JUST SOME NUMBERS

I have made the point in this blog that a society that promotes economic inequality belies any political philosophical claim that that society believes in equality. Why? Because financial resources are a political resource in any political system and that includes a republican democracy like ours. Money buys access; it buys influence; it buys communication accessibility. All of these are political advantages for the person or group that has the dollars to spend. I believe that this is self evident, but those who question any policy that addresses these inequalities as “punishing the rich” either does not believe in equality, as a political ideal, or is just being naïve about political realities.

Assuming you agree at least minimally with my contention, here are some statistics about how the American distribution of income and wealth has shifted in the last several decades. These stats are offered by Joseph E. Stiglitz,¹ Nobel prize winning economist.

In 2007, the top 1 percent earned on average an after tax income of $1.3 million a year. The bottom 20 percent earned on average an after tax income of $17,800. Breaking it down to a week, the top 1 percent earned 40 percent more money than the bottom 20 percent earned in a year. What the top 0.1 percent earned in a day and a half equates roughly with what the bottom 90 percent earned in a year. The top 20 percent got higher pay than the bottom 80 percent. During the last thirty years, the bottom 90 percent of wage earners have had a growth in income of 15 percent while the top 1 percent saw their income rise almost 150 percent. The top 0.1 percent during that time saw a 300 percent increase. Leading up to the financial crisis, the lower and middle income earners, while their incomes moved relatively little, saw their “wealth” increase as the equity in their real estate ownership rapidly increased. Of course, everyone found out that this increase was a mirage when the real estate bubble burst. While all segments of the population were hurt by the bubble bursting, the upper income and wealth group was able to recover fairly quickly. That was not the case for lower income and wealth groups. The wealth ratio between the top 1 percent and the rest in terms of wealth is that they own 225 times more wealth which is double the ratio that prevailed in the years 1962 or 1983. As for income derived from capital, the top 1 percent enjoys 57 percent of all such income in our economy.

Stiglitz summarizes the situation as follows:

The simple story of America is this: the rich are getting richer, the richest of the rich are getting still richer, the poor are becoming poorer and more numerous, and the middle class is being hollowed out. The incomes of the middle class are stagnating or falling, and the difference between them and the truly rich in increasing.²

Not only do these facts affect the quality of our democracy, but our democracy is issuing policies that not only enable the disparities, but also help it along. Stiglitz makes the point that during the thirty years after World War II, a war that brought Americans together in common cause, policy was aimed at closing the disparities. It worked. But since the “Reagan revolution” the policy trend has turned 180 degrees. Hence, we face the reality the above numbers reflect.

1Stiglitz, J. E. (2012). The price of inequality: How today's divided society endangers our future. New York, NY: W. W. Norton and Company.

2Ibid., p. 7.