Where Does The Real Problem Reside? The 0.01% Vs. The 1%

Tyler Durden's picture

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

While I always supported the overall message and energy that encompassed the Occupy Wall Street movement, I never backed the slogan of the 1% vs. the 99%. From my own personal experience, it is entirely clear that the actual problem is a far smaller group within the 1%, the 0.1% or the 0.01% (although I recognize “We Are the 99.9%” isn’t catchy).

This is why you’ll never hear me demonize “the 1%”, rather I always try to use the term oligarch, which refers a small handful of people who benefit most disproportionately from Federal Reserve handouts, D.C. corruption, tax code loopholes and the destructive trend of financialization generally.

This is is also why I became so disgusted by Sam Zell’s ignorant and destructive comments on Bloomberg television earlier this year that decided to pen an open letter to him.

Thanks to The Atlantic, we now have two charts that show what I have been writing about for many years now. It is not the 1% that is the problem, it’s actually a much smaller slice within that group that is thieving and pillaging at will from the rest of American society.

From The Atlantic:

I’ve written, over and over, that the most important divide in our wealth disparity was between the 1 percent and the 99 percent. For example, when I compared the evolution in investment income since the late 1970s, I often imagined a graph like this from the Economic Policy Institute, showing the 1 percent flying away from the rest of the country.

 

It turns out that that graph is somewhat misleading. It makes it look like the 1 percent is a group of similar households accelerating from the rest of the economy, holding hands, in unison. Nothing could be further from the truth.

 

A few weeks ago, I shared this graph (from the World Top Incomes Database) showing how the top 0.01 percent—that’s the one percent of the 1 percent—was leaving the rest of the top percentile behind.

 

Screen Shot 2014-03-29 at 9.23.25 PM

 

It’s even more egregious than that. An amazing chart from economist Amir Sufi, based on the work of Emmanuel Saez and Gabriel Zucman, shows that when you look inside the 1 percent, you see clearly that most of them aren’t growing their share of wealth at all. In fact, the gain in wealth share is all about the top 0.1 percent of the country. While nine-tenths of the top percentile hasn’t seen much change at all since 1960, the 0.01 percent has essentially quadrupled its share of the country’s wealth in half a century.

 

houseofdebt_SaezZucman21

 

It turns out that wealth inequality isn’t about the 1 percent v. the 99 percent at all. It’s about the 0.1 percent v. the 99.9 percent (or, really, the 0.01 percent vs. the 99.99 percent, if you like). Long-story-short is that this group, comprised mostly of bankers and CEOs, is riding the stock market to pick up extraordinary investment income. And it’s this investment income, rather than ordinary earned income, that’s creating this extraordinary wealth gap.

 

The mainstream is finally starting to figure it out. From crony capitalistic corporate welfare (even the New York Times covered oligarch welfare last week) to the 0.01% problem. Now if the nine tenths of the 1% would stop complacently continue to tread water and challenge the oligarchs we might actually be able to change things.

Full article here.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
underman's picture

One guillotine should suffice then.

Looney's picture

The REAL PROBLEM reside in DC.

MeMadMax's picture

The problem is DC working WITH the oligarchs. Forming a circle of never ending screwing over everyone else with no lube or reach around either...

Looney's picture

...The REAL PROBLEM resides in DC.

2 million outta 300? Make it a "1.5%"  ;-)

Looney

spine001's picture

I completely agree with the thesis of the article. I've been saying this in ZH and getting downarrowed for a very long time. The wealth numbers don't lie, if anything they underestimate the problem due to the top 0.001% hiding their wealth and its pornographic increase from public escrutiny. The number represent only the tip of the inequality iceberg.

old naughty's picture

GA, downarrow me, but please let me understand...

so the oligarch participating and "country" brought in line is not the target of the .001%...hummmmmm. 

A Nanny Moose's picture

All government is Oligarchy.

eatthebanksters's picture

Socialism eliminates competition and protect the oligarchs...same thing as crony capitalism...Obama, Reid and Pelosi are the leaders of this shit show...

