Specifically, I have observed that over the past three decades, more and more of this country's wealth and income have been consumed by a small percentage of the population — for lack of a better term, "the 10%" — while everyone else has gotten hosed.
I have also observed that what's wrong with this picture — aside from romantic notions of sharing, teamwork, et al. — is that the 90% of the people in the country who are getting screwed are actually the customers of the companies owned by the 10%. Therefore, by paying themselves as much as possible and paying the 90% as little as possible, the 10% are in fact impoverishing their own customers.Maybe. The top 20% account for 60% of the spending. The economy is less dependent on the lower 80% who are becoming increasingly marginal and "the poor" even expendable unless American converts from a service economy to a servant economy.
At some point, when the 10% have finished extracting every ounce of wealth from the 90%, the 90% will simply have no money with which to buy the products and services of the 10% — at which point the companies owned by the 10% will collapse.
(Before that, though, we might also have a revolution, political or otherwise. Economic inequality and desperation like the kind we are developing has triggered many of those throughout history.)
Business Insider
Way To Go, 'Capital'! You're Totally Crushing 'Labor'! A Few More Years Like This And You'll Win!!!
Henry Blodget
Henry Blodget
In Revisiting Plutonomics, Barry Ritholtz suggest it is a good time to review the Citigroup report on plotonomy.
Ajay Kapur, global strategist at Citigroup, and his research team came up with the term “Plutonomy” in 2005 to describe a country that is defined by massive income and wealth inequality. According to their definition, the U.S. is a Plutonomy, along with the U.K., Canada and Australia.
In a series of research notes over the past year, Kapur and his team explained that Plutonomies have three basic characteristics.
1. They are all created by “disruptive technology-driven productivity gains, creative financial innovation, capitalist friendly cooperative governments, immigrants…the rule of law and patenting inventions. Often these wealth waves involve great complexity exploited best by the rich and educated of the time.”
2. There is no “average” consumer in Plutonomies. There is only the rich “and everyone else.” The rich account for a disproportionate chunk of the economy, while the non-rich account for “surprisingly small bites of the national pie.” Kapur estimates that in 2005, the richest 20% may have been responsible for 60% of total spending.
3. Plutonomies are likely to grow in the future, fed by capitalist-friendly governments, more technology-driven productivity and globalization.
-The Wealth Report
