Ahead of the Curve

It is a nice feeling to be ahead of the NY Times. In Sunday's paper, the featured article was entitled "The Richest of the Rich, Proud of a New Gilded Age."

Fatboy Tom did a blog on this topic a few months ago labeled "The Richer Get Richer and the Poor...from Another Planet." The NY Times validated many of my assertions.

"Only twice before over the last century has 5 percent of the national income gone to families in the upper one-one-hundredth of a percent of the income distribution — currently, the almost 15,000 families with incomes of $9.5 million or more a year, according to an analysis of tax returns by the economists Emmanuel Saez at the University of California, Berkeley and Thomas Piketty at the Paris School of Economics.

Such concentration at the very top occurred in 1915 and 1916, as the Gilded Age, was ending, and again briefly in the late 1920s, before the stock market crash. Now it is back...."

In the article, Paul Volcker, former Chair of the Federal Reserve, contends that the increasing concentration of wealth in the upper 5% of Americans is not due to the enterprise and business acuity of the superrich. It's really is an artifact of the bull market and stock options afforded to so many CEOs.

"'The great fortunes today are largely a result of the long bull market in stocks,' Mr. Volcker said. 'Without rising stock prices, stock options would not have become a major source of riches for financiers and chief executives. Stock prices rise for a lot of reasons,' Mr. Volcker said, 'including ones that have nothing to do with the actions of these people.'

'The market did not go up because businessmen got so much smarter,' he said, adding that the 1950s and 1960s, which the new tycoons denigrate as bureaucratic and uninspiring, 'were very good economic times and no one was making what they are making now.'”

A very interesting read. As I have always said, great fortunes breed complacency, entitlement and increasing isolation from the larger society.