The Waltons’ money
We have the following statistic, taken from this Reuters article written by Felix Salmon:
In 2007, according to the labor economist Sylvia Allegretto, the six Walton family members on the Forbes 400 had a net worth equal to the bottom 30 percent of all Americans.
To be precise:
The Waltons are now collectively worth about $93 billion, according to Forbes.
Ummmm… that’s obscene under any measurement. But I wouldn’t be posting about it if it ended there, because I think we had some idea how much money, Walmart makes, or at least the scale of it.
However, it doesn’t end there. For some reason people who like super income inequality keep coming back with this:
This sounds outrageous, until you stop for a second and take note of the fact that Jeffrey Goldberg, individually, has a net worth greater than the bottom 25% of all Americans.
According to the latest data we have, 24.8% of American households had zero or negative net worth — add them all together, and you get zero.
For context, Jeffrey Goldberg is the guy who pointed out how stinking rich the Waltons are, and Salmon’s point here is to show that Goldberg, by dint of not being in debt, is actually kind of relatively rich.
That’s supposed to make the Waltons’ money okay? How does it make it okay? Here’s an indication that it’s supposed to somehow make it okay:
And while it’s definitely a bad thing that one in four Americans have no net worth at all, I don’t think you can really blame Walmart for that.
I will attempt to understand: we are saying that 25% of the households in this country are either in debt or have zero asset worth. Incidentally, if you are looking for an explanation of why “social mobility” has gone down in this country, look no further than this. We are starting out with a quarter of the people below the water line.
That’s not the point though: I think part of the point is that we are supposed to imagine some of those people in that 25% are recent college graduates with great jobs who will eventually pay off their student debt. I wonder how much, as a percentage, those whippersnappers account for in that 25% of households? Not much. And it doesn’t do anything about the $93 billion statistic we saw earlier. It’s just another shocking statistic that is supposed to make us… what? Feel like those 25% of households are just too damn lazy? I’m not understanding something.
I would posit that we have two extremely depressing statistics here, and one does not make the other one okay. Taken independently, they each make me want to barf.
And just because I’m close to barfing anyway, please allow me to refer to recent this article where former hedge fund manager Andy Kessler explains to us that nobody in this country should complain about being poor since 8-year-olds now own cell phones. Here’s my favorite line of ignorance:
Medical care? Thanks to the market, you can afford a hip replacement and extracapsular cataract extraction and a defibrillator—the costs have all come down with volume. Arthroscopic, endoscopic, laparoscopic, drug-eluting stents—these are all mainstream and engineered to get you up and around in days. They wouldn’t have been invented to service only the 1%.
I’d love to see this guy in a conversation with Elizabeth Warren about the real cost of medical care for the poor.
mathbabe 
I don’t agree that the Walton’s money is a priori wrong just for existing. This article just isn’t deep enough, you haven’t gone to the root. Would it be OK if they had 50 billion dollars? One billion? How rich is too rich? By what measure are we determining that? The thought that 24% of Americans (am I really reading that correctly?) have 0 net worth does make me want to barf but the Walton’s money doesn’t necessarily make me want to barf. It depends how they got it and what they do with it. What I’d like to see here is an analysis of the ways in which the system itself perpetuates poverty and wealth. I believe in capitalism enough to believe that at least some of the Walton’s money is absolutely legitimate. I suspect that not all of it is legitimate in a moral sense. I’d like to know enough to be able to suss that out and I think we need some declared principles on what constitutes legitimate profit and we need to distinguish between that and what is derived through the exploitation of others and without regard to the health of the planet. I agree that it is sick to think of people being so insanely rich and holding onto it while they see others in need but in some measure this applies to you and me and almost everyone else I know honestly. We are all eating a sandwich in a room of hungry people.
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I was critical above but keep in mind I LOVE that you write this blog. Keep doing it Cathy, it takes courage to put your thoughts out there for public perusal. You know I am a HUGE Mathbabe fan!
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Thanks! I’m a huge Catalina fan!
Cathy
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I believe that income/wealth inequality is a big problem in America, but I also don’t believe in making disingenuous arguments, and the fact that “the Waltons are richer than 30% of America combined” is a sensationalist and misleading statistic. The important underlying fact is that 25% have zero or negative net worth. One may or may not regard this level of indebtedness to be a problem, but note that *by itself* this fact says almost nothing about wealth inequality. The actual numbers tell the story of wealth inequality pretty nicely, so there’s no need to play games with them.
