Every Fall, the Nobel Prizes are awarded and Forbes Magazine publishes a list of the 400 richest Americans. The bottom line is that the rich are definitely getting richer. Bill Gates again tops the list with 51 billion dollars although the five members of the Walton family (numbers 6 through 10) if combined would exceed his fortune with close to 80 billion. Rounding out the top 11 are Warren Buffet at number 2, Paul Allen at 3, Michael Dell at 4, Larry Ellison at 5, and Steve Balmer at 11.
The combined wealth of the Forbes 400 is 1.13 trillion dollars. To put this in perspective, according the CIA world factbook, the US GDP in 2004 was 11.8 trillion dollars and the world GDP was 55.5 trillion. If we assume an income of 10% per year, the Forbes 400 makes up 1% of the US GDP and 0.2% of the world GDP.
The US per capita GDP works out to be about $40,000 a year. Thus, if income were distributed evenly, every family of four would take home $160,000 per year. You wouldn’t know it after seeing the effects of Katrina but the US is wealthy enough such that every family could be upper middle class. The US is by far the richest nation on the planet. In comparison, the other group of 7 nations all have per capita incomes below $30,000.
So what is the solution to poverty? I think the argument that it can be eliminated with economic growth seems to be proven wrong. We already are more than rich enough to ensure that every person could have a comfortable life. Obviously, some form of reallocation is necessary although I’m sure there are those who would argue that any attempt to redistribute wealth would only decrease US productivity. However, this imbalance cannot be sustained forever. It took a great depression and two world wars to lessen the income disparity from the robber baron era of a century ago. Do we need to go through something catastrophic again to repair our current inequities?