In 2023: The Ludicrous Amount of Wealth of the U.S. Wealthiest Shot Up
In 2023, we learned from the government that poverty and homelessness both increased in 2022. In 2023, there is also evidence of a massive surge in the already enormous wealth held by the wealthiest among us.
On the last day of the year, one can read in the Guardian an article with the headline “Smiles all round as financial markets end 2023 on an unexpected high,” and be informed that “the tech-focused Nasdaq Composite jumped by about 45%, led by the “Magnificent Seven” – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla,” and that these companies’ stocks “are up 74% this year compared with 12% for the rest of the world’s companies.”
Major beneficiaries from this “unexpected high” in stock prices include many of the world’s wealthiest. In 2023, they managed to add to their already bloated holdings after “suffering” declines in 2022. According to the Bloomberg billionaires index, the 10 wealthiest U.S. citizens saw their wealth shoot up over 53% from where it stood in 2022, reaching $1,373.4 Billion. Most of the ten are associated with one of the “magnificent seven” companies: Page and Brin with Alphabet, Bezos with Amazon, Zuckerberg with Meta, Gates and Ballmer with Microsoft, and Musk with Tesla.[1]
U.S is Number One—in Billionaires Worth Over $100 Billion
The Bloomberg billionaires index indicates that U.S. billionaires hold 9 of the top 10 positions of the wealthiest people in the world. All 11 of the world’s wealthiest were worth over $100 billion at the end of the year. The two non-U.S. citizens were Bernard Arnault from France whose wealth came to $179 billion (up $17 billion for the year) and Carlos Slim of Mexico at $105 billion (up $31 billion for the year).
Bloomberg’s index place 15 U.S. citizens as being among the world’s 25 wealthiest. As of the end of the year, the total wealth of the wealthiest 15 U.S. citizens came to $1,716.2 Billion rising by $498.4 Billion for the year. Eliminating the “poorest” two of the fifteen, the Kochs, who were the only ones among the fifteen who lost money during the year, leave the remaining wealthiest thirteen experiencing an increase in their wealth of over $503.57 Billion in a single year.
For the wealthiest, there has been some continuity and stability. In 2023, the same wealthiest nine U.S. citizens were also among the world’s 10 wealthiest at the end of 2020.
The overall trend is that the wealth of the wealthiest 10 has become much greater. However, it constantly fluctuates up and down as can be seen in where it stood at the end of each year in the table below that is derived from Bloomberg figures. It declined significantly in 2022 only to come roaring back in 2023 when it reached a new high.
The wealthiest 10 U.S. citizens have holdings whose value is far above where they stood at the end of 2019, just before the outbreak of the pandemic. The difference between their holdings now and at the end of 2019 comes to $677 Billion, up over 97% in 4 years showing that they benefitted mightily during the misery of the Covid pandemic.
The numbers in this table look small but are in the billions which can make them difficult to fully grasp. Professional baseball player Shohei Ohtani recently signed the biggest contract in the history of sports. He is to be paid for ten years $70 million/year (though much is being deferred). That comes to $.07 billion/year. Were this $.07 billion wealth and not income, it would not register in the table unless it was rounded up to $.1 billion.
An individual whose current yearly earnings are about four times the poverty level for a single person, $60,000, would have to work for over 1,100 years to earn what Ohtani is being paid in just one year. To earn the current wealth of Musk, Ohtani would have to play baseball for more than 3,200 years. As good a ballplayer as he is, this is something he presumably is not capable of doing. However, he’s lucky compared to the person making $60,000/year. That person would have to work for more than an impossible 3.8 million years to earn an amount equal to Musk’s current wealth. In fact, the increase in Musk’s wealth in 2023 was so great that in an average three-day period during the year, it went up over $750 million, an amount more the Ohtani will earn playing baseball for ten years.
Change Coming?
Given all of the problems in the world, no sane society would allow for such great fortunes to be held by single individuals like Musk. Why do these conditions continue?
Obviously, the conditions described here have much to do with the disproportionate amount of power the wealthy exercise in our so-called democracy. While not all wealthy capitalists are as powerful as their wealth might suggest, they and the rest of the U.S. ruling class have recently shown that they have sufficient power to maintain enough control over the state and society to enable them to accumulate more wealth and power. Their power is helped by the weakness of the working class and social movements for justice, the attention many people must give to difficulties they face getting by in their day-to-day lives, the appeal of widespread misinformation and demagoguery, and people being manipulated and distracted.
