Hear this.
If the wealthy stopped underreporting their earnings and paid their dues to the IRS, every college student in the U.S. could go to their institution of choice for free.
This sounds like a fantasy to Americans but to Europeans and to much of the civilized world it is guaranteed, along with other basics such as mandatory maternal/paternal leave, reasonable working hours, livable wages for the bottom 80% and most important of all, healthcare, the number one reason Americans go into debt.
The U.S. is known to be a leading example for the world on various levels through its revolutionary efforts in digitalization, innovation, education, Silicon Valley to Wall Street, stock market returns, a goldmine for immigrants, talent, and overall opportunities that emerge here.
As the wealthiest country, it holds a prestigious hopeful deceptive image that attracts millions of international buyers to immigrants each year. Despite being known as the land of opportunity and free, this country couldnât be more divided. Everything seems to be politicized and if we ask our fellow Americans to keep each other safe, we revolt. From basic mask wearing, voting and abuse of the tax system, everything is a battle to deal with.
We revolt because of democracy and freedom for the benefit of oneself not the greater good.
From the outside, everyone looks better than they usually are, including Americans. Most Americans own toxic debt to impress strangers they donât know with money they donât have. Perception isnât always reality and specifically when it comes to understanding what the U.S. is worth and the value it provides versus generates, it is extremely misleading on various levels.
Stark Reality
As a 1st world developed country, America should have a more even distribution of wealth between social classes by now than emerging market countries that are a quarter of its size. The largest institutions shouldnât pride themselves on rankings and rejection and instead on acceptance and affordability. Harvard University has an endowment the size of Costa Ricaâs GDP. Instead of having each school year begin with a speech on how many hard-working students an institution denies, they should welcome the incoming class with the amount of opportunities and scholarships they provided.
As the wealthiest nation in the world, this dispersion and proliferation of inequality is beyond disappointing considering half of the wealth in this country is held in the top 10% and income and wealth inequality is higher than any other country.
Instead of letting the top 1% students become billionaires we should give opportunities to the bottom 90% and turn them into millionaires. The shareholder class earns income at the expense of others which only perpetuates this divide.
From race to politics, America has dealt with a rough past it seems to ignore and not confront which is hurting the markets and W2 workers surviving to stay afloat.
Wealth inequality is the direct relationship between the growth rate of economy and return on wealth which has been disproportionately uneven for most Americans as privatization and the financial industry have grown more powerful catering to the shareholder class, their main incentive to boost profits.
Since the shareholder revolution in the 1980âs, upper-class citizens have amassed an insurmountable amount of wealth over the years as salary has stagnated for the bottom 90%. Inflation corrodes purchasing power, kills savers yet helps businesses earn a higher margin on their products.
The top 20% of Americans own 86% of the countryâs wealth while the bottom 80% only 14% due to expansion of innovation, digitization, side-hustlinâ, real estate boom, higher education divide, and overvalued asset/stock prices soaring with a record number of companies going public on the market leading executives to be rewarded based on how high their startup soars.
According to researchers, wealth inequality is horrific for the economy and stock market as a whole as it proliferates higher rates of social problems, lower population satisfaction rate and stagnant economic growth when human capital is neglected.
But whatâs perplexing is that it seems to not impact those who are profiting immensely off of recessions and generating more wealth each year than the bottom 50% in a lifetime. They go out of their way to weaken the U.S. by not paying their taxes, the most efficient way to lower the governmentâs deficit, spur equality, improve infrastructure/military and put money to use into Americanâs pockets. The ultra-rich are beyond narrow minded and donât comprehend the tremendous benefits that come about from lending a hand to those in need. More money in everyoneâs hands mean more investors which in turn boosts profits for shareholders. Itâs a win-win situation they canât seem to trust.
With tax-advantageous strategies in real estate, higher levels of education, inheritance, sheer luck, timing and connections, there are various reasons people become lucky in rising up the corporate latter and becoming part of the upper-class that are just not available for majority of Americans. It would be ideal if the students who only had access to the library had the same privileges as those who had everything. Loopholes become more enticing with more. America is known to promote social mobility although itâs never been this hard to do so in a highly financailized spearheaded segregated economy.
