Where did the money go?

The Occupy Wall Street movement, the 99%, argue that "our" money has been taken from us by the richest 1%; that the richest 400 people own the majority of our wealth. However, they have failed to do some rather simple math about what would happen to that money were it distributed.

According to a this article on Huffington Post, the richest 400 people in America have a total of around $1.37trillion; that’s $1,370,000,000,000. Wow! What a lot of money! Or is it? There are roughly 300 million people in the United States; that’s 300,000,000. What would happen if we were to divide that enormous fortune equally amongst all of us?

$1,370,000,000,000 / 300,000,000 = $4,566.67

imagesWait, what? That can’t be right. If we equally divided all of that money equally then we’d each only get a little over four and a half thousand dollars? But the 1% have stolen everything from us, haven’t they? If they don’t have our money then who does? The reality is that those 400 do have the majority of the wealth, but unfortunately even their vast fortune is not a lot of money. Almost half of our country’s value is owned by them but that isn’t the sad part. The real problem here is that our wealth is no longer held by anyone.

What happened to our wealth?
freshkills081201_1_560Take a look in the dumpster behind any restaurant. Think about every kitchen that was torn up and renovated just to add a few thousand dollars of value to a house. Fridge/freezers less than a year old ripped out and thrown into a landfill to make room for bigger, better ones. We buried our assets in landfills on the premise that our improvements were adding value to the houses we lived in. In reality that value never existed, the houses weren’t worth any more and the money spent on them was sitting in a landfill somewhere growing mold. Waste. We turned money into waste.

We’ve consumed and disposed over and over. Entitlement has taught us that we need the best of everything and that we need it right now. Unemployment checks spent on luxuries. Credit cards leveraged to the hilt, not to buy food or essentials, but to ensure that we had the latest LCD TVs, BluRay players, and surround sound speakers. “Old” items thrown away to get the latest and great.

ToyotaTacoma_RightSideI love to buy toys. My bright red Toyota truck, my wonderful cherry red iPad, and my shiny new MacBook Pro. They are fantastic in every way and I love them, but I didn’t get them right away. I first test drove a Tacoma truck in 2003. It took eight years of waiting, and saving, before I could finally get it. There have been many times when I would have loved to have bought all manner of items, but if you don’t have the cash you shouldn’t buy the item. This was one of the first rules I learned when I was young; you spend cash for toys, not credit, not loans, but cold hard cash from a savings account, and only when it won’t impact your budget in other ways.

 

It’s all about choice.
For over a decade I’ve rented an apartment instead of buying a house. I’d love for Meaghan and I to get a place of our own (and some day soon we will, I promise baby!), but only when we can do it responsibly. I was taught to pay my debts and that purchasing something without the ability to pay for it is not only irresponsible but also immoral. We’ve spent years paying off car loans, paying down student debts and putting money away in savings so that when the time is right we can find a modest house that’s within our budget and have a nice down payment. I’m not saying we haven’t made stupid choices in our time. I’ve paid off my fair share of credit card bills that were full of non-performing debt and frivolous purchases. The difference is that I’m willing to fess up to my own mistakes and learn from them. I spent the money, I failed to put it in savings, and now I have less money as a result. No-one broke into my house and took it while I slept. I swiped the card through the machine and punched in my PIN number. That’s where the money went. End of story.

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11 Responses to Where did the money go?

  1. Kevin says:

    I’d also call shenanigans on the 1% ~ top 400 switcheroo but since I haven’t read the article and I don’t know whether it is yours or HuffPo’s, I’ll let it pass.

    Wikipedia says top 1% owns 38% of wealth. Bottom 40% owns 1%.
    http://en.wikipedia.org/wiki/Distribution_of_wealth#Data.2C_charts.2C_and_graphs

    If I were in the redistribution game or believed in Fixed Pie Fallacies, I’d redistribute that. But I’m not and I don’t – and I don’t think that’s the point of the #occupy protests.

    It’s not a “fixed pie” problem. It’s the idea that the 1% have found an exploit in the game of capitalism. The game is rigged to send ever more of the national income to the already rich and powerful.

    I don’t care at all if a very rich man earns a kerjillion times as much as me and I have no desire to redistribute his wealth. It bothers me though that middle and lower class folks’ (contra your other post) income has been declining steadily for about 20 years. It bothers me that the rich and powerful rotate in and out of government to make themselves even more rich and powerful. It bothers me that the tax rate of the richest people is lower than that of the middle class. It bothers me that a small group of people were able to bring us very close to a financial armageddon and suffer no consequences. Far from being rewarded for their contributions to society, they were rewarded for threatening its destruction.