Will 2024 be a year of more of the same or will it be one in which people say enough? Will they get themselves organized and demand and fight for a massive shift in power that results in a major redistribution of wealth resulting in it being used to meet basic needs for housing, food, clean water, medical care, an education, and a healthy environment for the people of the world?
Notes.
[1] Most attended finishing schools for the ruling class, either an Ivy League college or Ivy League like colleges, Stanford and the University of Chicago: Gates, Balmer and Zuckerberg Harvard, Brin and Page Stanford, Bezos Princeton, Buffet Columbia, Ellison University of Chicago.
How Bankers Profit From Our Broken
Economic System
Bankers brought the global economic system to its knees in 2007 and nearly did the same in 2020. Both times, the US government bailed out the banks and left them in control. How can we end this cycle of trillion-dollar bailouts and make finance work for the rest of us? Drawing from decades of research on the history, economics, and politics of banking, economist Gerald Epstein, confronts the powerful people and institutions that benefit from our broken financial system—and the struggle to create an alternative. Clear-eyed and hopeful, Busting the Bankers’ Club: Finance for the Rest of Us centers the individuals and groups fighting for a financial system that will better serve the needs of the marginalized and support important transitions to a greener, fairer economy.
Judging by numerous Hollywood movies and most public opinion polls, you’d have to conclude that banks are not very popular in America. Yet, politically, bankers and other financiers are very powerful. Why the disconnect?
The answer is: “The Bankers’ Club”.
The Bankers’ Club is the collection of politicians, public officials, CEOs of non-financial companies, financial regulators such as the Federal Reserve, lawyers, and, even, economists who provide the political muscle, legal advice, and legitimizing arguments for deregulation, that sustain the financial industry’s profits and power. The “Club” is also the threat that bankers hold over our head, threatening to restrict credit, raise interest rates, or even create financial instability if we don’t treat the bankers right.
How can we bust this club and reform finance to make it work for everyday members of society?
Help the Bank Busters.
For decades, some politicians, consumer advocates, civil rights activists, labor union leaders, lawyers, and economists, have organized to hold powerful banks accountable, strengthen financial regulations, and push for publicly oriented financial institutions such as public banks. I refer to these reformers as “Club 
Busters”. In Busting the Bankers’ Club I profile some of these activists and leaders. I show that even though the struggle between the Bankers’ Club and the Club Busters is not an even one, the Busters have won victories and can win many more if more of us get involved on their side.
You say that the Federal Reserve is the chairman of the Bankers’ Club? What do you mean by that?
The Federal Reserve and the Wall Street banks scratch each other’s backs.
The Federal Reserve, the US central bank, the government institution that sets short term interest rates and supervises and regulates many banks, turns out to be a major friend and ally of the banks it regulates. This longer-term structural characteristic of the Fed became most obvious when Alan Greenspan, chair of the Federal Reserve between 1987 and 2006, led the charge to deregulate the big banks in the 1990’s, and kept interest rates exceedingly low in the 2000’s which fueled the credit-induced housing bubble and crash of 2007. The circle was completed when Ben Bernanke, the Fed Chair who succeeded Greenspan, along with Treasury Secretary, Tim Geithner, who had been President of the New York Federal Reserve when the 2007-2009 crisis struck, spent trillions of dollars to rescue the banks that had caused the crisis.
The Federal Reserve fights inflation by raising interest rates. But this makes financial services like mortgages and credit card borrowing cost more. So, the Fed is trying to lower prices by increasing prices. Does that make sense?
Not always. The Fed says it has no other choice, but, in fact, the Fed has options.
One reason the Fed raises interest rates to try to quell inflation is that the Fed has the tools to influence and even control some short-term interest rates. So, if all you have is a hammer, everything looks like a nail. But this is not the only reason. The Federal Reserve is reluctant to use a bunch of other tools at its disposal such as limits on the supply of credit to certain sectors (credit controls) or the ability to provide MORE credit to areas where there are supply shortages which could limit price increases in the cases where lack of supply is driving up inflation. This is surprising, because the Fed engaged in billions of dollars in credit distributions during the Great Financial Crisis and the Covid Crisis to help promote the stability of the financial system.
