What Ever Happened to Opportunity Capitalism?

By / 9.27.2010

The number of billionaires based in New York City increased from to 56 to 57 from 2009 to 2010 and their collective net worth increased by $19 billion (from $183.5 billion to $202.65 billion), even as poverty soared, according to data recently released by Forbes magazine and analyzed by my organization, the New York City Coalition Against Hunger.

Given the soaring poverty, high unemployment, and stagnant wages for rank-and-file workers, these numbers show the folly of the politicians who want to further extend tax cuts for the mega-rich while doing nothing to prevent subway fair hikes – which are essentially tax increases on millions of working New Yorkers.

One of the main reasons that transit authorities in New York and elsewhere have to raise fares is that operating subsides from the federal government and state governments have been slashed, and one of the main reasons that neither the federal government nor the states have enough money for such subsidies or other vital purposes is that they no longer require the wealthiest to pay their fair share of taxes.

A person in New York working full-time at a minimum wage salary ($7.25 per hour) for 52 weeks would earn $15,080 in a year, often too little to feed their family. According to the Coalition’s calculations, that means that New York’s 57 billionaires collectively have as much money as the annual earnings of 13 million minimum wage workers. Those billionaires have an average net worth of $3.6 billion, which means that on average, each billionaire has as much money as the annual earnings of 232,000 minimum wage workers.

I am a committed capitalist. I firmly believe that our society should reward hard work and talent with success, as it once did for my grandparents and so many others after they came to this country. I don’t believe in government trying to guarantee equal outcomes, but government should ensure a level playing field for equal opportunity.

But does anyone believe that the main reason that the average New York City billionaire has 232,000 times as much money as the average minimum wage worker is that the billionaire works 232,000 times as hard or is 232,000 times as talented?

In the last few decades, all too often, wealth at the top has been generated by rigging the system in ways that actually hamper the long-term economic health of the society as a whole. We need to replace the crony capitalism of today with what I call the ‘opportunity capitalism’ of previous generations that gave families who worked hard and played by the rules the ability to get ahead.

And we need to once again ensure that the ultra-rich pay their fair share of taxes, which are necessary to maintain basic services. Government’s retreat from progressive taxation has resulted in food stamps funding cuts at the federal level, food pantry and soup kitchen cuts at the state level, and school lunch cuts at the city level. This is not just vague economic theory – this is real-life pain for hungry families.

Photo credit: Steve Wampler