Richer, Poorer and Richer
By Dian Vujovich
If you’ve always had a bundle and aren’t feeling quite as bundle-full lately, you’re not alone. The pros say that the rich started getting richer in the 1970s and by 2006 that there was more wealth concentrated at the top than at any other time since the 1920s.
The past two years, however, have changed all that.
We all know what the stock market’s kaboom has done to investment portfolios. Combine that with plummeting real estate values and like most everyone else the rich have in fact become poorer.
Even things like the Mei Moses index, it tracks the price of art, for instance, has dropped 32 percent over the past six months, and, ticket prices had to be dropped on the most expensive New York Yankees tickets in their new stadium to sell them, according to a recent New York Times.com column ( http://tinyurl.com/mlcuyt ).
But along with the lowering of riches for the wealthy typically comes a more equal distribution of wealth.
“We had a period of roughly 50 years, from 1929 to 1979, when the income distribution tended to flatten,” said Neal Soss, the chief economist at Credit Suisse. “Since the early ’80s, incomes have tended to get less equal. And I think we’ve entered a phase now where society will move to a more equal distribution.”
Economists don’t really think a flat income distribution will last long. In fact, they think that wide spread between the haves and have-nots that existed in the late 20th Century will come around again. Getting back to it, though, could take a little time.
I’m hoping for that spread to not only remain flat but to tighten because I’d like to see the middle class become richer in the days ahead. Not poorer. And, see the top wage earners take home less in their paychecks. Why? Because in spite of what’s happened in the markets and with real estate prices, the cost of living has continued to rise. And the rising cost of living impacts the middle class far greater than it does those at the income pyramid’s top.
Pretending that the cost of living goes up 5 percent next year (cost of health insurance is estimated to increase by double that), and I’ve a $5 million dollar annual income, it gets cut by 5 percent and I loose this year’s bonus, unless I’ve not done a very good job of managing my wealth, my family and I will probably still get along just fine. On the other hand, if I’m bringing home $75,000 and have a family of four to tend to, taking anything away can make a huge difference in my family’s lifestyle. Bring home $40,000 and the results are dramatically worse. So I’m all for going back to the good ole days of the mid-20th Century when the spread between top wage earners and those of the average worker was around 40 times instead of 400 times differential of today. Now wouldn’t that be something.
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