So what led to the U.S.âs demise?
Deregulation of financial markets during the 1970s and 90s encouraging foreign capital into the U.S. economy which in turn lead to imbalances and monetary policy to shift to higher interest rates and promote the shareholder class.
Financailization is in response to tendencies of mature capitalism and since 2001, the financial sectorâs profits have risen by five-fold each year to more than 40% of total profits in the U.S. economy which have caused the allocation of assets to be disproportionally allocated towards the shareholder class through equity based compensation. Minimum wage takes years to reform with $2 average increase while stocks rise on average by 10% each year.
For the fist time, Millennials are not better off than their parents and are having the hardest time of their lives, even harder than graduating from that Ivy League as majority of the wealth is stashed within Baby Boomerâs pockets who outlived half a century worth of recessions and know the power of frugality, saving early and compound interest. On the corporation side, stock buybacks and dividends pushed the transfer of cash to shareholders draining the expansion to hire more employees and boost operations on the other end.
America isnât united and has never been. The shareholder class chooses to pay the least amount in taxes and get away with it. Billion dollar behemoths are worth more than most countryâs GDP and have the power to hide their money in tax shelters overseas to avoid tax and bring in more profits for their shareholders and company executives who can own a 8th beach home to weaken the link between social classes while the middle and lower class become victim to inflation, strenuous working hours, W2 income and pay more in taxes than the richest people alive!
The distribution of wealth upwards through private functions has drained our democracy and ability to address the nationâs problems. This is an ongoing problem that must be rewritten to fix the financial sector and influence over the economy. The banks are âtoo big to failâ and lead it to work for fewer and fewer people.
Full Price
From the inside, America is not a bargain but to foreigners it is a juicy deal. You can read about that here.
With inflation shy of 5% as demand accelerates with not enough supply mixed with high levels of consumer debt and many home buyers priced out of the market, people need more help than it seems.
The median home price for a home jumped 20% from last year all while W2 salaries have stagnated and the cost of living is becoming more expensive. Yet to outsiders, they are cashing in on this opportunity.
Majority of luxury real estate properties and the most expensive pieces of land in this country are either owned by brokerages who buy up the acres and split it up to perspective buyers for less, foreign investors who park their money here as the U.S. is seen as a favorable investment or the .1% of people.
Millions of past city dwellers cannot live in big cities anymore as land has become scarce, property valuations are out of the roof and they have no space to breathe. In turn this drives rents up even higher and people out to the suburbs having to sacrifice higher pay.
Thereâs no doubt America offers stellar returns on various asset classes from Big Tech to real estate yet they only work for those invested in them exploiting inequality, decreasing efficiency and politicalization further.
Even observing fees from asset management and household loans, which are two crucial growth drivers in the financial industry, they make up 74% of GDP and are fielded by foreigners and the upper class as corporations maximize shareholder value towards payouts to stock holders taking up a greater share of national income than at any point in the half century in post-war America.
Can America ever become leveled?
It will certainly take massive reform from the Fed and the government committees to pose strict regulation in the financial sector to monitor their dealings, transactions, cash hoard and activities to make sure they arenât taking advantage of most consumers. Their best, most profitable customers are unfortunately the most gullible, lazy and late.
Americaâs inequality is unique and shouldnât be this stark considering it is the most advanced nation in the world where millions should not be living on food stamps or have zero funds in their IRA.
Whatâs wrong with free education, health care or more governmental support?
It also raises happiness and health which Americans could use a massive boost in.
No more obesity and more peace.
As the richer get richer, sadly the poorer still get poorer.
Is this really the reality of a country that is a leading example to others?
Thank goodness they donât practice everything we preach.
In order to redistribute wealth, stricter laws on tax reform from tax loss harvesting to the step-up inheritance basis and capital gains tax need to be regulated, stronger investments in education or make it free, and increase the minimum wage. Coincidentally, this can all be done by having the top 20% give back to Uncle Sam1
Bezos doesnât need that extra million he owes to the IRS. It doesnât make him happier or more powerful. Let your money work for you and after a certain point, let it work in service of others otherwise reconsider moving elsewhere besides Florida.