Monday, 17 June 2013

99% versus 1%? Or 50% and 40% versus 10%?

Does the phrase ‘the 99% versus the 1%’ make any sense? Firstly, it assumes that there is a clear dividing line of income, or perhaps ownership of wealth, between the bottom 99% and the top 1% in a particular society. Secondly, it assumes there is a difference of political outlook between those who are in the 99% and those who are in the 1%. Thirdly, users of the slogan mostly ignore the fact that there is a clear hierarchy of income and wealth among countries in the world, separate from whatever may be the distribution within a particular country.

Here I will present some information on the first of these issues. The second can be dismissed simply by noting that there is no necessary relationship between a person’s political outlook and their position in a country’s income and wealth tables. A more relevant fact is that masses of people in richer countries can be pro-imperialist, to the point of signing up for a war, even if they are not in the higher echelons of society. The third point has been examined in a number of other articles on this blog.
Statistics for rich countries commonly show that the very richest people have large multiples of everyone else’s income or wealth, so that it does indeed seem as if those at the top, the 1%, are a well-defined separate group. However, a closer look at the figures reveals a different picture.
The examples I will give are focused on the ownership of financial assets in the US and the UK. Not only the ‘rich’, but also millions of others own these assets, perhaps directly, but more commonly via savings plans, endowment policies and pension schemes.
US Census Bureau data for 2007 show the following:
- For US families in the 80-90th percentile of the income distribution, the median holding of equities was $62,000, and for families in the top 10% of the income distribution, the median holding was $219,000.
- By comparison, the median value of equity holdings for families in the 40-60th percentile was less than $18,000; it was less than $9,000 for the 20-40th percentile.
The families counted were only those owning equities, however half of US households do, directly or indirectly, so the top 20% of these families will account for some 30 million and the top 10% are 15 million people in the US, based on a population of 300 million. These figures exclude other assets, such as bonds, property and pensions, which would substantially raise the sums, especially for the higher income groups.
A variety of UK data sources show the following facts:
- In 2005 there were some nine million people in the UK owning equities either directly or via mutual funds, some 15% of the UK population.
- At the end of 2010, UK individuals directly owned 11.5% of the value of UK equities, of £204.5bn worth, excluding any holdings via investment funds.
- Estimates of the net financial wealth of UK households in 2008-10, including cash savings, bond and equity holdings minus financial liabilities (excluding mortgages), showed a mean figure of £44,200.
- The latter distribution was skewed dramatically, and the median net household wealth was only £6,600, but it is instructive to note the details.
- Nearly a quarter of all households had zero or negative net financial wealth, 55% of households had from zero to £50,000 net financial wealth, 9% had from £50,00 to £100,000 and nearly 12% of households had more than £100,000.
These figures, as in the US case, also ignore the large exposure to equities and bonds that individuals have via pension funds, which in the UK case make up 39% of total household wealth compared to just 11% for financial wealth. Another 39% of household wealth is made up from property holdings, with 68% of households being owner-occupiers.
In conclusion, those who want to use a slogan like the ‘99% versus the 1%’ might consider revising it to ‘the 30% broke and the 50-60% doing all right versus the 10-20% rich’. Admittedly, it is not as catchy, but having to mouth it less often might allow some time to examine the realities of the imperialist world economy today.
Tony Norfield, 17 June 2013

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