A Nanny Moose's picture

Indeed! As surely as there is never one cockroach, even the most brutal dictator does not act alone. Bush, The 0'Bamabot are just increasing degrees of dictatorship. Even Stalin, Lenin, Pol Pot, Tito, Pinochet...they had benefactors.

Edit: The primary purpose of ALL government is to eliminate competition. Period. Why else would it need all the guns?

Occams_Chainsaw's picture

Our DC pols are just whores to the .01%.

therover's picture

+1.

Whores who take it up the ass and like it.

therover's picture

The problem is the oligarchs owning DC. DC does not work with them...it works FOR them.

ATM's picture

A limited government has no use for oligarchs. It is government with the most power that uses oligarchs. Cut off gogovernment power and the oligarchs will whither away.

Ultimately,  the government power is what .ust be limited for the sake of the people.

sessinpo's picture

ATM   A limited government has no use for oligarchs. It is government with the most power that uses oligarchs. Cut off gogovernment power and the oligarchs will whither away.

----

How would you explain  city states? In city states, you still had a few rich and powerful that ran or influenced the city to their favor.

In the most basic term of oligarch, the head of tribe in the Amazon would fit relatively since they run things.

For example, there will always be oligarchs or the elite, even if you reduce government to nothing because someone will take charge and the general public will look to and put their trust in someone for leadership. That person will take that power and profit from it.

I think I agree with you if you are saying government should be reduced to limit oligarch power. However, I disagree with you in saying that removing government would make oligarchs whither away. Instead, the oligarch becomes the government as I described in the example above.

Policraticus's picture

The real problem is the lemmings who continue to vote for those that reside in DC.

Policraticus's picture

The guillotine is too efficient.  I would think that burning at the stake would garner more attention.  It might allow the MSN to gain a story that would increase their ratings.

underman's picture

The guillotine is perfect.  No need for drama.  Heads of the MSM roll too.

Gaurden's picture

looks like the 1% are next on the chopping block.

Quus Ant's picture

The 1% will defend the .01% because they aspire to join them.

The middle class defend the 1% in kind.

The love of money greases the wheels.

cynicalskeptic's picture

I have FAR more in common with - and am far closer in earnings to the absolute bottom than I am to the top 0.1%.

If you've had enough exposure to the 0.1% you develop a healthy contempt for most of those at that level.   They treat their minions pretty badly - whatever level they are at.

 

More than a few would gladly join in the mobs as an excuse to 'get even'.

 

Quus Ant's picture

True.  Which is why we hear next to nothing about the .1%

 

Hobo Sapien's picture

So true. I once moved in that circle a bit, mostly as a photojournalist in SoCal. Your local council members and mayors, state legislators, etc., are crude wanna-bees comparatively; the 0.01% are vipers that put on the facade but even their smiles are a threat gesture, if you know how to look.

RichardParker's picture

How long till the go after the top 5%? The top 10%? 

Serenity Now's picture

Not long.  

This class warfare hatred of the 1% (or any percentage of that percent) is disgusting.

There is NO virtue in being in the bottom percentile, or the middle, or the top.  None whatsoever.

Most of the class warfare comes from disingenuous white liberals who live in gated communities and have absolutely NO plans of lowering their % (whatever it may be) any time soon.  It gets lapped up by the liberals and so-called libertarians who thrive on emotion and greed and hatred.

seek's picture

We have been for some time.

Remember the 0.01% don't earn their money for the most part, but steal it in a variety of ways -- inflation via first access to money (they own the banks, so the fractional reserve money creation favors them in a big way), preferential tax treatment (as a 1%er with actual earnings instead of capital gains, I pay >40% of my income, rather than the 15% or less someone like Mitt Romney pays), regulation (which cuts down on competition and disproportionately affects small businesses that are the majority of the 1%'s income), etc.

Lastly, we're one of the few groups left that have savings. That's fresh meat begging to be stolen by the 0.01% and/or government.

Since the 90%+ have already been sucked dry, the 1% is all the ultra-rich vampires have left to prey on, and they are.

Oldwood's picture

But the .01% is not nearly enough people to hate. When the shit hits the fan, anyone with anything will become a target, even the stackers and horders.

seek's picture

Which is why I started downgrading vehicles and don't maintain my property (externally) very well, and haven't upgraded my lifestyle.