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I think you understand something I don’t. It’s actually true, even knowing that 25% of people cumulatively no money, that the Waltons have as much as 30% of people.
How is it misleading?
We could put it another way: the bottom quarter of people have no money, and after that 5% of the population combined has as much as the Waltons. According to the census (http://quickfacts.census.gov/qfd/states/00000.html), there are 112,611,029 households, so that means the Waltons have as much as the bottom 5,630,551 households (average 2.6 people per household, so at a guess 14,639,433 people) who have any money at all.
Overall, we have broken this down to numbers, and I’m still thinking the Waltons have too much money.
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A net worth of $93 billion is, on its face, immoral, illegitimate and the result of exploiting a huge number of people.
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Let’s consider Bill gates. Bill Gates has $56B. Much of this is slated for philanthropic causes subject to his foundations’ direction. It is estimated that the foundations vaccination program (which is only a fraction of the foundations endeavors) will have saved 7.6 million lives by 2020.
Now lets consider the alternatives:
1) We evenly give each person in the world $8. This would do little for citizens of developed countries. In poor countries it may cover the cost of some lifesaving treatments, but because of poor judgement and infrastructure, etc I doubt this would end up saving nearly as many lives.
2) We evenly give each person in the US $186. Ipod sales would probably rocket, but probably no lives would be saved (certainly this isn’t going to pull any out of poverty).
3) The US government taxed most of it away from Gates. Since spending and revenue are so poorly connected in this country, likely all that would be different is that the US debt would be .4% less.
4) We decided that Microsoft made it’s money through exploiting its employees and competitors, and redistributed the funds to these people. Microsoft has 90,000 employees. Throwing in potential effected competitors, say the effected Microsoft world is 200k people. Thus to each of these people we give, on average, $280k. For the most part all we are doing is giving people who probably already have a comfortable lifestyle in a rich country $280k. This will probably be great for BWM sales, but probably not much else.
As far as I can see, the current distribution probably will lead to the most good in the world.
Would the world be a better place today if the government had confiscated the vast majority of Carnegie, Morgan and Rockfeller’s wealth and redistributed it to the masses of the to buy 1910’s Iphonographs, or spent it on 1910’s F14 Battle Buggies?
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I want to respond to ‘anonymous’ above.
It is worth noting that Bill Gates earned his money (at least to some extent) because it came from a company he founded, developed and runs. He has stated that he is giving it to charity because he is concerned about the pernicious effect too much inherited wealth might have on his children.
And how much do rich playboy heirs and heiresses contribute to society? There is a saying ‘ashes to ashes in three generations: the first generation builds a business, the second operates the business, and the third runs it into the ground’. Although I am not convinced that transferring ‘surplus wealth’ to the government in the form of tax is necessarily the best option, it is clear to me that were this desirable, inheritance tax would effect the timing of any such transfer optimally.
And while it is impossible to estimate the continuing impact of redistribution of wealth in the late 1910s and early 1920s would have a century later, a more salient question might be whether it would have lessened the severity of life in the 1930s.
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The thought that “the rich really can’t get much of value for their money” is a strange defense to offer. Isn’t the natural counter “well then, they wouldn’t feel much pain if they had a little less.”?
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Yes, it is a sorry state the wealthy must find themselves in, unable to use their wealth to place the maximum possible amount of distance between themselves and the rest of us.
Why we even bother to flatter moral defenses of outsized personal fortunes when the personalities to whom the fortunes belong are unafraid to be so fatuous in public is beyond me.
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Rodger: “There is a saying…”
A saying. Oh wow. I didn’t know there was a saying. Surely a saying is a sound logical basis for a national policy.
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The real problem with the current income distribution is not that there are a few people with truly obscene amounts of money, but that there are not enough people with moderate amounts of money (I do understand that it is a distribution and that these are not mutually exclusive, but I think that the focus is misplaced).
The middle class is very important. Not because it is somehow morally superior to be middle class, but because the middle class have a lot to lose. They are comfortable, but are easily made uncomfortable (one major illness away, etc). For this reason, a large and vibrant middle class promotes a strong civic society, protection of the commons, and social stability. All good things in my book.
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Can’t any one see that you can not have jobs if all that money is held by a few. They really control our country.i fought in ww2 for our country, what did they fight for.?
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