pay, and car loan interest. Budget hawks are saying this sets up a 'tax cliff' in the legislation similar to the one Republicans are now trying to surmount, since most of the 2017 Trump tax cuts expire at the end of this year. 'There's a total tax cliff in there. There's about $1.5 trillion worth of taxes that expire in four years, five years, which means what? In five years, they'll just keep them going. This is why we end up with the same problem,' Rep. Chip Roy (R-Texas) said last week. 'It is 100 percent a gimmick to have tax cuts that you're putting in place for four or five years,' he added. The legislation is likely to undergo substantial changes in the Senate, including a change in the accounting baseline that will allow trillions of dollars worth of deficit additions coming from the extension of previous tax cuts to be ignored. But senators are sounding open to maintaining the split between making the 2017 Tax Cuts and Jobs Act (TCJA) permanent and allowing the additional cuts for workers, families, retirees and consumers to expire. 'The general feeling of Senate Finance is the TCJA — we need to make that permanent. We need to make the business provisions — the expensing, the R&D provisions — we need to make those permanent. The other things, I think we should discuss it,' Sen. Ron Johnson (R-Wis.), a member of the Senate Finance Committee, said last week. Sen. John Hoeven (R-N.D.) stressed the objective of overall permanence while saying the additional cuts could be subject to change. 'Our intent is to make the tax cuts permanent. Now, something like the child tax credit, with a huge transfer payment aspect to it, I'd have to say that's something I'd have to check on. Other tax cuts and reductions, depending on score and how the votes come down, that could change,' he said last week. The expiring cuts are mostly ones that were proposed by President Trump while he was on the campaign trail. They appealed to various constituencies and came fast and furious in the run-up to the election. Seven different targeted tax proposals were floated in September and October, according to a tally by news agency Reuters. Trump proposed making auto loan interest fully deductible at a speech in October in Detroit, the capital of the U.S. auto industry. He pitched getting rid of taxes on tips in June in Las Vegas, Nev., a battleground state with an enormous hospitality sector. He proposed a tax credit for family caregivers at a rally at Madison Square Garden in New York, a state where more than 4 million people take care of loved ones. Many in the policy establishment — both left-leaning and right-leaning — view Trump's additional cuts as ancillary, if not altogether undesirable. 'I would prefer those things would be completely off the list,' Daniel Bunn, president of the Tax Foundation, a conservative think tank in Washington, told The Hill in November. 'It's not good policy. It does not move in the same direction that the 2017 reforms work.' William Gale, co-director of the more liberal Urban-Brookings Tax Policy Center, wrote in a commentary last year that canceling taxes on tips was a bad idea. 'The obvious problem is that the proposals are inconsistent with sound tax policy. The less obvious problem is that exempting tips would not even help the vast majority of low-income workers,' he wrote. While senators sound open to keeping the division between permanent and temporary tax cuts, they're also wary about creating another tax cliff that is likely to factor into political debates in the future. 'They're doing that for only four years, and all of a sudden that stops? I'm not real high on tax policy that expires,' Johnson said of the no-tax-on-tips provision. 'If it's good enough to include, let's make it permanent. Let's have that discussion.' The Senate has a lot more room to work with than the House since its budget baseline for the bill could allow about $5.5 trillion in expiring tax cuts to be left out of the accounting. However, conservatives in both chambers have expressed concerns about the potential deficit impact of the GOP bill, which has rattled financial markets and spurred a sell-off in the bond market. The nonpartisan Congressional Budget Office (CBO) estimated last week that the House's version of the plan would add $2.4 trillion to the nation's deficits over roughly the next decade. In a follow-up analysis requested by Democrats, Congress' official budget scorer estimated additional interest costs resulting from the plan would amount to $551 billion over a decade — a change that would 'increase the cumulative effect on the deficit to $3.0 trillion.' While top Republicans have sought to discredit the CBO's scoring of the measure, there has been distress in both chambers, as well as the White House, over the overall cost and the fact that it is projected to grow the economy by just 0.03 percent. The Joint Committee on Taxation (JCT) estimated that the bill would grow the economy from 1.83 percent to 1.86 percent over the long run, representing little change from the Federal Reserve's latest prediction of 1.8 percent made prior to the passage of the legislation in the House. 'The Democrat inspired and 'controlled' Congressional Budget Office (CBO) purposefully gave us an extremely low level of growth, 1.8 percent over 10 years — how ridiculous and unpatriotic is that!' Trump wrote on social media earlier this month. One of JCT's models shows the legislation reducing U.S. capital stock by 0.9 percent over the budget window, leading to an overall decrease in economic output. 'The first and second half effects result in a decrease of 0.1 percent on average over the entire budget window,' JCT found. Democrats have seized upon the expiring cuts that Trump proposed as evidence that the bill is skewed toward the wealthy — though lower income tax rates for lower earners will be made permanent as part of the bill. 'Why is this bill designed to take away some of the benefits that you claim people are going to have?' Rep. Gwen Moore (D-Wis.) asked Treasury Secretary Scott Bessent during a hearing Wednesday. 'The senior tax credit expires … No taxes on tips expires.' Despite locking in lower tax rates for lower earners, forecasts project the House-passed tax bill will benefit higher earners more and will redistribute wealth from the bottom to the top of the income spectrum. Half of the bill's passthrough deduction alone, which was worth more than $200 billion in 2022, went to the top 1 percent of taxpayers by adjusted gross income, according to the JCT.
