And How It Oppresses Us
I suspect what’s really meant is “Poor people need to bootstrap themselves.”
But how can they, when so much wealth is hoarded?
We’re told that businesses are more important than people every day, like when Amazon’s Whole Foods cut access to health care benefits for part-time employees “in order to better meet the needs of our business.” And those benefits had to be purchased by the employees.
In fact, there’s plenty of basic resources for everyone. Most of the U.S.A.’s wealth is hoarded by a tiny group of people, mostly white men.
This is over $900 billion dollars in personal wealth. No family or individual needs even 1% of the kind of money these billionaires possess.
But that $900 billion is just the very top tier of the ultra high net worth (UHNW) wealthy. In addition to these fifteen, more than 20,000 other people posses enough wealth to require a dedicated office staff to manage it via “family offices.” From Investopedia:
Family offices are private wealth management advisory firms that serve ultra-high-net-worth (UHNW) investors. They are different from traditional wealth management shops in that they offer a total outsourced solution to managing the financial and investment side of an affluent individual or family. For example, many family offices offer budgeting, insurance, charitable giving, family-owned businesses, wealth transfer, and tax services.
So how many of these family offices are there, and what sort of wealth do they manage? The numbers are difficult to estimate, as you may have guessed. Wealthy people often spend considerable energy to keep their financial affairs and tax returns private. The 45th president of the U.S. is a good example of that. Most Americans running for public office release their tax returns to the public — but most of them aren’t UHNW people.
One organization, Family Office Exchange, estimates there are over 10,000 such family offices in the United States:
For our estimate, we’ll assume that half of those individuals with $100–500 million in assets have some form of a family office. For those with assets greater than $500 million, the percentage is probably higher. According to FOX’s biennial Family Office Benchmarking Study, these families typically have more complexity, can afford it, and desire the privacy and control provided by a single family office. For purposes of this analysis, we assume 75% have family offices. This simple reasoning results in more than 10,000 single family offices in the United States, shown below:
I wouldn’t want to treat this group of investors unfairly (you know how that upsets folks with privilege), so let’s make a lowball estimate of the total wealth of UHNW individuals in the U.S. by multiplying 20,000 people by $100 million — the lowest amount of net assets for those eligible for the family office. The answer is:
Yes, that’s $2 Trillion, a number that’s very hard for me to wrap my brain around. What does that number even mean? For comparison purposes, the U.S. spent just under $600 billion on Medicaid for 73 million people in 2017. So 73 million people received healthcare in 2017, and it cost less than the personal wealth of 20,000 people. No, wait — it cost less than the personal wealth of only FIFTEEN people. Someone check my math, please.
There’s a tipping point beyond which it’s hard for very rich people to lose money. Left to its own devices, money breeds with itself and makes more money, creating what’s called “generational wealth.” You might have noticed in the top 15 wealthiest people chart that three of them, all members of the Walton family, accumulated their wealth via inheritance. When UHNW people don’t spend all their money (who could?), their wealth accumulates via interest, dividends, appreciation, and probably other ways I know nothing about in my middle class world.
Most Americans (about 85%) live above the poverty line, which is now set at $12,490 per year for an individual, and $25,750 for a family of four. To put that in perspective with our UHNW friends’ wealth, that means a family of four making $30,000 per year lives on .03 percent of $100 million, or that $100 million could support over 3,000 families of four in a given year.
In 2017, the U.S. Census estimated that 39.7 million Americans lived in poverty. Fifteen million of those are children.
So i have a question: If these UHNW folks loosened their grips on their wealth — via increased taxes, for example — how might that ameliorate poverty in America?
[This article originally appeared on my Medium blog on September 25, 2019]