In listening to the interview of Sen. Bernie Sanders on the talking heads programs yesterday I noticed something confusing. He continually talks about the “1%” and then conflates that with “billionaires”.
There are fewer than 1,000 billionaires in the United States. Their total combined wealth is around $6 trillion. Their combined annual income is unclear.
There are about 1.5 million individuals in the top 1% of income earners. Their combined annual income is around $120 billion. Their combined wealth is around $49 trillion.
Which is Sen. Sanders concerned about? I’m concerned about the heavy concentration of wealth in so few hands in the United States but I’m even more concerned about the wealth and income of the top 1% than I am of the .001%.
My uninformed take on the .001% is that they are shrewd exploiters of “the system” and will prosper regardless of what that system is. Perhaps they are using the influence their enormous wealth brings but it’s a lot less obvious than the lobbying and manipulation of the top 1% of income earners.
Take Elon Musk as an example of the “billionaire class”. An extremely short summary of where he obtained his wealth might be
Zip2 => X.com (online bank) => PayPal => SpaceX => Starlink => Tesla
Most of his wealth is Tesla stock. I don’t see a great deal of rent-seeking on his part until SpaceX but ever since he founded SpaceX he’s been very skillful at it. Would Tesla actually be where it is today without the federal subsidies for electric vehicles? I doubt it. But here’s the key point: Mr. Musk did not lobby to get those put in place. He’s said that he opposes such subsidies. His benefiting from them as much as he does is an example of my point: he’s riding the waves not creating them.
The situation with the top 1% is somewhat different. In many cases their high incomes depend on lobbying organizations that try to get the Congress to craft the laws in ways that benefit them.
Consider the graph at the top of this post. The incomes of “the billionaires” has gone up twice as face as that of the top 1% but the income of the top 1% have gone up three times as fast as those of the top 25% of income earners.
That’s why I’m as worried about oligarchy as Sen. Sanders is but I’m worried about rule by the 1% at last as much as rule by billionaires. And that 1% includes Sen. Sanders.
The problem is that just one person in that billionaire class, especially the ones at the top, can singlehandedly dominate policy and commit obviously criminal acts with impunity. They can intimidate people into complying with their wishes. They can buy and control their own media and control what goes out on it. No single person outside of that class has that ability.
Tesla got subsidies from multiple sources to make it cheaper for people to buy them. Tesla also sold tax credits which is where most of their profits came in the early years. Note that Musk opposes them now that his company is built out and has gone through the intensive capital investment stage while having little revenue. Of course he doesnt want competitors to have that advantage. I am also sure he is absolutely sincere that as he continues to get money from govt contracts he wont abuse his position as temporary POTUS to make sure he benefits. Clearly only a left leaning person would do that.
Steve
I’m not a Musk fan and I’m not a DOGE fan—I think it has major process if not legality problems.
However, I AM a fan of good government. Why are the Democrats, apparently, taking the position that nothing in the federal government can be cut without doing serious harm to the needy?
I think what’s being revealed is that the amount of WFA is much higher than is typically cited.
The bottom 90% (!!) includes everyone from the upper middle class down to the working poor and people on welfare. How far down that income range do you have to go before the line flattens out (no growth) or even begins to decline? The income level that got zero growth over those 40 years would be interesting to know.
I care less about Musk (an extreme outlier) and more about my two 40 something nephews who can only find part time work and live with their parents. And then there are the millions of homeless, present in every city in our country.
A huge sociological/demographic/economic disaster has occurred, and no political party cares. All our politicians represent the weathy.
Meanwhile, our Ruling Class appears to be preparing to commit a tactical nuclear strike on Iran’s nuclear facilities and its leadership.
@Steve.
The subsidies Musk benefited from you supported. So what now ?
Private sector unions are all but dead, as am I. My family gets by crowding together in ancient housing.
In 1974, I rented three different apartments for $60/month, utilities included. That was 31 times the prevailing wage for unskilled labor ($2.10) Today, a one bedroom apartment in this town is about $2,000/ month plus utilities.
Unskilled labor is about $20.
Do that math. $620.00/month SHOULD BE a reasonable amount for rent.
What has changed? Retirement money, (401 k’s) has created an incentive to invest in REITS and drive up the price of housing and rents.
Millions of people today in America live on the streets because dives are unaffordable.
People who have jobs are living in their cars! That’s how bad it has become.
Regulate REITS as the monopolies they have become.
