| Number 63 | March 24, 2000 |
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This Week:
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Greetings, Have I got a job for you! Actually, Nygaard Notes could really use a research assistant. If you have any interest in volunteering anywhere from 1 to 10 hours per week, please get in touch. Or, perhaps you have some connection with an instructor in an educational institution who might be interested in offering a Nygaard Notes internship to her students. The thing is, there is lots of reporting that should be done that I just don’t have time to do. To give just one example, the Governor’s Capital Budget Plan is bound to be chock-full of interesting things that you’ll never see on the news, but it runs to 85 pages, and I just don’t have time to do more than skim the darned thing. The internship (or whatever we might call it) would have me and the intern deciding on what sorts of things our readers should know, and then working together to figure out the best ways to get the information, put it together, and present it. I think it would be a learning experience for both of us. So, if you have any ideas... Lots of new readers this week, so welcome, and a hearty “Hi, howzit goin?” to you. I received my first ever non-subscription donation this week, so thank you to Martha. You have a place in history, and in my heart. I should have an exciting announcement to make next week. I can hardly wait to tell you! But I can’t yet... In solidarity, Nygaard |
- Michael Hotra of the American Tort Reform Foundation, the stepchild of the right wing propaganda outfit the American Tort Reform Association, which I mentioned in NN #62. He was referring to George W. Bush, presumptive 2000 Presidential candidate of the Republican Party. |
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Edward Wolff is an economics professor at New York University who has studied wealth and its distribution for a number of years now. He wrote a remarkable article on the subject that originally appeared in The American Prospect No. 22 (Summer 1995), pages 58 through 64. The title is “How the Pie is Sliced,” and it is the basis of a number of facts in this week’s Nygaard Notes. It can be found on the web at http://www.prospect.org/archives/22/22wolf.html or a different, easier-to-read version of the same article can be found at: http://www.orednet.org/~jflory/22wolf.html . Those of you without computers can copy down these addresses and go to any library, where they can help you look at it and most likely print it out for you to take home. |
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Most people know how much they earn each year, since they have to pay income taxes. Many people do not know their net worth, however. Maybe this is because we have no wealth taxes in this country (property taxes being the exception). So, Nygaard Notes readers, get out your calculators and get ready to figure out how wealthy you are. What is “Wealth?” What you take home in pay (or interest, or dividends, or whatever) is called “income.” What you already have at home - that is, what you own - is called your “wealth.” There are essentially four types of wealth you can have:
Add up all of those things and see what number you get. This number is your “total assets.” Now, subtract what you owe to other people - your “liabilities.” The result is what is called your “net worth.” Are you surprised at how little it is? Now that you have a number to attach to your personal net worth, how about some numbers to put that number in perspective? (Some of the following information may be hard to believe, so I will include many of my sources.) Who Owns America? For purposes of this discussion, “rich” means those who own more than 90% of the population; in other words, the top 10%. When I say “super rich,” I mean the top one percent. Unless you are rich, you probably don’t own much of anything, except maybe the house you live in. That’s because the rich own 62% of everything in the United States, including 85% of all the stocks, 90% of all the bonds, 87% of all the trusts, 92% of all the businesses, 80% of all the non-residential real estate, 45% of all the life insurance, and so on. That doesn’t leave much for you and me. Although the rich own 62% of everything, they only have 29% of the debts in the country. So if we look at net worth - wealth minus debt - the share of the national wealth owned by the rich goes up to 68%. Since two-thirds of the “wealth” owned by the bottom 90% of us is tied up in our homes - which are assets that we can’t really convert to cash very easily - some economists factor this out to come up with what is called “financial wealth.” Since financial wealth roughly indicates how much money you could come up with and still have a place to live, that’s the indicator I usually talk about. Using this indicator, then, the rich own fully 77.5% of the country. I told you this might be unbelievable. [Figures courtesy of Doug Henwood, based on figures from the Federal Reserve and the IRS. Find more details at http://www.panix.com/~dhenwood/LBO_home.html] Two weeks ago I presented a handy-dandy little chart to help you see where you stand in terms of your income. This week I’ve prepared the wealth, or “net worth,” version. Bear in mind that these are figures for “household” net worth, not individual. That’s because these figures come from the Census Bureau (www.census.gov/hhes/www/wealth/wlth93t4.html) and that’s the way they do things. The groups are organized according to monthly income.
