Super wealthy today are better off than royalty of old

Yves Smith of Naked Capitalism this past weekend dismantled a small piece in the Wall Street Journal which had attempted to show that income disparity in the U.S. is not at an all time record. Back in the 1830s, Alexis de Tocqueville, author of Democracy in America, compared the compensation of French and American civil servants, with the king and President. What the Journal added was a comparison of the U.S. minimum wage with Goldman Sachs CEO Lloyd Blankfein's annual pay and bonus of $69 million in 2007.

But the King was almost certainly the richest and best paid individual in France. He made 8,000 times the most menial civil worker. Our disparity (minimum wage versus Lloyd Blankfein) at a mere 5,000+ isn't quite as bad, right?

But Blankfein was far from the best paid American. Forbes told us that the 400 highest earning taxpayers reported $105 billion in adjusted gross income. That averages $262.5 million. $262 million versus the minimum wage level of $13,100 gives a ratio of over 20,000 to one.

Now some will protest that the $105 billion probably includes one time windfalls, like the sale of major businesses. Doesn't wash. We are looking for the disparity top to bottom. I haven't seen any estimates for 2008 yet, and hedge funds had a rougher year, but the Institutional Investor ranking of top hedge fund managers for 2007 showed John Paulson at $3.7 billion, George Soros at $2.9 billion, and James Simons at $2.8 billion.

So the popular perception is right. The super wealthy today are better off than royalty of old. And it's not due to indoor plumbing, either.

Subject Meta: 

Forum Categories: 

very nice call out

I like Naked Capitalism and thank God for the bloggers on some of this crap spewing from the MSM.

You must have Javascript enabled to use this form.

One big assumption

minimum wage level of $13,100

That is assuming that the worker bee is working full time @ minimum wage. Most people at that wage only work part time. I guess its all in the definition of full time employment.

It has always been about class warfare.

You must have Javascript enabled to use this form.

that would make an excellent post

Going through the entire definition of the poverty levels in the United States. Average wage levels, minimum wage levels.

Then there is part time work as well as contactors, which is an entire area from true consulting, which is a true business to people being screwed out of benefits, real wages and the ability to claim unemployment insurance.

poverty levels

1 person is 10,800. That's just incredible. Let's say someone rents a room, and let's say it's a $350/month.

That's $4200 and also absurdly low and implies there are even livable rooms to rent in the U.S. for that kind of money. Truth is real rent, even for a studio eats up all of that amount.

You must have Javascript enabled to use this form.