Score another $40 billion for Bill Gates
That's enough money to lift all the poor in the US out of poverty
BOSTON — Not many people can lose nearly $1 billion in a few hours.
Perhaps just one - William Gates III, ranked by Forbes as the world's richest individual.
Forbes's recently published list of the 10 richest people is not just an opportunity for the magazine to get publicity. It also gives an excuse for out-of-fashion liberals to complain about the rich getting richer.
Mr. Gates, who heads Microsoft Corp. is worth $90 billion, up from $51 billion the year before, the magazine estimates.
A Web site, Bill Gates Personal Wealth Clock, put his wealth at $97.3 billion at 11:56 a.m. Eastern Daylight Time last Wednesday.
By 3:26 p.m. he was worth "only" $96.4 billion. His 141.1 million shares in Microsoft had fallen on the stock market in those few hours. Maybe a billion here, a billion there, doesn't make much difference to Gates.
But much smaller amounts do count for those at the other end of the income ladder. Betsy Leondar-Wright, spokeswoman for United for a Fair Economy, in Boston, notes that the increase in Bill Gates' wealth since the Forbes look last year would be just about enough to lift the income of all poor Americans to the poverty line for a year.
Gates's net worth, she also reckons, is greater than the annual gross domestic products of Central America, Jamaica, Bolivia, Dominican Republic, Haiti, and Grenada - 10 nations in all.
Of course, paper wealth is not the same as the genuine output of goods and services produced in these countries. If Gates were to try selling all his stock in a short time, much of his wealth would disappear as its price fell.
And huge wealth has some disadvantages along with its benefits. The Gates "Wealth Clock" on the Internet does not flatter him, to say the least. Wealth can generate envy from those not obeying the "Thou shalt not covet" commandment.
Those stirring up concern with economic inequity, such as Ms. Leondar-Wright, are often charged with envy or engaging in class warfare.
Yet there are valid issues raised by the extreme inequality in wealth distribution in the United States.
Edward Wolff, an expert on wealth at New York University, calculates that the inflation-adjusted net worth of the median household fell from $54,600 in 1989 to $49,900 in 1997. The median is the point where as many households have greater wealth as have less wealth.
The median wage in real terms has risen in the past two years, finally reaching its 1989 level this past winter.
But wealth, which is accumulated savings and other assets, has not passed the 1989 peak prior to the 1990-91 recession, says Professor Wolff. Many families dip into their savings and take home loans to maintain their living standards.
Personal debt has risen. "This is a very disturbing trend," says Wolff, who describes himself as a "progressive Democrat."
That's because wealth is an economic "safety cushion" against job loss and sickness. It can be turned into the consumption of goods and services. And houses, which hold a large chunk of wealth, provide shelter.
For Wolff, one danger of extreme wealth inequality is that those with loads of money use it to win political influence and power.
Some 90 percent of campaign contributions come from the richest 10 percent of families, he says.
"So you can see why Congress is not eager to support measures adverse to the rich," he says. "It would be politically suicidal."
Most Republican tax measures, such as abolishing the estate tax, favor the well-to-do, says this Democratic economist.
A new tax bill, sponsored by representatives from both parties, would increase the amount of income subject to the low 15 percent tax rate rather than 28 percent.
Sounds great. But an analysis by Washington's Center on Budget and Policy Priorities says this "Middle Class Tax Relief Act" would actually help the well-to-do. Three-quarters of families with less income would get no benefit.
A counter view is that tax cuts for the rich stimulate business, and prosperity trickles down.
Wolff says it's not trickling and advocates a host of government measures to help the less affluent.