These are 1993 figures; wealth is even more concentrated now, with the top one-half of one percent of the population owning almost as much as the bottom 90% combined (28% to 32%). As mind-boggling as these numbers are, it’s even worse when you break things down by race. The net worth of white families, not all that high to begin with, is still 8 times that of African-Americans and 12 times that of “Hispanics” (Census Bureau terminology) . The median financial wealth of African-Americans (meaning that half have more and half have less) is $200. This is one percent of the $18,000 median financial wealth of whites. The median financial wealth of “Hispanics” is zero. These stats are from Jeff Gates at the Global Policy Forum, http://www.globalpolicy.org/socecon/inequal/gates99.htm Are your eyes glazed over yet? Needless to say, there are a lot more numbers where these came from, but mercy compels me to stop here for this week. Now you have enough information to realize that you are not rich. (Surprise!) Next week I’ll conclude with a few more numbers (sorry) about the larger world, and a comment on the meaning of wealth. And, as usual, I’ll suggest a few ideas about what we might want to do about this inequality stuff. Stay tuned. |
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High on the legislative wish-list of many American corporations is “tort reform.” What they want, among other things, is to make it more difficult for citizens to collect punitive damages from corporations who knowingly sacrifice public health and safety for profits. Punitive damages are the fines (basically) that are levied in a tort lawsuit against violators to punish them for their misdeeds. Due to enormous propaganda efforts on the part of business and their friends, many people have come to believe some pretty wild things about what happens when corporations get taken to court. Here are some examples of statements I have heard or read recently:
If one or more of the above statements makes sense to you, allow me to introduce you to the work of Professor Michael Rustad, from Suffolk University Law School in Boston. While numerous organizations and individuals have studied the issue of punitive damages in the American court system, nobody has studied it more thoroughly than Professor Rustad. Mr. Rustad has, in fact, looked at pretty much every single case in which punitive damages were awarded between 1965 and 1990, and many since then, and he has come to the conclusion that “much of what is said about the nature of punitive damages is either untrue, unknown, or pieced together from questionable sources.” Based on his research - reported in the Iowa Law Review of October 1992, with subsequent research reported in the Wisconsin Law Review, 1998 Volume 1 - let’s look at some of the above statements, which I hereby christen “myths.” Myth #1: Power-mad juries handing out pots of gold. Reality: While the incidence of punitive damages awarded has been rising, they are still “rare,” “infrequent,” or “unusual,” according to any credible study you look at. Of all tort cases filed, only about 4% result in the plaintiffs getting any punitive damages at all. And the amounts of those damages are not plucked out of the air, but are closely correlated with the costs of addressing the harm or injuries suffered. In addition, a lot of these are cases of businesses suing each other rather than, for example, citizen Ed Bobson trying to milk General Motors. Myth #2: Stub your toe, file a lawsuit. Reality: Rustad points out that every study of punitive damages cases shows that the plaintiffs “were almost always seriously injured or killed by the product.” It is actually quite difficult to convince a jury to award punitive damages, as it requires proving lots more than just “negligence.” Juries have to believe that a company’s conduct was outrageous, callous, or flagrant, so they look for evidence of prior complaints, of prior lawsuits, or a pattern of “sacrificing public safety for profits.” As far as blameworthy victims trying to scam the poor corporations, only 7% of plaintiffs in the cases studied were found to be even partially negligent. How often do corporations have to pay people “millions?” Of all the punitive damages awards studied, only 10% have been for more than $1 million. And judges can and often do reverse or reduce the amounts awarded by a jury, so the final amount paid by the guilty party usually is significantly less than the amounts that people see in the papers. Evidence suggests that less than 1 percent of people awarded punitive damages (who, remember, are only 4% of those who file suit) ever actually collect as much as $1 million. Myth #3: Innocent mistakes, vindictively punished. Reality: Punitive damages awards are almost always based on evidence of “reckless, callous, or willful” conduct. For example, Minnesota’s own Dayton’s (now Target) Corp. was assessed punitive damages in the 1980s after they decided to increase their profits by selling kids’ pajamas that they knew perfectly well were flammable. As the Minnesota Supreme Court put it, “the decision not to use flame-retardant cotton flannelette was merely an economic one for the benefit of the defendant.” The deterrence of such despicable corporate conduct - and there are many, many more examples - is precisely the reason we have such a thing as punitive damages. Given the current weakness of our public regulatory structure, the threat of a big lawsuit and the accompanying bad publicity are probably our best current defenses against corporate malfeasance. And that’s exactly why Free Marketeers want to “reform” the tort laws. Be forewarned. When you hear candidates say “It’s time to reform the legal system!” they are most likely not talking about addressing the gross race- and class-based injustices in our system, which should be our number one priorities for legal reform. No, what they are likely to be talking about is “tort reform,” by which they mean a weakening of our ability to use the courts to do what our legislators do not have the will to do. |