The glorification of greed: America’s greatest export

Two recent items on the major problem facing the world today, the explosion of inequality and the destabilization of society across the globe. The first is a graph showing that inequality has hit the “global upper middle class” the worst in relative terms (e.g., the American middle class and similars).

The great economic reshuffle – Reuters

October 28, 2013 @ 3:43 pm

By Shane Ferro

Branko Milanovic ^[1], the lead economist at the World Bank’s research department, has a new paper out on global income inequality (the paper was first spotted by John McDermot ^[2]t). Among other things, Milanovic compares the change in global income from 1988 to 2008:

^[3]

He writes:

Global income distribution has thus changed in a remarkable way. It was probably the profoundest global reshuffle of people’s economic positions since the Industrial revolution. Broadly speaking, the bottom third, with the exception of the very poorest, became significantly better-off, and many of people there escaped absolute poverty. The middle third or more became much richer, seeing their real incomes rise by approximately 3% per capita annually.

And yet, those in the 75th to 90th percentile of the income distribution — including “many from former Communist countries and Latin America, as well as those citizens of rich countries whose incomes stagnated” — haven’t seen the sort of gains that the bottom half and the top 1% have. […]

The second article I’m linking to emphasizes the growth of billionaires outside the US and the West. Some might say that America’s greatest export has been its culture, not the least part of which is our glorification of greedy material acquisition. We have seen the shameless tax avoidance of the very rich across the globe—for example, Gerard Depardieu in France emigrating (at last report) to avoid a 75 percent marginal tax rate on income over about two million dollars. In American the highest growth rates occurred when wew had such marginal tax rates and there was a sense of a viable social contract, and when incomes far beyond anything needed for happiness or a good life caused a mild sense of shame among many (I know, I was there and had rich relatives who paid their taxes without complaint).

Billionaires: Decline of the West, Rise of the Rest – triplecrisis.com

Robin Broad and John Cavanagh

With the help of Forbes magazine, we and colleagues at the Institute for Policy Studies have been tracking the world’s billionaires and rising inequality the world over for several decades. Just as a drop of water gives us a clue into the chemical composition of the sea, these billionaires offer fascinating clues into the changing face of global power and inequality.

After our initial gawking at the extravagance of this year’s list of 1,426, we looked closer. This list reveals the major power shift in the world today:the decline of the West and the rise of the rest. Gone are the days when U.S. billionaires accounted for over 40 percent of the list, with Western Europe and Japan making up most of the rest. Today, the Asia-Pacific region hosts 386 billionaires, 20 more than all of Europe and Russia combined.

In 2013, of the 9 countries that are home to over 30 billionaires each, only three are traditional “developed” countries: the United States, Germany, and the United Kingdom.

Next in line after the United States, with its 442 billionaires today? China, with 122 billionaires (up from zero billionaires in 1995), and third place goes to Russia with 110. China’s billionaires have made money from every possible source. Consider the country’s richest man, Zong Qinghou, who made his $11.6 billion through his ownership of the country’s largest beverage maker. Russia’s lengthy billionaire list is led by men who reaped billions from the country’s vast oil, gas and mineral wealth with devastating consequences to the environment. […]

With this kind of concentration of wealth and power the specter of neo-feudalistic global fascism (rule by greedy corporation) is not such a stretch to imagine. Look at Europe, look at the United States.

Labor arbitrage is a game that can be played indefinitely. Until marginal tax rates on very high incomes can be raised substantially global imbalances and instability will probably increase.