Scares women off unfortunately, but anyone looking at my primary home would think I was blue collar and has no idea of what my net worth really is. Can't get the target profile to zero but you can hope the hordes prioritize.

Serenity Now's picture

I am honestly shocked that you are a 1%-er, own a business, pay that much in taxes, and STILL find the audacity to accuse a small percentile above yours of STEALING their money.  You should know better.

JFC, if the 1% engages in class warfare, then there truly is no hope.  

seek's picture

About a third of my clients are banks, the names of which grace ZH's pages daily. I have a number of rejected clients in the industry as well.

I have zero doubt a significant portion of the .01% got their money by stealing or illegal means. They may have started with legitmate savings, but after someone asks for inside information for the fourth time, you put two and two together. The same with HFT. Are there legit 0.01%ers? Yes, but in my experience they're in the minority.

Look at income statistics and then sort them by occupation, and you'll see a very distinct trend emerge, and I'd argue that trend correlates strongly with being aligned with TBTF financial interests.

cynicalskeptic's picture

NEWSFLASH - the '1%' (up to but NOT including the top 0.1%) are very much ON the chopping block NOW.  They've been there for the last 40 years.  It's alot harder getting here now than it was 50 years ago.  Those at the 1-2% level are a LOT closer to the absolute bottom than they are to even the top 1/10 of a percent.

Those at the 1-2% level are usually wage slaves themselves - albeit at a higher level.  But there's a high price for earning at hat level.  You probably put in a huge effort in high school to get into a good (and expensive) college.  You've been working 60-80 hours a week since graduation - never take all your vacation and probably put off kids for a while - if you have them.  You live in a nice house in a 'good' neighborhood but it cost a fortune to buy and the carrying costs - like property taxes - are substantial.  AND it's not like you have a choice here - if you want to live reasonably close (an hour or so ONE way) to work in a place where the well paying jobs are - it costs $$.  Truth is that your lifestyle was not all that much better than your blue collar brother down south whose income was a third  of what yours was  for the first decade or so of your career.  The difference was in the long run where his income topped out (and then stagnated after his employer sold the plant).

That 1-2% level around here (NYC burbs) means you're upper middle class - though it took far more effort to get here than it would have for your parents generation.  The  income needed to get here probably also means you and your spouse are working.  Two incomes are the norm now for the middle class - and upper middle class.  But that doesn't make it easy to raise a family.   Your kids have done well in school - you've worked to give them opportunities you didn't have but those summer programs and the good colleges they've gone to showed them how much more some have - and it's a hell of a lot more.  Those kids didn't have to worry about getting into a good school and they won't have to worry about finding jobs when they graduate.

You can pay your bills on time - buy a new car (or too often, lease one) when you need one instead of scrounging to keep the old one going.  You get to take vacations - when it's convneient for work -  though you're on call during it.  If you live within your income - preferably below it - it's a good life, better than what your parents had but not care free by any means.   Some of those at this level own their own business - a dry cleaning chain, an auto body shop or are professionals - doctors, dentists - but most are still corporate wage slaves.  No matter how much you try to plan and save, odds are you're in trouble if you get laid off.  It's harder and harder to find another job as you move up - and get older.  Job security is another one of those things that has become rarer and rarer.  If you're lucky you eventually make it to a level where bonuses aren't just more $$$ and start to include things like stock options - THAT's where the real money starts.

But until then it gets to be a real annoyance when you realize that you are paying the MAXIMUM amount of taxes - you pay out more as a percentage of your income than those below you AND those above you.  Kind of sucks when you see that the CEO of your company has a few racehorses and a number of residences spread around the country (HE gets to take HIS vacations).  The people you know that inherited serious money have a living standard you'll never match - and few of them seem to work all that hard.  You've tried to hold onto your soul but it's disiheartening to see that those that ARE doing so much 'better' than you seem to lack anything resembling ethics and morals.

