How Much in ‘Inequality Tax’ Are You Paying?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

What nation ranks as the world’s richest? A simple question to answer, right. Well, not so much, suggests the just-released tenth annual Global Wealth Report from the banking giant Credit Suisse. Everything turns out to depend on how we define “richest.”

If we mean by “richest” the nation with the most total wealth, we have a clear worldwide number one: the United States. The 245 million adults who call the United States home held, as of this past June, a combined net worth of $106 trillion. No other nation comes close to that total. China ranks a distant second, with a mere $64 trillion, Japan even farther back at $25 trillion.

But if we mean by richest the nation with the most wealth per person, top billing goes to Switzerland, not the United States. The average Swiss adult is sitting on a $565,000 personal nest-egg. Americans average $432,000, a figure only good enough for second place.

So does Switzerland merit the title of the world’s wealthiest nation? Not necessarily. The Swiss may sport the world’s highest average wealth, but that doesn’t automatically mean that their nation has the world’s richest average people.

We’re not playing word games here. We’re talking about the important distinction that statisticians draw between mean and median. To calculate a national wealth mean — a simple average — researchers just divide total wealth by number of people. The problem with this simple average? If some people have fantastically more wealth than other people, the resulting average will give a misleading picture about economic life as average people live it.

Medians can paint a more realistic picture. Statisticians calculate the median wealth of a nation by identifying the amount of wealth that represents the midpoint in the nation’s wealth distribution, that point at which half the nation’s population has more wealth and half less. Medians, in other words, can give us a nation’s most typical net worth, the wealth that a nation’s most ordinary people hold.

By this median measure, Switzerland holds up as a strikingly wealthy nation. The United States does not. Typical Swiss adults turn out to hold $228,000 in net worth, the most in the world. Typical Americans hold personal fortunes worth just $66,000.

Typical Canadians, with $107,000 per adult, have more wealth than that American total. So do typical Taiwanese ($70,000), typical Brits ($97,000), and typical Australians ($181,000)

Overall, typical adults in 16 other developed nationals have more wealth than typical adults in the United States. Typical Japanese adults, for instance, hold $110,000 in personal wealth, a net worth considerably higher than the $66,000 Americans can claim.

What explains how ordinary Americans can have so little wealth when they live in a nation that has so much? In a word: inequality. Other nations have much more equal distributions of income and wealth than the United States.

Japan in particular stands out here. The new Credit Suisse 2019 Global Wealth Report notes that Japan “has a more equal wealth distribution than any other major country.” Japan’s richest 10 percent hold less than half their nation’s wealth, just 48 percent. In the United States, the top 10 percent hold nearly 76 percent, over three-quarters of national wealth.

And what about the top 1 percent? America’s 1 percenters hold a national wealth share nearly double the wealth share of top 1 percenters in Japan.

How would typical Americans fare if we Americans engineered an about-face on our growing inequality and achieved a distribution of wealth as equal as Japan’s? If we succeeded at that egalitarian endeavor, the net worth of America’s most typical adults would triple, from $66,000 to $199,000.

In effect, the difference between those two totals amounts to an “inequality tax.” By letting our rich grab an oversized share of the wealth all of us help create, we are taxing ourselves into economic insecurity. Other nations don’t tolerate greed grabs. Why should we?

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Reposted from Inequality.org

Sam Pizzigati edits Too Much, the online weekly on excess and inequality. He is an associate fellow at the Institute for Policy Studies in Washington, D.C. Last year, he played an active role on the team that generated The Nation magazine special issue on extreme inequality. That issue recently won the 2009 Hillman Prize for magazine journalism. Pizzigati’s latest book, Greed and Good: Understanding and Overcoming the Inequality that Limits Our Lives (Apex Press, 2004), won an “outstanding title” of the year ranking from the American Library Association’s Choice book review journal.

Posted In: Allied Approaches

Union Matters

Steel for Wind Power

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities. 

Siemens Gamesa last month laid off 130 workers at its turbine blade manufacturing plant in Iowa, just months after GE Renewable Energy decided to close an Arkansas factory and eliminate 470 jobs.

The companies reported shrinking demand for their products, even though U.S. consumption of wind energy increases every year.

America’s prosperity depends not only on harnessing this crucial energy source but also ensuring that highly skilled U.S. workers build the components with the cleanest technology available.

Right now, the nation relies on imported steel and turbine components from foreign manufacturers like China while America’s own steel industry—well equipped for this production—struggles because of dumping and other unfair trade practices.

Steel makes up the bulk of turbine hubs and the wind towers themselves. It’s also used to make the cranes and platforms necessary for installing the towers.

Yet the potential boon to America’s steel industry is just one reason to ramp up domestic production of wind energy infrastructure.

American steel production ranks among the cleanest in the world, while China has the highest carbon emissions of any steelmaking nation and flouts environmental regulations.

The nation’s highly-skilled steelmaking workforce must play an essential role in the deeply-needed revitalization and modernization of the nation’s failing infrastructure. Producing the components for harnessing wind energy domestically and cleanly is an important step that will put Americans to work and position the United States to be world leaders in this growing industry.

 

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