I’ve written before about the growing wealth inequality in much of the developed world and I recently came across a piece written by Joel Kotkin who is a presidential fellow in urban futures at Chapman University in California.
Kotkin assesses the changing complexities of class in the United States, which he argues can no longer be understood in terms of traditional political divisions between left and right or conservative and liberal. He believes the emerging class order of the twenty-first century is marked by the rise of a high-tech oligarchy resulting in a declining middle class.
In the very beginning the new emerging United States of America represented a dramatic break from the past. At least among whites, there was also far less poverty in America, compared to Europe’s grinding poverty. Jefferson noted in 1814, America had fewer “paupers,” and the bulk of the population was “fed abundantly, clothed above mere decency, to labour moderately and raise their families.”
This is no longer the case. We have a growing new group of people who are the new sixth social class. Traditionally in America there was five social classes: upper, upper-middle, middle, working and lower. In a count taken in January 2019 the conclusion was seventeen out of every 10,000 people in the United States are experiencing homelessness.
Surely this is impossible in a country where GDP per capita is expected to reach $53,240 by the end of 2020 according to Trading Economics?
This trend is not new and in recent decades America has begun to show signs of growing feudalisation. This change has been most pronounced in the economy, where income growth has skewed dramatically towards the ultra-rich, creating a ruling financial and now tech oligarchy. This is a global phenomenon that really took off in the 1970s, upward mobility for middle and working classes across all advanced economies began to stall, while the prospects for the upper classes rose dramatically.
The ultra-rich represent an emergent global aristocracy – or rather, a new oligarchy. Fewer than 100 billionaires now own as much as 50 per cent of the world’s assets, the same amount that around 400 billionaires owned a little more than five years ago.
In the United States, the richest 400 US citizens now have more wealth than 185 million of their fellow Americans com-bined. The shift has been dramatic: The top 1pc in America captured just 4.9pc of total US income growth from 1945 to 1973, but in the following two decades, the country’s richest classes gobbled up the majority of US income growth.
In the past, the oligarchy tended to be associated with either Wall Street or industrial corporate executives. But today the predominant and most influential group consists of those atop a handful of mega-technology firms. Six firms – Amazon, Apple, Facebook, Google, Microsoft and Netflix – have achieved a combined net worth equal to one-quarter of the NASDAQ, more than the next 282 firms combined and equal to the gross domestic product of France.
Initially the rise of the tech oligarchy was viewed as transformative and positive. Today we confront a reality more reminiscent of the feudal past. Reversing the path away from a new feudalism will require, among other things, a rediscovery of belief in basic values and what it means to be an American.
Finally, since 1978 CEO compensation has grown 940pc and typical worker compensation has risen only 12pc during that time; is this fair?
Gordon is the former president and chief executive of BMMI. He can be reached at [email protected]