Wall Street and Main Street

September 15, 2010

Today it is easy to hate Wall Street. Almost everyday in the news we hear about something someone or some organization did to promote the financial and banking industry meltdown. Generally our first reaction is to blame. While I don’t think that either executives in the banking or financial industry are without fault, sitting back and complaining and moaning about it will accomplish nothing.

The World Distribution of Household Wealth by the Helsinki-based World Institute for Development Economics Research of the United Nations University states that 2% of the people hold the 50% of the worlds wealth, 1% hold 40% and the top 10% hold 85% of the worlds wealth. They define wealth at Net Worth vs just annual income. While we live in global economy, I want to contrast this report to one by Professor G. William, Sociology Dept at UC Santa Cruz who published a paper, updated this August, that shows that in the U.S. 34.6% of total Net Worth is held by the top 1%, the next 19% hold 50.5% and the bottom 80% hold a mere 15% resulting in 85.1% of wealth residing with the top 20%. A 2007 report by the U.S. Census Bureau show that 40.1% of the population earns over $75,000 per year, 51.9% earn between $15,000 and $74,999 per year and 8% earn $15,000 or less.

This is all interestingly summarized in a statement that was made to me by an Investment Banking Attorney, “1% of the people in this country earn $1 million or more per year, 5% earn $100,000 or more per year and the rest earn less than $100,000 per year. This means that 1% think, 5% think they think and the rest would rather die then think”. Okay, okay, I’ll hold him while you hit him. But this is just a good example of what the people controlling the wealth, and in turn the government, think. I’d translate this to the wealthy aggressively exercise their voice, money and vote to get the people in place to ensure their continued success and the rest of use just aren’t as effective (I’m being polite).

So if 80% of the people earn about 15% of the annual income in this country and want to change the rules, they have the power (in their sheer numbers) to shift things. This 80% we like to call “Main Streeters”. They make up the small businesses that are responsible for the majority of current and new jobs. In turn, they are at the center of a stable and sustainable economy. They are also the people who support these businesses by buying their products and services.

Like the “wealthy” Main Streeter can also shift things with their votes and they can also shift things with their actions. At Money for Main Street we think Main Streeter can take action by banning together in a community where they provide the resources that small business need to prosper, including peer-to-business social lending, providing small business focused products and services and the advice and experience they share.

So rather then being angry at Wall Street, support and build Main Street.