Dave-I have not seen any Democrat say that there should be no cuts in govt spending. Feel free to cite people making that claim. What I see are people claiming that we have an unelected guy given the power to make the cuts. That in order to do this he brought in a bunch of 25 y/o coders. The cuts have been erratic and they have continually lied about the cuts.
When it was first talked about they said they would be bringing in leaders from industry to do this. That sounded OK to me since there are lots of people who have experience reading contracts, reading spreadsheets, balance sheets and making personnel decisions. Heck, I suspect Drew and his guys would be better equipped than a bunch of mid 20s coders.
I also think that there was some expectation/hope that there would be some attention to norms. Instead they have unilaterally decided they can ignore Congress and decide whether or not to spend money already allotted, to say nothing of claiming they have the power to unilaterally break contracts.
Finally, it seems like they ought to be able to find some fraud. I haven’t heard of any. Maybe you can cite some. It seems like they are just cutting stuff they dont like.
Also, to be fair, I do think DOGE unfairly gets stuff lumped onto them that’s not really their fault. Stuff like Trump going after individual law firms, breaking the 1st amendment or going after law firms in general that file stuff he doesnt like. Or the inconsistency on tariffs, or a ton of other stuff.
Grey- No one ever asked me about subsidies for Tesla. If they had I would have supported them with the qualification that other EV companies be treated equally, which is not happening. Regardless, the point stands that a large part of Musk’s success is due to the government money he received directly and indirectly. The point also stands that he has free access to govt records, is making spending decisions about govt money and he remains a govt contractor. Housing costs too much? You supported the guy who wants to raise the price of wood, steel and lumber 25%? Brilliant. You want REITs regulated but support the guy who wants to do away with all regulations? Brilliant.
Steve
Is it me or the surprising thing is that the 1% between 2007 and 2019 had only a 4% real gain in income; while every other group listed had gains exceeding that, between 10% and 20%. I would love to know what the data shows up to 2024.
As for Elon; I don’t think SpaceX is “rent seeking”; or at least the classic definition of it. SpaceX product is significantly better and cheaper then the competition, or in some cases there is no competition because no one has been able to replicate what SpaceX has done.
As an example, SpaceX reduced launch costs by 90% compared to state of the art before it arrived. Or Starlink, which is 4x to 5x faster with 1/10th of latency of satellite internet provider pre-Starlink; and opened a whole bunch of use cases which were previously not possible (marine, high latitudes, extreme remote areas).
If one actually reviewed the history of SpaceX, it was clear the government favored the traditional launch companies (Boeing / Lockheed) over SpaceX and gave SpaceX minimal contracts until Spacex proved it was the best offering available.
As for Tesla. The tax credits are emission credits for satisfying fleet emission standards (CAFE). Tesla doesn’t get money from the government for the credits; the credits are sold to other car manufacturers whose fleets don’t satisfy the emission standards to avoid the penalties for not meeting the standards. Emission credits aren’t generally considered subsidies, they are a semi-market oriented policy to reduce pollution and used in other jurisdictions like Europe and China.
Remember, the credits are worth nothing if other car manufacturers met the CAFE standards with the cars they make and have no need to buy credits.
As for the buyer EV credits; I personally think they have been poorly designed (and Tesla has taken advantage of them to the limit). But they aren’t the reason for Tesla’s success and are not the reason why other US EV manufacturers have struggled or died (I think Rivian, Lucid are the only ones left)
SpaceX is a govt contractor. If you read through their history, they were pretty dependent upon govt grants, loans and contracts and hiring former NASA workers to get going. They have gotten at least $15 billion from NASA that we know about. Yes, they eventually succeeded, but just like Tesla they were dependent upon govt money when forming and to a degree rarely seen with other start ups. Link to article documenting the $38 billion in government money that we know about from public records.
Again, of course he now opposes these kids of loans and subsidies. It’s not just a matter of how much money but when you get it. Note that when Musk wanted to expand his factory at a key time he secured a low interest govt loan of half a billion. How many of us could call up the US govt at the last minute and get a govt loan? Heck, why didnt he get a bank loan? Having the govt as piggy bank when needed then denying it to others is one way to lessen competition. Is that rent seeking? What should we call it? Just simple hypocrisy?
https://archive.ph/pIVab
Steve
I agree that conflation between “the 1%” and “the .001 %” (aka “billionaires/oligarchs”) is annoying. But we should remember that most Americans are functionally innumerate (in addition to being politically ignorant).