Thanksgiving 2019 is shaping up to be one of the best from an economic perspective in our history. The cost of the turkey dinner this year will be lowest since 2005 thanks to competition. An estimated 55 million Americans will travel for the holiday, including 4.4 million by air. They will gobble up 46 million turkeys and consume 8.1 billion calories at dinner. The National Retail Federation expects consumers to spend a whopping $730 billion with retailers during the holiday season, including a record $142 billion online. What we used to call “Black Friday” now stretches from the first of November to the week after Christmas. The economy is growing and unemployment is at record lows. We have a lot to be thankful for.
But not all of us are benefiting equally from the strong economy. Structural imbalances have been building over the past 40 years that have exacerbated the concentration of income and wealth in the United States and continue to widen the gap between the top 10% and the rest of the population. Continued expansion of this disparity will ultimately have profound consequences for democracy. This would be a worthy topic for discussion around the Thanksgiving table this season.
Marketwatch columnist Rex Nutting suggests a fascinating analogy to illustrate the magnitude of wealth inequality in America. Consider this adaptation of his example.
Suppose your Thanksgiving feast included 10 hungry family members gathered around the table. To demonstrate the issue, you decide to carve the turkey and divide it up not equally, but according to the relative distribution of wealth in the United States. A 15 pounder should yield about 5.5 pounds of edible meat.
Since you are the wealthiest, you first take your portion: 68 ounces (a little over four pounds). That represents the share of wealth in the hands of the top 10% of Americans (77% of the total according to the Federal Reserve Bank of St. Louis).
Moving on, four of your guests each receive 5 ounces, symbolizing the fact that the next 40% of the population owns 22% of the wealth.
Finally, we come around the table to the last five, representing the bottom 50% of the wealth distribution which holds 1% of the total. You serve up one quarter ounce of the bird to each. And please pass a teaspoon of mashed potatoes.
The illustration is stark but thought-provoking.
Each of us in America has much for which to be grateful. But the Holiday season also presents an opportunity to reflect upon how we can do better. We have been blessed with tremendous resources, and have changed the course of history by applying the power of capitalism and market forces to unleash a tsunami of innovation that has benefited us all. But it is also the case that capitalism is imperfect and allows for significant imbalances to develop over time that stress the fabric of democracy and can rend that fabric if left unattended for too long. The challenge is to accept the fact of deepening inequality and begin to address it without falling into the trap of villainizing the achievers and innovators who have made our prosperity possible.
This discussion is difficult and will require good faith. But our nation has a long history of coming together in good faith when the times demand it. As we gather together to celebrate the many blessing we enjoy as Americans, perhaps we can begin a conversation on how to strengthen and preserve the best of capitalist democracy by retaining the ideal and correcting the flaws.
Very best wishes for a very happy Thanksgiving Day and a wonderful holiday season.
Christopher A. Hopkins, CFA, is a vice president and portfolio manager for Barnett & Co. in Chattanooga.