by Holmes Hummel
How does money pile up in the hands of a few?
My great-great-grandfathers accumulated wealth by claiming as their own the productivity of stolen land, captured people, and institutions organized by and for white Christian men. By contrast, the wealth inherited by my generation is accumulated today through investments in branded corporations that handle all the messy transactions of the global economy on our behalf as shareholders, paying dividends on the same types of systems that generated proceeds for my family’s lauded patriarchs.
When I meet other young people with access to wealth, some explain that their wealth “comes from the stock market,” as if food comes from grocery stores instead of the hands of farmworkers. Similarly, I hear organizers who strive for social justice talking about redistributing wealth in ways that overlook the mechanisms through which it is accumulating in the first place.
In my experience, capitalism delivers on a claim that those who already have more than they need are entitled to accumulate more by virtue of prior ownership. The logical basis for our banking and investment systems rests on the notion that if you have prior ownership of resources that others want, you are entitled to rent (or proceeds) from its use should you dare take the risk of letting them use it. It doesn’t matter if “prior ownership” came not through “virtue” but instead through theft, conquest, or exploitation.
Taking advantage of this economic regime, the richest 10% of U.S. households have accumulated 2/3 of the nation’s wealth, and the top 1% own half of that.
What’s enough to accumulate vs. What’s enough to redistribute
Wealth disparity aggravates most of the major issues that mark the present landscape of political contest: democratic participation, war & the poverty draft, racism & subjugation, criminal injustice & prisons, borders & immigration, housing & gentrification, wages & working conditions, health care & public health, climate justice, education & access, trade rules & international debt, and of course, economic justice.
Wrestling with the growing disparity between wealth and poverty, activists often appeal to progressive people with wealth, imploring them to voluntarily redistribute money they control. And I often find myself joining them! However, this type of social negotiation is typically so fraught with tangled power dynamics that people involved become preoccupied with the unsatisfying constructions of the philanthropic sector itself, as if that’s what needs reform.
Trying to address wealth inequity through philanthropy implies that voluntary wealth redistribution can somehow turn the tide on the involuntary seizure of the world’s common resources in an aggressive campaign of privatization, consolidation, and accumulation. Instead, wealth accumulation is accelerating because structural mechanisms for accumulation are much more powerful than the ones often discussed for redistribution.
In my experience, discussions about voluntary wealth redistribution often distract attention from a more critical dimension of the problem: financial mechanisms of passive wealth accumulation.
Therefore, before asking questions like, “How can we disperse this concentration of wealth?,” I think it is essential to ask, “How can we slow, stop, and reverse the gross accumulation?”
Who knows “the rules” and how to change them?
Many social justice campaigners can breakdown in detail the rules that affect living wages, welfare, and affordable housing. But with the exception of a few people crafting actual legislative proposals at United for a Fair Economy, I rarely find campaigners talking about the nuts & bolts of how to change the rules of wealth accumulation.
Every organizer I know opposed the Bush tax cuts, but so few can actually explain them, or would even know how to change them back. Reversing those kinds of policies is just a start because the 1990’s weren’t much better for people concerned about the growing wealth disparity.
Even if all the white, wealthy men of the world, and all their descendents suddenly sought reconciliation and redemption by relinquishing the assets under their control, voluntary redistribution is just no match for mechanisms of the global economy that would swiftly re-accumulate those resources in the hands of a few. Similarly, if every worker won a living wage tomorrow, those victories still couldn’t challenge the powerful process of accumulation driven by dividends and capital gains collected by the uber-wealthy for no work at all at nearly the same tax rate!
As social justice organizers make a political critique about the non-profit industrial complex and a philanthropic sector that drives it, how can we also improve the political literacy about specific rules that accelerate accumulation of wealth? Let’s look at global trade rules that allow money to move freely, but bind people at guarded borders. Let’s look at the weak constructions of the capital gains tax (15% on profits from sale of investments), or the estate tax(45% over ~$4M of accumulated assets), or the shamefully low dividend tax (15% on income from investments, same as a living wage worker!). *
The financial press is another important source of information on “the way things work” for wealthy people. Until the political literacy about these terms improve among opposed social forces, it is hard for me to see “things getting better,” and with the underpinnings of economic apartheid left mostly unchallenged, I wonder if the best our movements are poised to do is just “keep things from getting worse.”
Enough for society
Chuck Collins, a co-founder of United for a Fair Economy, is now anchoring a Working Group on Extreme Inequality to explicitly target the shafts that guide flows of money to pile up like snow-drifts in certain zip codes. Responsible Wealth, a project of United for a Fair Economy, has been challenging executive compensation and challenging tax breaks for the wealthy for years. Class Action has been helping people understand the way rules have changed over time to construct our current class stratification. Class Action also leads a campaign for wealth-blind college admissions, which highlights explicit benefits afforded to families who live in the class stratosphere, such as preferential treatment in college admissions.
I’m aware that the philanthropic sector has created a continuous tournament among non-profit organizations that balkanizes them all into niche-markets of issue-areas, and I know that not every organization wants to get mired in tax code issues. However, political illiteracy stunts conversations about how wealth disparity aggravates many issues that people care about and what should be done about it.
I am concerned that by absorbing ourselves in a negotiation about how much is enough for a few progressive wealthy people to keep or give back we start engaging in a social negotiation about pay-out rates from individuals and foundations. Though progressive people working the landscape of social justice philanthropy spend a great deal of energy trying to prevail on the sensibilities of wealthy people to voluntarily reduce what they think is enough for themselves, I am ready to turn attention to the instruments of mandatory rules that could be (and once were!) designed to reflect what society says is enough.
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*Not familiar with those terms? That’s because it’s usually only the wealthy who pay them.
Capital gains means an increase (or gain) in the value of an asset you bought (with capital) and then sold at a profit. If you bought a house (or some stocks) for $100,000 and then some time later someone else thought it was worth $180,000 and had the money to buy it from you at that higher price, the capital gains would be $80,000 – and the capital gains tax due would be $12,000 or 15%.
Dividends payments are like interest from a savings account at the bank, but instead, they are actually payments of profits from corporations being distributed back to shareholders. So, if I buy $500,000 worth of stock in a firm that pays 4% dividends, I would expect to receive approximately $20,000 that year for the effort of opening my stock statments, paying $3000 in taxes. Of course, the profits are actually generated by the ingenuity and industrious effort of workers at the firm, but because I already had prior ownership of some money, I could own part of their company rather than work myself.
Estate taxes are paid only after you have had your entire life to voluntarily distribute accumulated wealth, and after you’ve lived that good life, the government splits everything with your kids 50-50, except the first $4 million, which they get free and clear. For some (adult) kids, that’s not enough, they want it all. And thus, the campaign to repeal the “death tax,” which only applies to the wealthiest 0.3% of the population. On the other hand, Bill Gates Sr. & Chuck Collins have written an important book, Wealth and Our Common Wealth, which lays out a rational for preserving the estate tax, echoed by a few thousand wealthy people who have signed an public, online pledge to preserve it.