The 400 richest Americans have $2 trillion at their disposal, beating last year’s total of $1.7 trillion and outstripping the total income of some nations, reports Robert Frank for CNBC.
The richest Americans’ net worth
Forbes has released its annual 400 Club list of the richest Americans, who now have an average net worth of $5 billion. Their combined net worth is more than the poorest 150 million Americans, more than the GDP of Italy, Canada, Mexico, and more than the Federal Reserve’s entire U.S. Treasury bond holdings.
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Bill Gates remained on top of the list this year with $72 billion, while Warren Buffett came in second with about $58 billion.
This record-breaking news is in line with what economists have long been saying about the U.S. recovery: corporations and investors are recovering, while everyone else is languishing.
“Top 1 percent incomes grew by 31.4 percent while bottom 99 percent incomes grew only by 0.4 percent from 2009 to 2012,” writes UC Berkeley Professor Emmanuel Saez. “Top 1 percent incomes are close to full recovery while bottom 99 percent incomes have hardly started to recover.”
Investment class problems
Arguments about fairness aside, this level of inequality creates problems even for the investment class that is currently benefiting from it. In the long run, domestic demand can’t be maintained with wages that are steady or falling relative to inflation. In the past, easy credit has allowed rising consumption in the face of stagnant real wages, but that approach has largely played itself out, as many Americans are looking to deleverage (and as indebtedness has become more stigmatized in popular culture).
Buffett has famously asked to be taxed more to deal with this problem (the so-called Buffett rule that would have taxed high-income people 30 percent of income without exception). He may be particularly generous (he gives about $1 billion a year to various charities), but calling him anti-rich would be ridiculous.
Of course it’s good to celebrate individual achievement, and most of the people in the 400 Club are incredibly accomplished, but it’s also worth remembering that as the ultra-rich break records with their wealth, most of the country is waiting for the recovery to begin.