In June, über-investor Warren Buffet and his poker pal Bill Gates launched the Giving Pledge campaign to challenge their fellow billionaires to give away half their wealth to charitable causes.
Forbes magazine estimates that the potential donation, if the 400 richest people in the U.S. were to join the pledge, would be $600 billion. That’s more than three times the entire GDP of B.C. From 400 people!
That got me thinking about billionaires and how much money they have. It’s a lot, and their share of total wealth is growing – at the expense of everyone else. In 1980, the richest 1% in the U.S. pocketed 9% of total U.S national income. By 2007 their share had more than doubled, to 23% of total income. Parallel to that gap opening up, the difference between CEO compensation and the average compensation of workers also opened. In the 1970s in the U.S. it was 40 times, now it’s 350 times larger.
What about Canada?
Thane Stenner wrote recently in his BIV column (“World Wealth Report highlights trends among the world’s affluent” – issue 1085; August 10-16) that the number of high-net-worth individuals in Canada (people with $1 million in investible assets) grew to 251,000 in 2009 from 213,000 in 2008. So while unemployment was rising and the minimum wage in B.C. was locked down at $8 per hour, the number of very rich people in Canada jumped by 18% in one year. Looking back at the 25 years between 1980 and 2005, the percentage of the population making more than $100,000 a year jumped to 6.5% from 3.4%.
Now this would be a wonderful thing if all boats were rising on this tide. But most people are in a stagnant economic backwater. In 1980, a person in Canada with a full-time job earned a median pre-tax salary of $41,348. In 2005, after adjusting for inflation, that same person was making $41,401. In those 25 years, the average salaried worker had gained $53 a year. Flat-lined.
In the last few years a new dimension has been added to this unsettling trend. A lot of people at the very top, particularly those in the financial services industry in the U.S., aren’t earning their money. They’re stealing it. The latest evidence comes in a documentary film screened at the Vancouver International Film Festival. Charles Ferguson’s Inside Job makes an indisputable case that the people who created the U.S.-turned-international financial crisis through fraudulent claims about credit ratings, who bet against their own bogus investment products even while they were selling them to clients, who took home hundreds of millions of dollars in compensation, are still in charge of U.S. economic policy.
The “banksters” are still blocking regulatory reforms, and they’re still protecting each other from any investigation that would bring to justice the perpetrators of the biggest financial heist in history.
Compared with the savings and loans debacle of the 1980s, when felony convictions resulted, not a single Wall Street executive has been prosecuted for a scandal that cost the public eight times as much in bailout money alone.
As director Ferguson puts it: “This was a bank robbery, but it wasn’t committed by someone walking into a bank with a gun. It was a bank robbery committed by the guy who owns the bank. And the guy who owns the bank took some of the money before he robbed the bank and paid off the police so that when he robbed it, they didn’t bother him. They made tens of billions of dollars.”
If the growing ranks of non-billionaires are expected to live with their languishing lot, the least they can expect is legal consequences for those who robbed them of their life savings and pensions. Until that corruption is weeded out of the system, economic recovery and basic public services will continue to be hijacked by the looting of the public treasury that’s still going on south of the border.