Forbes recently released its 400 Richest People In America In 2012 & in usual fashion, fawns over these uber-rich folks with the irksomely misleading Horatio Alger narrative. I know there are many people who still believe that if one works hard enough he/she can join (or come close to) the ranks of millionaires/billionaires and live la vida loca just like in the movies and videos. Dream on.
In terms up upward mobility, the US has the lowest rates amongst wealthy nations. If you were born into poverty, your chances of escaping are slim. One highly regarded study puts it this way:
The main driver of the difference in the pattern of male inter-generational mobility in the U.S. from that of each of the other countries in our study is the low mobility out of the lowest quintile group in the United States. Indeed, it is very noticeable that while for all of the other countries persistence is particularly high in the upper tails of the distribution, in the U.S. this is reversed – with a particularly high likelihood that sons of the poorest fathers in the U.S. will remain in the lowest earnings quintile. We view this as a challenge to the popular notion of an “American exceptionalism” in economic mobility. Indeed, the combination of a high probability of American sons of the poorest fifth of fathers remaining in the lowest quintile group, the lower probability of “rags-to-riches” (poorest to richest) and slightly lower probability of “riches-to-rags” (richest to poorest), places the notion of American exceptionalism in a new light. The U.S., or at least the population of young U.S. men, seems to be distinguished from other countries by having greater low-income persistence, rather than less, having fewer very large positional changes across generations, rather than more, and possibly having a greater persistence of high income, rather than less.
According to a report by United for a Fair Economy, this Forbes list of the country’s richest people tells the story of a nation where being born into wealth or inheriting great sums from a departed spouse are by far the most common paths to financial fortune. This report seeks to show that the highly-touted Forbes list actually misleads about the sources of wealth and opportunity for many of those who appear on it. According to the report’s authors, “Each story calculatedly glamorizes the myth of the ‘self-made man’ while minimizing the many other factors that enable wealth, such as tax policies, other government policies that favor the wealthy, and the importance of being born to the right family, gender and race.”
Folks cannot seem to shake loose their myths, sad to say. I guess these illusions give them the warm fuzzies & to think or know otherwise is too mush of a downer. But what is real must be faced. Did you notice the lack of diversity on the Forbes list? The game is so rigged. According to the UFE report I mentioned, the growing wealth inequality is not due to any inherent brilliance or dynamism of the wealthy, but because of carefully crafted policy and legislative reforms enacted by government at the behest of the these same individuals. The report cites two examples which tells the story of how the rich are able to retain and pass along their enormous assets:
(1)Tax rates on capital gains – These have been slashed, which especially benefits members of the Forbes list. The richest 0.1% receive half of all net increases in capital gains.
(2) Drastic cuts to the federal estate tax – The Bush tax cuts & Obama’s compromise allow the rich to pass on more of their massive fortunes to their heirs, contributing to the growth of inequality and entrenching a class of super-wealthy m*f*ers.
Now stop dreaming.
There is a big-ass chasm between the haves and have-nots because the system is rigged that way. Of course, every now and then you will read about a rags to riches story to give your weak-ass mind the fuzzies, but these lucky few are the exceptions. What must be examined is why things are the way they are (the rules, loopholes, tax shelters, etc) and finding ways to make our society more fair & humane. Let’s go to work!