Earlier this summer, an annual report on wealth accumulation worldwide found that, despite the financial collapse of 2008, the ensuing Great Recession and the grindingly slow recovery we’re experiencing now, the number of millionaires in the United States has actually grown:
According to the annual World Wealth Report from Merill Lynch and Capgemini, the U.S. had 3.1 million millionaires in 2010, up from 2.86 million in 2009. The latest figure tops the pre-crisis peak of three million.
Merrill and Capgemini define millionaires as individuals with $1 million or more in investible assets, not including primary home, collectibles, consumables and consumer durables.
The wealth held by these millionaires also hit a record. North American millionaires had a combined wealth of $11.6 trillion, up from $10.7 trillion in 2009.
The number of Americans with $30 million is still slightly below the pre-crisis peak. In 2010 there were 40,000 North Americans with $30 million or more, up from 36,000 in 2009.
Why are millionaires doing so much better than everyone else? Financial markets. Remember, the rich depend on financial markets (which have rebounded) while the rest of America depends on jobs and homes for wealth–both of which remain in a slump. According to the report, global equity markets rose 18 percent in 2010. Since the wealthy have a larger share of their fortunes in stocks, they would have benefited most.
This report from June helps explain results of a study released by the Economic Policy Institute last week that found that 5 percent of U.S. households now hold 82 percent of the nation’s wealth.
If you believe Republican dogma, however, enabling the rich to get richer is the only way to reduce poverty rates and ensure prosperity for the middle class. According the GOP’s “trickle down” theory, when the rich get richer, their good fortune is supposed to shower down onto the middle class and the poor in the form of salaries and fees they pay to yacht builders, art dealers, furriers, interior decorators, caterers, groundskeepers, limo drivers, nannies, masseuses and other providers of services to the elite.
During the Reagan administration, Republicans codified trickle-down theory into the tax law, and it has underpinned the government’s economic policy, more or less, ever since.
So, a quarter century into this grand experiment, given all the wealth that has accumulated at the top, some of those billions of dollars should be trickling downstream by now. Right?
Wrong. In a report also released last week, the Census Bureau found that the U.S poverty rate had surged to its highest level in a quarter century — specifically since 1983, near the midpoint of Reagan’s two terms and around the time the Republicans’ trickle-down theory became law.
Trickle-down economic theory did not pass the smell test from the start, but now, after living with it for over a quarter century, we have plenty of empirical evidence that it was bogus from the start.
In the Clinton era, for example, when Democrats reversed Reagan-Bush era trickle-down tax policies and raised taxes on the wealthy, the economy grew and employment expanded. Conversely, in 2001 and 2003, when Bush, Cheney and their rubberstamp GOP-controlled Congress reinstituted trickle-down policies in the form of the Bush tax cuts on the wealthy, economic growth slowed and job creation stalled.
Of course, reality has a liberal bias, as Stephen Colbert has said. And so despite a preponderance of evidence that their policies have failed their own middle-class and poor constituents, Republicans in Congress today are vehemently opposed to raising tax rates back to the Clinton-era levels — even as they rail against deficits while demanding cuts to services for the growing ranks of the unemployed, the poor, sick and elderly whose interests they are also supposed to represent.
All of this prompts a question: Is the growing prosperity disparity in the United States the intended result of Republican economic theory — was shifting the nation’s wealth upwards out of the middle class their objective from the start? — or is the collapse of the middle class and the concomitant surge in the poverty rate the result of colossal policy failures and gross incompetence of two generations of conservative economists and politicians?
Which is it? Have Republicans deliberately robbed from the poor and middle class to the benefit their wealthy patrons or corporate sponsors — or is the economic crisis we’re facing just a monumental mistake?
Here’s a clue: From the perspective of the true base of the Republican Party — the merely rich and the uber-wealthy — a quarter century of trickle-down economics has been an unqualified success.