    Bonus stats:
    Collective worth of congress critters increased by 25% (to $2billion) in the last two years.
    Over 50% of congress critters are millionaires (versus 1% in the general population)
    http://thedailywh.at/2011/11/01/rich-get-richer-of-the-day/

  2. I appreciate the feedback. I’m genuinely curious about this stuff and would love to learn more about where I’m wrong. I’ll update my research to determine the net worth of the 1% in addition to the 400 to see how that affects the numbers.

    What I’m seeing and hearing from the occupy movement doesn’t add up for me, and that’s why I’m poking at it. I’ll admit I’m having a hard time discerning their actual message and what solutions they are proposing. I may be off-target.

    “It bothers me that a small group of people were able to bring us very close to a financial armageddon and suffer no consequences. Far from being rewarded for their contributions to society, they were rewarded for threatening its destruction.”
    Completely agreed. I don’t condone what those people did at all. The bailout was wrong, the mortgage swapping games were wrong. Any games with our money played like that should be punished to the fullest extent of the law.

    Rather where I was going with this is to poke at the shirking of personal responsibility for our current situation. Many of the folks protesting right now were very happy a few years ago when their house values and 401k just kept going up. It seems convenient that the protests are linked with the magic credit card no longer working. People flipping houses just a few years ago seemed mighty happy with the system at the time; despite my belief that deep down they knew what they were doing was wrong.

    Furthermore, I see many people who have over-leveraged their situations year on year now complaining that they are out of money and citing the 1% as the reason why. It’s not that the corrupt bankers and politicians who are gaming the system aren’t doing something wrong. Rather that I’m miffed at people pretending they did everything right over the last decade when that’s clearly not the case. While I think we should track down and punish those who broke the law and profited from it, I don’t think we should paint the 1% as a big silver bullet that will solve all of our problems. This also might be me misunderstanding the message from the occupy folks. I’m not getting a clear signal from the coverage.

  3. “It bothers me that the tax rate of the richest people is lower than that of the middle class.” – Agreed. That should be fixed!

    “It’s the idea that the 1% have found an exploit in the game of capitalism. The game is rigged to send ever more of the national income to the already rich and powerful.”
    I agree that this is also wrong. However, what I’d like to determine is whether plugging that gap would really fix our economic problems. What’s not clear to me is how much money that actually takes out of the system. It feels like that number scales poorly across three hundred million people. I don’t have the figures so I’m going on a hunch that despite the growth in their wealth, the actual amount of money removed from the system is a small amount per capita.

  4. Ozwald says:

    When you line it up in terms of individuals personal wealth ( the amount of available cash) as you did then yes it doesn’t look like the top 1% have a huge amount but that’s not they’re griping about.

    When you look at the total annual wealth produced by the USA it comes to around about $15,000,000,000,000 (fifteen trillion). That figure represents the total value of goods, services and whatnot generated by the people of America. Now divide that number by the 300,000,000 population of the USA and you find that works out as about $50,000 per person.

    On average each man, woman and child in the USA generates fifty thousand dollars in wealth per year. And that is an average that includes children and non working spouses etc. You should really triple that if you looked at it in terms of the working population so in reality each worker in the USA generates about 150k dollars of wealth per year. Now ask what the average yearly wage per person in the USA is. 75% of the population get less than 50k per year and 50% less than 30k.

    Now you see where the discrepancy lies. The average worker in the USA receives in reward less than a quarter of the wealth they generate through their labour and thus we come to the very crux of socialism. A touchy subject that’s hard to explain, I find, to people your side of the pond but given you actually hail from (smirk) Doncaster (smirk) one would hope you have at least a basic grasp of left wing economic theory, however insane it is, without the whole COMMUNISM!!!! thing that most americans have drummed into them from birth. Anyhoo that’s the core principle. Those that create the wealth fail to see the majority of the reward for it and the vast majority of what the USA produces ends up either in the hands of or under the control of a tiny minority.

    Not that I care though, you know my views on whose to blame for the whole recession, debt, meltdown thing and anyone who thinks it’s the bankers or the rich needs their face beating with a brick.

