There’s Plenty Of Wealth To Go Around — It Just Doesn’t
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We’ve “grown the pie” massively since the 1980s, but it hasn’t resulted in ordinary Americans getting a bigger slice.
Get ready to hear a lot about baking this campaign season.
When it comes to how wealth is distributed in this country, “pie” is a favorite pundit metaphor. Some politicians want to “re-divide the pie,” so everyone’s slice is more equal in size.
But that’s “socialism,” some pundits scold. Better to trust our billionaires and millionaires to “grow the pie” so big that every American has a generous slice.
New York Times columnist Thomas Friedman indulged a bit of this recently. Michael Bloomberg, Friedman explained, is a grow-the-pie guy. Bernie Sanders, he warned, is a re-divide-the-pie guy.
Bloomberg has a net worth of about $50 billion. How big would he have to grow the pie so that every American household gets a slice as big as his? By my calculations, that would require about a 500,000 percent increase in the size of America’s total wealth — to over $600 quadrillion.
Let’s suspend reality for a minute and pretend it’s possible to grow the pie just 1 percent that large, to a mere $6 quadrillion — 60 times the pie’s current size. Would Bloomberg and his fellow billionaires seek to share the pie’s growth equally with the rest of us, or would they try to grow their own slices even larger?
Color me cynical, but I’ve no doubt that if America managed to grow its pie 60-fold, those billionaires would be turning themselves into trillionaires — we may even see our first quadrillionaire.
You see, we’ve lived through this experiment already.
In 1982, when Ronald Reagan’s massive tax cuts for the wealthy were taking effect, America’s aggregate wealth was around $10 trillion. Since then, it’s increased ten-fold — and we’ve experienced a concentration of wealth surpassing even the Gilded Age of the early 1900s.
America’s richest families — the Kochs, Mars, and Waltons — inflated their wealth by 6,000 percent, while the median American family treaded water. African-American households got clobbered, experiencing a 50 percent decrease in median household wealth.
And after all that growth, 40 percent of American adults don’t have the cash to handle a $400 emergency expense.
Funny thing, nobody from the grow-the-pie crowd ever explains why growing the pie in the future would help average Americans — not after enormous growth over the past several decades did bubkus for them.
The bottom line: Growing the pie, by itself, won’t cut it.
Does re-dividing the pie hold potential, or is Bernie Sanders just talking pie in the sky (pun intended)?
Actually, it does. Quite a bit. Dividing today’s $100 trillion American pie evenly among its 125 million households would give each household an $800,000 slice. Grow that pie by a realistically achievable 25 percent over the next decade, and we have a nation of millionaires.
Many would contend that giving each household an equal slice would be unfair or counterproductive. And that’s a fine debate to have. But to suggest the pie isn’t already big enough to provide for all Americans is a lie.
There’s plenty to go around. The problem is that a relative handful of families have slices so gigantic that they could never ever finish eating them, while millions of Americans are living on crumbs.