But the worst part of having 'done well' is that you are considered to be 'rich' by the rest of your family and pretty much anyone else and you sure don't FEEL 'rich'. They fail to see how hard you worked to get to where you are - though hard work is no guarantee of anything (you have enough friends who've worked as hard and who are still just 'getting by').  

Sadly, if the shit does hit the fan, the mobs that decide to go looting will be hitting YOUR house - not the hedge fund guys in Greenwich, the wealthy on the Upper East Side or those nice elite villages where the really wealthy live.

 

SilverRhino's picture

That family thing .... you also become the target of every sob story and hard time plot that your family can cook up to get a loan that they never pay back.  

I love my family, but hearing "so ... when do we get to enjoy OUR raise?" really pisses me off.  

Pemaquid's picture

Your grasp of things is amazingly accurate. Well written!

underman's picture

It's getting all caught up in buying "crap" and needing to look the part that gets you in trouble.  Knock it down to bare essentials.  Key is to stop trying to impress your friends and family.  Stop caring what they say or think about you.  Live rich and free.

Isotope's picture

OK, how do you know so much about my entire life? You've been stalking me, right?

Dickweed Wang's picture

Simple, get rid of the .01% causing the problem in a way that makes the remaining .99% not want to move up and take their place when they are gone . . . . .

El Vaquero's picture

You want to castrate them and make them choke to death on their own testicles in public?  Dude, that's fucked up. 

NihilistZero's picture

What about the females?  Blade tipped dildos?

RichardParker's picture

Isn't that what socialism does?

Serenity Now's picture

Dickweed,

JFC, I hope that was sarcasm.  If you get rid of the .01%, then the rest AUTOMATICALLY move up and someone else becomes that .01%.

Why can't people understand this?  There will ALWAYS be percentiles.  

What the liberals really want is to cap how much a person can make, earn, inherit, keep, own, etc.  But of course they don't admit that.

FieldingMellish's picture

This will continue until there is but one person left who will declare himself ruler for life.

 

USA, Kim Jung-style.

Hohum's picture

If the .01% actually created wealth, we could bow in their presence.  Too bad they don't.  They create debt, though.

Stuck on Zero's picture

Yeah but the 0.01% are really angry that the 1% are doing so well.

 

francis_sawyer666's picture

I'm not so sure, the amount of money is astronomical

Let's see when I was a kid 'millionaire meant something'

Today we have 10-20 trillionaires that are NEVER mentioned, anytime or anyplace.

We have 100's and 100's of BILLIONAIRES.

A millionaire dont' mean fucking shit ... everybody in the USA that has gubmint job and a GUBMINT retirement package has a pension with a CASH annuity value of +$5 million dollars or more.

Are the trillionaires jealous of the billionaires? Nada,  and given that nobody even knows about the trillionaires they can do as they wish.

*

Nope the only people who are fucked are the little people who ain't born billionaires or are not COP.

Like they said "YOUR EITHER COP OR LITTLE PEOPLE" if your cop you a millionaire.

defender1be's picture

And how about the 50% or so parasite's (government  employee's and free chit army)?

The cost more to society than the 0.01% and the keep the 0.01% in power thanks to there emphaty, stupity and democracy.

The are at least as much to blame as the 0.01%.

francis_sawyer666's picture

The FIAT is 100% FREE to create to INFINITY. At this late point in time it costs nothing to keep 65% of the USA public on the dole feeding at the pig trough.

The USA will continue to implode, and the FSA/COP on the dole will go to +90%, and then the FIAT will collapse,... and it will be an UN-CIVIL war.

*

(government  employee's and free chit army)

Today over 65% of the FSA and cops,judges,hangman, feed at the FREE FIAT PIG TROUGH,

Every dictator on earth licks his chops and wants to impersonate USA imperial FREE-FIAT power.

*

In summary it costs nothing to keep everyone on the FREE FIAT, the problem is eventually ALL FOOD will be imported, and then the world will refuse the PAYMENT, and weill demand OIL or GOLD in payment and the USA don't got any.

This is why SOROS is demanding the USA open the SDR cuz the last of the USA assets need to be bled TODAY.

yochananmichael's picture

The 1% are the whipping boys for the .01%.