The Class War Launched by America's Wealthiest Is Getting More Savage
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We’re in a class war.
It’s the corporations and the very wealthiest against all the rest of us. We’re losing.
In 1962 the wealthiest 1 percent of American households had 125 times the wealth of the median household. Now it’s 190 times as much. Is that a case of a rising tide lifting all boats, just a few of them a little bit higher? No.
From 1950 to 1965, median family income rose from $24,000 a year to $38,000 a year. That’s close to 4 percent a year, close to 60 percent over 15 years. That’s a rising tide.
In 1964 there was a big tax cut. That’s when things started to slow down for average people. By the mid-'70s the rise of the middle class stalled. From 1975 to 2010 median family income rose $42,936 to $49,777. That’s not quite 16 percent over 25 years, less than six-tenths of 1 percent per year.
Briefly, when taxes went up under Clinton, median income rose, peaked at $52,587 in 1999, and then, after Bush cut taxes, declined. Keep in mind that this is median family income. In the '50s and '60s, family income was usually earned by a single person. Today, family income normally comes from at least two people.
At the same time, income for the richest soared. In 1979 the richest 1 percent of Americans earned 9 percent of all U.S. income. Now they earn 24 percent of all U.S. income. One percent of Americans earn nearly one-fourth of all the income in the country.
Then came the crashes of 2001 and 2008 and the recessions that followed.
The crash hasn’t changed anything. Things have become worse.
From 1990 to 2005, adjusted for inflation -- the minimum wage is down 9 percent, production workers’ pay is up only over 15 years 4.3 percent.
At the same time, the rich get richer:
Corporate profits are up 106.7 percent. The S&P 500 is still up 141.4 percent since 1990. CEO compensation is up 282 percent. Call it transfer of wealth. Or call it class warfare.
What’s wrong with the rich getting richer?
Slate's Timothy Noah, in " The United States of Inequality," wrote, “Income distribution in the United States [has become] more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador.”
Take a look at that list.
Countries with wide income inequality don’t lead the world in research, technology, industry, and innovation. They’re unstable. They have large underclasses. They have high rates of crime. They have little opportunity.
In such countries the rich have disproportionate power. They take control of all aspects of society, especially government, the police, and the judiciary. They become self perpetuating.
If current trends continue, “The United States by 2043 will have the same income inequality as Mexico.” (Tula Connell, Mar 12, 2010, AFL-CIO Now.)
Countries with high levels of income inequality are third-world countries.
Here’s how regular people can deal with cultures of high inequality. The primary, and best, weapon is a progressive tax structure. As people move up the income ladder they pay a higher rate at each rung. Unearned income –from dividends and capital gains – is taxed at least as high as earned income (money that people actually work for.) Tax cuts for the wealthy mark, with great precision, the decline in fortunes of ordinary Americans. Tax cuts for the wealthy mark, with equal precision, the increase in inequality. We had a chance to slow the process by letting the last round, the Bush tax cuts, expire. We’ve lost that round.