Not since the Gilded Age of the late 19th century has America witnessed such a rapid shift in the distribution of economic wealth as it has in the past 30 years.
This article on economic inequality arrived this morning from Alternet. It was entitled, Who's Gorging and Who's Getting Roasted in the Economic Barbecue? and was written by James M. Cypher, for Dollars and Sense. The excerpts are posted with Alternet’s permission.
Democratic candidates must not forget to talk up the Bush tax cuts for the wealthy in race up to the primaries and beyond.
The entire article is here. I will summarize what James Cypher wrote:
http://www.alternet.org/...
Economic inequality has been on the rise in the United States for 30-odd years. Not since the Gilded Age of the late 19th century -- during what Mark Twain referred to as "the Great Barbeque" -- has the country witnessed such a rapid shift in the distribution of economic resources.
Still, most mainstream economists do not pay too much attention to the distribution of income and wealth -- that is, how the value of current production (income) and past accumulated assets (wealth) is divided up among U.S. households. Some economists focus their attention on theory for theory's sake and do not work much with empirical data of any kind. Others who are interested in these on-the-ground data simply assume that each individual or group gets what it deserves from a capitalist economy. In their view, if the share of income going to wage earners goes up, that must mean that wage earners are more productive and thus deserve a larger slice of the nation's total income -- and vice versa if that share goes down.
Heterodox economists, however, frequently look upon the distribution of income and wealth as among the most important shorthand guides to the overall state of a society and its economy. Some are interested in economic justice; others may or may not be, but nonetheless are convinced that changes in income distribution signal underlying societal trends and perhaps important points of political tension. And the general public appears to be paying increasing attention to income and wealth inequality. Consider the strong support voters have given to recent ballot questions raising state minimum wages and the extensive coverage of economic inequality that has suddenly begun to appear in mainstream news outlets like the New York Times, the Los Angeles Times, and the Wall Street Journal, all of which published lengthy article series on the topic in the past few years. Just last month, news outlets around the country spotlighted the extravagant bonuses paid out by investment firm Goldman Sachs, including a $53.4 million bonus to the firm's CEO.
By now, economists and others who do pay attention to the issue are aware that income and wealth inequality in the United States rose steadily during the last three decades of the 20th century. But now that we are several years into the 21st, what do we know about income and wealth distribution today? Has the trend toward inequality continued, or are there signs of a reversal? And what can an understanding of the entire post-World War II era tell us about how to move again toward greater economic equality?
The short answers are: (1) Income distribution is even more unequal that we thought; (2) The newest data suggest the trend toward greater inequality continues, with no signs of a reversal; (3) We all do better when we all do better. During the 30 or so years after World War II the economy boomed and every stratum of society did better -- pretty much at the same rate. When the era of shared growth ended, so too did much of the growth: the U.S. economy slowed down and recessions were deeper, more frequent, and harder to overcome. Growth spurts that did occur left most people out: the bottom 60% of U.S. households earned only 95 cents in 2004 for every dollar they made in 1979. A quarter century of falling incomes for the vast majority, even though average household income rose by 27% in real terms. Whew!
The rest of James Cypher’s article contains interesting subheadings which I abstracted.
The classless society
The Census studies still attribute 50% of total income to the top fifth for 2003, but this number appears to understate what the top fifth now receives -- nearly 60%, according to the IRS.
A brave new globalized world for workers
.....beginning in the early 1970s, U.S. corporations and the wealthy individuals who largely own them had the means, the motive, and the opportunity to garner a larger share of the nation's income -- and they did so.
.....companies took a two-pronged approach to strengthening their hand vis-à-vis workers: (1) a frontal assault on unions, with decertification elections and get-tough tactics during unionization attempts, and (2) a debilitating war of nerves whereby corporations threatened to move offshore unless workers scaled back their demands or agreed to givebacks of prior gains in wage and benefit levels or working conditions.
.....both Republican and Democratic administrations have tailored their economic policies to benefit corporations and shareholders over workers.
Exploding millionairism
Given these shifts in the political economy of the United States, it is not surprising that economic inequality in 2000 was higher than in 1970.
....labor's share of the nation's income is falling.
Aiding and abetting
And the federal government is continuing to play its part, facilitating the transfer of an ever-larger share of the nation's income to its wealthiest households. George W. Bush once joked that his constituency was "the haves and the have-mores" -- this may have been one of the few instances in which he was actually leveling with his audience.
These tax cuts represent only one of the many Bush administration policies that have abetted the ongoing shift of income away from most households and toward the wealthiest ones.
Here we find the crucial link between income and wealth accumulation. Able to save nearly a quarter of their income, the rich search out financial assets (and sometimes real assets such as houses and businesses) to pour their vast funds into. In many instances, sometimes with inside information, they are able to generate considerable future income from their invested savings. Like a snowball rolling downhill, savings for the rich can have a turbo effect -- more savings generates more income, which then accumulates as wealth.
Lifestyles of the rich
Make the rich even richer and the creative forces of market capitalism will be unleashed, resulting in more savings and consequently more capital investment, raising productivity and creating abundance for all. At any rate, that's the supply-side/neoliberal theory. However -- and reminiscent of the false boom that defined the Japanese economy in the late 1980s -- the big money has not gone into productive investments in the United States.
Had enough of the "haves"?
.....(Mark) Twain decried as the "great barbeque," the outrageous concentration of income and wealth eventually sparked a reaction and a vast reform movement. But it was not until the onset of the Great Depression, decades later, that massive labor/social unrest and economic collapse forced the country's political elite to check the growing concentration of income and wealth.
Today, it does not appear that there are, as yet, any viable forces at work to put the brakes on the current runaway process of rising inequality.
If the Democrats cannot provide that force, who will?