    As to the rich paying less tax thing that’s actually quite sensible in theory. We used to play a little game in my stoner days with a couple of mates to pass the time that illustrates it where you take someones penny jar and separate the coins out to represent the total amount of wealth in the nation and try and work out who has the dosh and once you have then where the money goes around the system. Oh how those winter evenings just flew by 😀
    We always found that if you’re running the economy the ‘rich’ getting the cash is exactly where you want the cash to end up. In fact every time we tried some kind of wealth distribution the money immediately vanished overseas. The reason for that is that normal people, when given extra cash, spend it on things. Food, beer, cigs, clothes, shiny toys, cars etc. Things. And since they want the best value for their bucks they go for cheap and cheap means foreign. Whoosh all the money gone. This happens anyway over time, in a mature post industrial society the tendency is for the economy to eventually flatline as the import/export deficit bleeds the cash away. No ones yet to figure out an effective way of stopping it either unless you have a huge surplus in raw materials you can trade. The trick is to try and cut down on the cash outflow to the amount your exports drag back in and try and keep the wealth generated inside the nation.

    But I digress.

    As I said Joe public uses money to get things but the top 1% are markedly different. They use money to make money. They take that money and turn it into even more money and that money they use to make EVEN MORE MONEY so that they can realise their dream of sleeping in a bed made out of money, eating off plates made out of money and living in a house made totally out of money. In making that money, by and large, the money stays in the system. They creates jobs, do research, buy property and even pay a few taxes here and there. It stays inside the country.

    When the govt comes to decide how to extort the cash it needs to run itself it doesn’t ever, despite what the politicians claim on tv, think in terms of fairness or social justice or whatever and the question it always asks is ‘where can I take this money I need that will do the least harm to the economy?’. Faced with the choice then the ‘rich’ will always be the lowest taxed because by and large they use their wealth in a way that profits the nation. They have a track record for making wealth, creating jobs and recycling the cash internally. Meanwhile the lower down the tree you get the more you find that people use their wealth in a way that hurts the economy. You can’t tell them what they can and can’t spend their cash on because that’s COMMUNISM!!!!! but you can, and all post industrial govts do, take the biggest relative chunk from the working and middle classes to maximise the amount of cash being recycled back internally.

    Hope that makes sense.

  5. Brad Williams says:

    When the rich and powerful rotate themselves and their buddies in and out of government, it is something horrendous … and it is NOT capitalism.

  6. Kevin says:

    I like your friend Ozwald even if, as I suspect, he is from somewhere north of Watford! I hesitate to question his economics because he clearly has thought about this more than I have but, if it’s true that it’s better for rich people to have the money because they use it more efficiently (I hope I paraphrased that accurately), how come stimulus bills always hand out cheques to the poorer among us? Or is that just a bribe disguised as a stimulus to keep the pitchforks at bay?

    > it doesn’t ever, despite what the politicians claim on tv, think in terms of fairness or social justice

    That’s what democracy is for – to help fix it when things get out of whack.

  7. Kevin says:

    >it is NOT capitalism

    We agree on that point! If the logo of the OIR is any clue though, I suspect we might disagree on what _is_ capitalism or on how to get closer to it 🙂

  8. Matt says:

    Cain’s 9-9-9 was a big step in the right direction if your goal is to see how transparent you can be about be about enriching the plutorcrats without putting them in any real danger of having their gated communities besieged. Way to push the envelope!

    If he can say that and still be a serious candidate, I would be pleasantly only-a-little surprised to see stimulus checks for the wealthy proposed by one of the other GOP presidential candidates. Those guys are a barrel-o-laughs. I thought everyone knew the drill – it was SOP to have legislation to achieve the same effect, but you’re SUPPOSED to obfuscate it.

    I don’t yet have my head around Ozawalds’ notion that unwashed masses are particularly bad at keeping wealth in the country, or how important that is, but I feel confident that though there may be some value in enabling those most likely to invest in our economy, we’ve gone overboard.

    The most immediate problem is that you have friends with interesting ideas, but you don’t provide opportunities for me to talk with them over suitable beverages.

  9. Kevin says:

    If only there were some kind of beer festival coming up in portland so I could visit…. on Dec 5.

  10. It would be great if the Rt Hon. Sir Ozwald Mosley were able to join us. Sadly he has not yet flown the pond. The drive and flight home from the beer fest would just be miserable.

  11. Kevin says:

    Economist has a post on the “better to tax poor people” idea.

    http://www.economist.com/blogs/democracyinamerica/2011/11/tax-progressivity?fsrc=rss

    tl;dr it’s not

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