Income inequality is starting to gather a wee bit of attention from the megamedia, although it still doesn't often make an appearance on page one or the evening news. On Sunday, The New York Times published a piece on the sixth page of the business section by Cornell University Professor Robert Frank that scratched the surface of a subject that was given a good deal more attention when practically every newspaper in the country had a labor reporter on staff.
During the three decades after World War II, for example, incomes in the United States rose rapidly and at about the same rate — almost 3 percent a year — for people at all income levels. America had an economically vibrant middle class. Roads and bridges were well maintained, and impressive new infrastructure was being built. People were optimistic.
By contrast, during the last three decades the economy has grown much more slowly, and our infrastructure has fallen into grave disrepair. Most troubling, all significant income growth has been concentrated at the top of the scale. The share of total income going to the top 1 percent of earners, which stood at 8.9 percent in 1976, rose to 23.5 percent by 2007, but during the same period, the average inflation-adjusted hourly wage declined by more than 7 percent.
Yet many economists are reluctant to confront rising income inequality directly, saying that whether this trend is good or bad requires a value judgment that is best left to philosophers. But that disclaimer rings hollow. Economics, after all, was founded by moral philosophers, and links between the disciplines remain strong. So economists are well positioned to address this question, and the answer is very clear. ...
ECONOMISTS who say we should relegate questions about inequality to philosophers often advocate policies, like tax cuts for the wealthy, that increase inequality substantially. That greater inequality causes real harm is beyond doubt.
This bears repeating until every American has heard it at least 10 times to partially counteract the propaganda from the other side that has spurred people to vote and support policies against their own interests. As Chad Stone at the Center for Budget and Policy Priorities pointed out again Monday, in the first 30 or so years after World War II, Americans in just about every income cohort saw their inflation-adjusted incomes nearly double. Then a radical change occurred, as you can see in a CBPP chart that ought to be reprinted and broadcast every single day that extending tax cuts for the wealthy remains under serious consideration. (Of course, that would require having a media that isn't controlled by the very folks who have been pushing the policies that created that skewed banana-republic income ratio in the first place.)
Wealth, a far different measure than income, but obviously not disconnected from it, also is ever-more skewed. Economist G. William Domhoff has written about this for decades. Taking his cue from the research of Edward N. Wolff at New York University, he has recently updated some of his work.
The most recent figures (2007) show that the top 1 percent of America households own 34.6 percent of all private wealth. The next 19 percent own 50.5 percent. That leaves 15 percent of the wealth for the bottom four-fifths of the population. Historically speaking, the situation was worse in 1929 when the top 1 percent owned 44.2 percent of the wealth. In 1976, their worst year, the top sliver of Americans owned only 19.9 percent.
Stir race into that class calculation and matters deteriorate even further:
In 2007, the average white household had 15 times as much total wealth as the average African-American or Latino household. If we exclude home equity from the calculations and consider only financial wealth, the ratios are in the neighborhood of 100:1. Extrapolating from these figures, we see that 70% of white families' wealth is in the form of their principal residence; for Blacks and Hispanics, the figures are 95% and 96%, respectively.
What matters most is the inordinate power this skewed income-and-wealth ratio creates. That the wealthy are powerful and use their wealth to maintain and expand that power is not exactly news. Trying to limit that power has, after all, been the work of reformers for a long, long time. But the very fact of that skewing, coupled with ever-worsening Supreme Court's rulings that corporations are people, money is speech and contributions to electioneering can't be prohibited, has put reformers at a worse disadvantage than ever.
Finding the means of overcoming that disadvantage is crucial if we are to avoid seeing the top 20 percent own 95 percent instead of 85 percent of the wealth, with political clout to match. One key ingredient in this fight is knowing the details of what it is we're fighting, something Domhoff has been actively pursuing since 1967 when he wrote the first edition of Who Rules America?, now in its 6th revision, with an addition to the title, Power, Politics and Social Change. Not by any means is this a mere philosophical take, but a valuable, practical guide for power researchers, community organizers and other Americans determined not to let the current state of affairs continue eternally.