When I was a young man in Washington in the 1960s, most of the country’s economic growth actually accrued to the bottom 90% of households – in other words, to the majority of everyday people. From the end of World War II until the early 1970s, incomes grew at a slightly faster rate at the bottom and middle of the economic distribution. The economists Thomas Piketty and Emmanuel Saez looked at tax data from 1950 through 1980 and found that the share of all income going to everyone BUT the rich increased to 65%. The average income for 9 out of 10 Americans was growing, too – from $17,719 to $30,941. That’s a 75% increase in income content in constant 2008 dollars, when their study was published.
Then something happened. Since 1980 the economy continued to grow impressively, but most of the benefits went to the top. Workers were more productive but shared less in the wealth they were helping to create. As the richest among us began to capture the rising share of economic growth the line flattens for the bottom 90%. In the late 1970s the richest one percent received nine percent of total income and held 18% of the nation’s wealth. By 2007, they had more than 23% of total income and 35% of the wealth. Now, more than 50% of all the income gains go to the richest one percent. The 400 wealthiest individuals on the Forbes 400 list own more wealth than the bottom 150 million Americans; those 400 possess more wealth than half the country combined. At no time in modern history has the top one hundredth of one percent owned more of our wealth or paid so low a tax rate.
This phenomenon has changed America, because inequality matters. Surveying its impact…
On economic growth, which it slows;On health, which it undermines;On social cohesion and solidarity, which it erodes;On education, affordable housing and other public services, which it starves;On government, which it hijacks.
The scholar Robert McChesney concludes, sadly: “This isn’t what democracy looks like.”