the Goofy Thing about Wealth Inequality

You saw it: 85 individuals own as much wealth as the combined fortunes of the bottom 50% of the world's population.

The goofy thing is that it is both not as bad, and worse, than that.

A lot of that wealth is in the form of stock in publicly traded companies, often founded by these individuals.  Bill Gates owns a lot of Microsoft Stock, probably worth billions, if you multiply his share holdings by the stock price on the current "ticker tape." The problem is that if Bill Gates decided to turn that stock into cash, the price would plummet and his networth would too. He might have to go sit at a lesser table at Davos. The goofy thing is that these wealth figures are exaggerated; all of them are largely based on what other members of the financial elite appraise their worth. When someone buys a share of Apple at $500, they aren't really buying $500 worth of actual Apple assets; they aren't even buying a good shot at earning $500 worth of future Apple profits in the future. They are just willing to spend more than another person who was willing to buy Apple at $499.

So, it's not as bad as it looks.

But it's worse. The reason that these numbers are inflated is because there is an asset bubble, particularly in the stock market. The reason why people, banks and other institutional investors are willing to pay $500 for Apple is because they have more money to invest than they have profitable places to invest it. Too much money chasing too few investment opportunities drives up the price of stocks, and the rising stock market shows this at work.

This is goofy because there are a lot of places to invest. Repairing the infrastructure. Revamping the schools. Putting highspeed wireless internet into every corner of the country. Weatherizing houses and buildings. Building new low-cost houses. Building out urban public transportation systems. Investing in better public services by creating more public sector jobs that will improve quality and quantity of those services. More teachers. More police. You could invest in our young adults by paying off their student loans. Every one of these investments would increase the total wealth of the country, improve living standards, and immediately boost the economy.

But they require government spending. And the government is "broke".  But the fact that the government is broke doesn't mean that the country is broke. It just means that the money is in the wrong hands.


Not enough money in Washington.  Too much money on Wall Street.

This is what the dominance of Financial Capital looks like, and our current situation is shows how it distorts our economy and diminishes the lives of all of us.


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