What's Your Inequality Tax?

This article originally appeared on OtherWords.org

Who is the world’s richest country? 

That may seem like a simple question, but it’s not. According to the Global Wealth Report from banking giant Credit Suisse, it all depends on how we define “richest.”

If we mean the nation with the most total wealth, we have a clear No. 1: the United States. The 245 million U.S. adults hold a combined net worth of $106 trillion. 

No other nation comes close. China ranks a distant second, with a mere $64 trillion, Japan even further back at $25 trillion.

But if we mean the nation with the most wealth per person, top billing goes to Switzerland. The average Swiss adult is sitting on a $565,000 personal nest-egg. Americans average $432,000, only good enough for second place. 

So does Switzerland merit the title of the world’s wealthiest nation? Not necessarily. 

The Swiss may sport the world’s highest average wealth, but that doesn’t automatically mean that their nation has the world’s richest average people.

We’re not playing word games here. We’re talking about the important distinction that statisticians draw between mean and median. 

To calculate a national wealth mean — a simple average — researchers just divide total wealth by number of people. The problem? If some people have fantastically more wealth than other people, the resulting average will give a misleading picture about economic life as average people live it.

Medians can paint a more realistic picture. Statisticians calculate the median wealth of a nation by identifying the midpoint in the nation’s wealth distribution — that point at which half the nation’s population has more wealth and half less. 

Medians, in other words, can tell us how much wealth ordinary people hold.

By this median measure, Switzerland holds up as a strikingly wealthy nation. The United States does not. Typical Swiss adults turn out to hold $228,000 in net worth, the most in the world. Typical Americans hold personal fortunes worth just $66,000. 

Typical Canadians, with $107,000 per adult, have more wealth than that U.S. total. So do typical Taiwanese ($70,000), typical Brits ($97,000), and typical Australians ($181,000).

Overall, typical adults in 16 other developed nations have more wealth than we do here. Typical Japanese adults, for instance, hold $110,000 in personal wealth, a net worth considerably higher than the $66,000 Americans can claim.

Why do ordinary Americans have so little wealth when they live in a nation that has so much? In a word: inequality. Other nations have much more equal distributions of income and wealth than the United States. 

Japan in particular stands out here. The new Credit Suisse 2019 Global Wealth Report notes that Japan “has a more equal wealth distribution than any other major country.” Japan’s richest 10 percent holds less than half their nation’s wealth, just 48 percent. In the United States, the top 10 percent hold nearly 76 percent, over three-quarters of national wealth. 

How would typical Americans fare if we were as equal as Japan? If we succeeded at turning our economy around that way, the net worth of America’s most typical adults would triple, from $66,000 to $199,000.

In effect, the difference between those two totals amounts to an “inequality tax.” 

By letting our rich grab an oversized share of the wealth all of us help create, we are taxing ourselves into economic insecurity. Other nations don’t tolerate greed grabs. Why should we?

Sam Pizzigati co-edits Inequality.org for the Institute for Policy Studies. His latest book is The Case for a Maximum Wage. This op-ed was distributed by OtherWords.org.

Wildfires Make Case for Public Utilities

This article originally appeared on OtherWords.org

Right now, thousands of Californians are fleeing raging wildfires, while millions sit in the dark. And for-profit utilities may be to blame.

Pacific Gas & Electric — a private, for-profit utility in the state — has admitted that its equipment likely caused 10 wildfires this year alone. To avoid further damage, the utility has been shutting off its customers’ power when weather conditions cause increased fire danger.

Will this lower the risk of wildfires? Maybe. It will also leave blacked out hospitals choosing whether to refrigerate their vaccines or keep their medical records online.

As Vox environmental reporter David Roberts put it, giving customers a choice between blackouts or fires is a failure.

A popular theory says that businesses must be “efficient” in order to survive in a competitive marketplace. By contrast, the government — without such market pressure — is naturally “inefficient.”

But even in the best cases, for-profit utilities with state-sanctioned monopolies are not functioning in a competitive marketplace. And unlike public utilities, which simply have to cover the costs of operating, privatized utilities must generate something else: profits.

How do they do this? By cutting costs — including employee salaries and benefits, customer services, and equipment upgrades. In the case of PG&E, it’s meant failing to upgrade and maintain their aging infrastructure.

It would be one thing if PG&E’s grid used all of the latest, most up-to-date technology. But that’s not the case. Instead of making their grid more resilient, now they simply shut it off when the weather gets bad — and it may still be causing fires.

And if customers don’t like that, too bad. It’s a monopoly.

Prices and service aren’t the only things at stake. We also need to get power from sources that are reliable, safe, and environmentally clean.

A corporation with a profit incentive, which needs to provide shareholders with growth each quarter, may not invest in that. Upgrading and maintaining infrastructure cuts into profits, giving them a reason to sacrifice safety and eco-friendliness to cut costs.

Imagine a circumstance in which most consumers and businesses get their power from clean, rooftop solar panels.

Sounds great, but there’s a big problem for for-profit utilities: After the initial manufacturing and installation, there’s no profit in people getting their power from the sun.

It’s clean, it’s technologically sound, and yet it’s not available to most people. As long as private, for-profit corporations provide our power, cleaner solutions like rooftop solar will remain out of reach to many.

But what if we had publicly owned utilities?

The wildfires — and the climate crisis that’s making them worse — are public problems. The reliability of our power grid is a public need.

When we privatize our utilities, we limit the solutions we can choose from to those that are profitable to a corporation. We risk situations like the one we are in now, in which the public is suffering the consequences of decisions a private entity made to maximize its own profits.

The public interest, not private profit, should be priority No. 1. If there’s a silver lining to this mess with PG&E, it’s that more people will demand that.

OtherWords columnist Jill Richardson is pursuing a PhD in sociology at the University of Wisconsin-Madison. Distributed by OtherWords.org.