USA Today
an hour ago
- USA Today
Rents remain far above pre-COVID levels. Use this tool to check prices in your area
Rents remain far above pre-COVID levels. Use this tool to check prices in your area Show Caption Hide Caption Father's Day: Projects you can do with your kids It's never too early to share home skills with your little ones. These simple projects make it fun for kids to learn. After seven years of work and more than $18 million invested, Harbor Village, a new affordable housing development in Carlisle, Pennsylvania, officially opened its doors in January. The 40-unit rental development came together thanks to Safe Harbour, a housing nonprofit based in Carlisle. By the time Safe Harbour started screening prospective tenants, there were over 400 applications, said Scott Shewell, the group's long-time president and CEO. 'And I still get calls every day,' he told USA TODAY. The median apartment rent in Carlisle was $1,259 in May. It was one of the fastest-growing areas for rent prices that month, up 6% from a year ago, according to a USA TODAY analysis of Apartment List data. Shewell wasn't surprised. The area, he said, has seen blockbuster growth over the past several years and even well-meaning local governments committed to affordable housing haven't been able to keep up with the demand. Population in Carlisle borough has gone up nearly 12% since 2020, according to the U.S. Census Bureau. In May, Manhattan, Kansas, led other metros as the fastest-growing market in rental prices. The metro saw a 14% increase in rent prices from the same month last year. It was followed by Abilene, Texas; Grand Forks, North Dakota-Minnesota and Shreveport-Bossier City, Louisiana. Recent data shows that the rental prices in most metro areas have leveled off, but for millions of renters, the typical rent still remains dramatically higher than it was before the COVID-19 pandemic began. The USA TODAY analysis of Apartment List data for 202 metro areas found that average monthly rent between January and May was significantly higher in 94% of the metros, compared with the same period in 2019. Excluding the handful that stayed about the same as pre-pandemic levels, the data showed that prices were up by an average of 31%. The pandemic supercharged the rental market, breaking old patterns of steady growth as the population shuffled, cities closed, and people started working from home. After a short drop in rental prices, prices rebounded aggressively, hitting record highs before flattening in the latter half of 2022. The impact has been felt across the board, from Manhattan in New York City to Manhattan in Kansas. The Apartment List data shows that the new level remained steady in May 2025, which, although a relief, does not do away with the rent burden the already high prices have put on families. According to census data, about 25% of renters in America are so rent-burdened that they spent more than half of their income on rent in 2023. That figure was 22% in 2019. A three-percentage point difference means millions more Americans are spending a substantial chunk of their paycheck in rent. When these high prices were accompanied by broader inflation in groceries, gas and energy, the strain was felt by families – charting up as a top issue in the 2024 presidential election, in which Americans elected President Donald Trump who centered his campaign on bringing down prices. Housing market experts say that the rental market might have settled on a new baseline, which means prices might not go back down to what they were in 2019. Read more: Work from home is reshaping the housing market 5 years after COVID Rob Warnock, a senior research associate at Apartment List, said a reversal to pre-pandemic prices is unlikely, as we're now at a level for how much housing costs. 'More realistic than rent prices coming down is rent prices stabilizing at a place where incomes can catch up,' Warnock said. For now, two trends in the market have emerged to keep the rental prices at a stable level: slowed rental demand and a recent construction frenzy. 'The past year has been really defined by a lot of new housing construction that was built over the previous three years, coupled with fairly low demand in the rental market,' Warnock said. 'As a result, what we see is that prices are largely flat, if not down.' A race to build There are only a handful of metros where rent prices have decreased over the past year. Notable among them is Bozeman, Montana, where people flocked during the pandemic for lower costs and outdoor spaces while working remotely. '(It) expedited everyone's decision-making to move to a town like Bozeman. There's a lot of fantasy around it,' said Casey Rose, an adviser at Sterling Commercial Real Estate Advisors. Amid the increased demand in the Montana mountain metro, developers started to build apartments. Many of the projects were delivered at the same time, which resulted in very low vacancy rates, Rose said. Compared with last year, rents in Bozeman are down roughly 10%, the second largest decline, according to the Apartment List data. But the actual prices, Rose said, can be masked by incentives like offering two months of free rent, or even a free iPad, TV, or ski pass. A similar pattern has played out in Austin, where rental prices are down 6.4% compared with a year ago. Stacey Auzanne, a property manager and a third-generation Austin resident, watched pandemic digital nomads flood into the city, while builders kept erecting new developments, creating a supply glut that kept rental prices suppressed. Auzanne, who manages dozens of properties, said the landlords she works with are holding rents steady, with one even dropping the price $50 a month. It's worth it to keep good tenants in place, she said – particularly in a market where there's more supply than demand. 'The market just kept accelerating and the bubble burst,' Auzanne said. 'This year, we're really feeling it.' Experts raised concerns that prices could go up because of the changing political landscape that has seen a stringent tariff policy and crackdown on immigrants who form a large part of the construction workforce. While housing inflation has dropped from its peak of over 8% in early 2023, costs have not fallen as quickly as overall inflation. According to consumer price index data released by the Labor Department on Wednesday, rent inflation was at 3.8% in May, the smallest annual increase since January 2022. This slowdown reflects lower rents for new leases finally filtering into rates for existing tenants. While the overall rise in consumer prices was modest in May, housing costs remained the largest contributor to inflation, accounting for 35% of all price increases. More: CPI report reveals inflation crept higher in May as tariff impact was tamer than expected
