What does it mean to live in this 'Second Gilded Age'?
Brad DeLong asks whether a society where some 30 million workers are essentially paid, directly or indirectly, by the top 0.1% can be a healthy one.
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First posted on:
The Berkeley Blog, 27 June 2019
I am hearing from a number of people that columns like this one on “Excessive Wealth Disorder” and its ilk by Paul Krugman and our other compadres are bloodless, and ineffective. They do not convey any sense of what is happening.
So let me make it more concrete:
The top 0.01% of American workers – now some 15,000 – this year have incomes, including capital gains, of about 500 times the average. Typical incomes in America today, including capital gains and benefits, are perhaps $300 a working day. The gulf between them and average income is large: average income is about $800 a working day. Thus 1,5000 workers in the top 0.01% of income this year receive an average of $400,000 a day.
How could one go about spending that? Suppose you decided this morning that you wanted to rent the 2,000 square-foot Ritz-Carlton suite at the Ritz-Carlton San Francisco hotel for the week of next Memorial Day, and did so. That would set you back $6,000 for seven nights. You would still have to spend $394,000 more today to avoid getting richer: to avoid getting richer you would have to spend $16,667 an hour, awake and asleep, day in and day out.
One way to think about the spending of these 1,5000 superrich is that they are, collectively, through their spending, paying for the employment of and directly employing 7,500,000 workers who are dedicated to making them happier and advancing their purposes, whatever those purposes may be. And a large proportion of the 1,5000 are bosses. It is true that bosses are partially constrained by their obligation to advance the purposes of the organisations they work for. But they are free to shape and interpret those purposes as they wish to a substantial degree. Guess that the average of the superrich is effectively the unconstrained boss of only three more workers: that makes 30,000,000 of us who are paid directly and indirectly and who are thus are focused on advancing the top 0.01%’s particular and idiosyncratic purposes.
And then there are the rest of the top 0.1% - not 15,000 but 135,000, each on average one-ninth as well-off – who must spend and reinvest not $400,000 but $45,000 a day, but who are collectively of the same economic weight as the top 0.01%, and thus have another 30,000,000 of us working for them, paid to directly and indirectly, and thus focused on advancing the top 0.1%’s particular and idiosyncratic purposes as well.
Is that likely to be a healthy society?