The Institute for Policy Studies has released its assessment of the Forbes 400 and found that income inequality in the U.S. has reached an alarming peak. The data shows that the 20 wealthiest individuals in the country have more wealth than the bottom half of the U.S. population combined.
Forbes has been ranking the 400 richest Americans since 1982. Released on Dec. 1, the IPS analysis of this year’s ranking concludes that the U.S. is in danger of becoming a “hereditary aristocracy of wealth and power.”
The data shows that the top 400 wealthiest Americans are doing incredibly well, their combined wealth amounting to $2.34 trillion, which is more than the GDP of India, one of the most populated countries in the world. IPS concludes that these numbers are actually underestimating the wealth of the 1/10th of the richest 1 percent of Americans, due to offshore tax havens that keep much of their money off the books.
IPS finds that among the 20 richest individuals in America, eight are the founders of successful corporations. Among them are Bill Gates of Microsoft, Mark Zuckerberg of Facebook and Phil Knight of Nike. It also found that nine of the top 20 are “heirs to dynastic wealth.”
The IPS analysis also found a clear racial wealth divide growing in the U.S. Its data demonstrates that wealth among African-American and Latino families drastically shrank following the 2008 economic crash.
While African-Americans make up 13.2 percent of the U.S. population, they only own 2.5 percent of the nation’s wealth. Meanwhile, Latinos make up 17 percent of the population while only holding 2.9 percent of the pie, according to IPS.
IPS says this growing inequality poses existential threats to American society. With 158 of the wealthiest donors providing half of all campaign donations in the 2016 presidential election campaigns of both political parties, the voice and vote of most Americans are being undermined. The disparity in wealth also weakens trust in social communities, reduces upward mobility and makes the economy more unstable and unpredictable.
Several American billionaires have voiced concern over this growing inequality.
“High levels of inequality are a problem — messing up economic incentives, tilting democracies in favor of powerful interests, and undercutting the ideal that all people are created equal,” says Bill Gates, according to Fortune. “Capitalism does not self-correct toward greater equality — that is, excess wealth concentration can have a snowball effect if left unchecked.”
“If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us,” says billionaire investor Nick Hanauer, Fortune reports.
Income inequality can lead to devastating social consequences if left completely unchecked. French economist Thomas Piketty recently wrote that economic inequality in the Middle East has contributed to Islamic terrorism, The Huffington Post reports.
Piketty says that many Arab nations are “oil monarchies,” where the richest families own between 60 to 70 percent of the Middle East’s GDP. Couple this with a high rate of unemployment among young people, and you have a disenfranchised population that is more impressionable and vulnerable to radicalization, The Huffington Post reports.
The IPS report recommends that to reverse the income inequality growing in the U.S., a good place to start would be to close the offshore tax havens and billionaire tax havens. It also recommends raising the minimum wage, providing paid sick leave for all Americans and investing more in education.