OurTown: A Parable about Inequality and the Top 1 Percent
By Walt Glazer, In Bull Market
Note from James: After I wrote “The Magnitude of Inequality,” Walt Glazer sent me the story below, which he had previously written. It’s based on an analogy that’s similar to the one I used, but more developed in some ways. I offered to post it here and he agreed.
Imagine, somewhere in America, a place called OurTown. It’s an average community of 10,000 households, much like the rest of the country, except for the fact that the annual income of each household determines the height of their dwelling. For every $10,000 of income they get a foot of headroom.
So, if everyone had the same income (based on $13 trillion national income divided equally among 115 million households resulting in an average/meanincome of $113,000 a year) they could all live comfortably in single-story homes with 11 foot ceilings.
But due to inequality today, the average/median annual household income is only about $50,000. Therefore, half (5,000) of the OurTowners must live within a tight 5 foot headroom and the poorest among them are squeezed under a 2 foot ceiling. Of the rest of the bottom 90%, most (4,000) can stand up within their single-story houses.
This leaves the top 10 percent of the community. Most of them (900) have “comfortable” incomes between $108,000-$386,000, often based on two-incomes, and can enjoy living in two- and three-story homes, with easy access to the ground.
The remaining top 1 percent with annual incomes over $386,000 all live in a high-rise apartment building. Most of them (90) are “rich” doctors, lawyers and business people earning up to $2 million a year. Living below the 20th floor, they can still see the ground and sometimes take the stairs for exercise.
Above them, however, are the top .1 percent of OurTowns householders with annual incomes over $2 million. Most (9) are executives and business owners with generous salaries and bonuses. These “very rich” residents live in luxury suites in a separate tower, serviced by a high-speed elevator, rising 1,100 feet above the ground.
At the top, however, lives the richest OurTowner who is in the top .01 percent, an investor/speculator with an estimated income over $30 million a year. This figure is said to be larger than the combined incomes of the lower half of the community; it is not surprising, therefore, that he is called “stinking rich.” Living in the penthouse, thousands of feet in the air, it is unclear how he gets back to the ground.
Like the rest of America, OurTown was badly divided: the majority of homeowners rarely saw the rich apartment owners and the richest living in the tower spoke to no one else. They were no longer a community, with shared experiences, values and responsibilities.
And then one day everything changed. The old, polluting power plant stopped working. Some people blamed the apartment owners for using too much electricity; others said the cause was a foreign internet attack. But everyone was affected and the richest suffered the worst.
For most OurTowners living in houses, this was a challenge but they adjusted by using their fireplaces and opening windows. They could still walk outside to go to work, school and shopping. And the air quality improved near the ground.
But in the apartment building the loss of electricity was catastrophic. With no heating or air conditioning, and sealed windows, the apartments became fetid. With no elevators, residents had to use the stairs or were stuck inside. The richest residents in the tower could not see the ground through the dark polluted air, and became claustrophobic.
The OurTown power plant was owned by the community and they all attended a meeting to discuss what to do. The investor/speculator and his rich friends offered to buy the old plant and pay to repair it. But this proposal was booed down loudly. Instead, an alternative proposal was passed by acclimation for a special assessment on residents to finance a new green energy plant.
However, the assessment was limited to incomes over $1 million a year This affected only a couple of dozen residents, who protested and threatened to go to court, but they were quickly shamed into silence.
Together, this assessment came to about a tenth of the total OurTown income that year (on a national basis, all personal income over $1 million a year from the richest 1.35 million Americans would produce about $1.3 trillion). It paid for the plant and left money for other worthwhile community projects.
By this time, many of the richest OurTowners had moved out of their high-rise apartments. They felt it was not safe, healthy or friendly. They wanted to get their feet back on the ground. As one said, “We are all in this together.” Now imagine that!
Note on Sources
The name “OurTown” is obviously based on the Thornton Wilder play, “Our Town,” but updated into a single word.
Statistics come from the New York Times and Census data. Numbers can vary depending on definitions, sources, dates, etc. but the ones used here seem recent/reliable. But they may need to be updated.
Walt Glazer is a retired American historian who taught at the University of Pittsburgh and now lives in Sagamore Hills, Ohio.