But understanding the Fed as an important member of the Bankers’ Club also gives insight in why the Fed chooses to raise interest rates to fight inflation. Increasing interest rates help the banks increase their interest rates in inflationary periods. This helps the banks sustain their profits on loans when prices are rising. Unfortunately, that hurts the borrowers who are facing increases in prices for goods and services and who now have to pay more for credit too.
In short: by raising interest rates to fight inflation, the Fed is fighting fire with fire, risking that many of us will get burned.
How can we get the Federal Reserve to serve us all?
Promote transparency, accountability, and representation: in other words, have more democracy at the Fed.
The Federal Reserve is our public Central Bank. But, during most of its history, it has placed the interests of the private banks that it regulates above the interests of the public – of us. Supporters of the current system call for a continuation of Central Bank Independence – an arms-length relationship between the Fed and the government and us. But this arrangement leads to a fingers’ length (if any) distance between the Fed and the big banks.
What is the solution?
The Fed needs more transparency, accountability and representation vis a vis the public. In Busting the Bankers’ Club, I describe what this means and how it can be achieved.
Income and wealth inequality in the United States have hit record levels. You say that the Bankers’ Club has been a major source of this inequality? Can you explain?
CEO pay in the United States is now almost 400 times as high as the incomes of the typical worker. A big driver is the huge incomes made by financial executives which then set a standard for executives in other industries. Another major driver is the form of compensation: a significant portion of CEO pay is in financial products such as stock options and other forms of pay that have lax tax treatment and are conducive to speculative income gains. Finally, some financial institutions’ practices, such as private equity firms, are built on a business model of loading firms up with high levels of debt and then squeezing workers’ and suppliers’ incomes to allow them to service the debt or go bankrupt.
You argue that our current financial system contributes to racial wealth inequality and fails to serve the poorer members of our society? What kinds of changes do we need to fix these problems? Specifically, what can banks do?
Numerous scholars, including for example Mehrsa Barardaran, Keeanga-Yamahtta Taylor,and Richard Rothstein have identified ways in which banks have contributed to disinvestment from African American communities and failed to provide financial services to poor households, especially those from black and Hispanic backgrounds. The most famous example of this behavior is “red-lining.” In the Post-World War II period, banks—in connection with US government policies—excluded predominantly African American areas from receiving government-subsidized home mortgages. Busting the Bankers’ Club discusses policies and institutions that can reduce these problems, including public banks that are oriented toward providing credit in these neighborhoods, the broader and stricter enforcement of the Community Reinvestment Act (CRA), and stronger support by the Federal Reserve System for credit provision in these communities.
In Busting the Bankers’ Club you say that new financial regulations are not enough. You say we need publicly oriented financial institutions, what you call banks without bankers. What are these? What can they accomplish that private banks or better regulation cannot?
Private, profit-oriented banks focus on one thing and one thing only: their bottom line. But most capitalist economies have a variety of financial institutions – private and public – that make banking decisions based on a broader set of considerations: their contributions to community development, promoting small businesses, providing access to better banking services in communities of color, helping to underwrite affordable housing, and promoting green energy.
Examples in the United States include Postal Banking services, which existed from 1911 – 1967; Community Development Financial Institutions (CDFI’s) which have special bank charters that require them to make investments that promote community development; state-level public banks, like the Bank of North Dakota; and municipal public banks, like those being established in California. On top of these smaller institutions, municipal, state, and Federal public development banks, such as the Green Development Bank established by the Inflation Reduction Act (2022) promote specific sectors such as, in this case, green energy.
You’re an economist. But you write that many economists are members of the Bankers’ Club, that is, they develop theories and promote ideas that purport to show that Wall Street serves society and that more financial regulation is inefficient and bad for economic growth. Are these economic ideas and these economists still on top?
I would say no. In recent years, the Club Busters in the economics profession have made significant headway in making their points and getting a hearing.
When the great financial crisis hit in 2008, Queen Elizabeth of England famously asked a group of economists, how did they miss this most important economic event of the last 80 years? They had no good answer, but the question was a bit misplaced: a good number of critical economists outside of the mainstream had, in fact, long warned that the financial sector was hurtling toward a crisis. In Busting the Bankers’ Club, I describe the forces that led mainstream economists to get it so wrong and to make it more difficult for critical voices among the Economics profession to be heard. Since then, these critical voices have had a much bigger impact on economic policy, including inside the Biden Administration. This plurality of economic voices being heard has had a positive impact on the quality of economic advice and economic policy.
This interview originally appeared on the University of California Press blog.
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