The inequality of wealth and income in the US is greater than at any time since the 1920s. As Professor Elizabeth Warren has explained, “there is nobody in this country who got rich on his own.” Nobody. Not even Mitt Romney. As Simon Johnson, former chief economist of the IMF, noted recently, “the U.S. is unique…just as we have the world’s most advanced economy, military and technology, we also have its most advanced oligarchy.” Today, we are told by the 1% and their political representatives in Washington DC that we can no longer afford money for public education and the social safety net, even as trillions go to Wall Street and the unending wars purportedly fighting terrorism (although it could easily be argued that terrorism begets terrorism, we must also consider who in the world really uses & traffics in Weapons of Mass Destruction?).
The Occupy Wall Street protests (the 99%) are a protest, a rebellion of human beings thinking reasonably and rationally. After all, isn’t government supposed to serve the People, and not the other way around? Government employees are “public servants” not corporate servants, and not solely servants of the 1%. The greater the disparity in wealth between the very rich and everyone else, the more unstable an economy becomes. Consumer demand is what drives a capitalist economy, and as more people sink into poverty, they are unable to buy products because they don’t have enough income to make those purchases.
In 1928, one year before the global economic collapse of the Great Depression, the wealthiest .001% of the U.S. population owned 892 times more than 90% of the nation’s citizens. Today, the top .001% of the U.S. population owns 976 times more than the entire bottom 90%.
Chart courtesy of The Nation magazine. Click for full size.
As you can plainly see, there has been a radical redistribution of income to the top 1%. And yet, they don’t call this “socialism”. This dire economic situation just didn’t happen by accident either. The wealthiest 1% reaped 2/3rds of the economic benefits from Bush’s tax cuts. In 2010, top 1% incomes grew by 11.6% while bottom 99% incomes grew only by 0.2%, its lowest level in nearly 30 years. Hence, the top 1% captured 93% of the income gains in the first year of recovery. It is likely that this uneven recovery has continued in 2011-12 as the stock market has continued to recover. [For a more detailed description of these and other sources of income inequality data, please see Chad Stone, Hannah Shaw, Danilo Trisi, and Arloc Sherman, “A Guide to Statistics on Historical Trends in Income Inequality,” Center on Budget and Policy Priorities, March 5, 2012, http://www.cbpp.org/files/11-28-11pov.pdf.]
One out of every 5 children in the U.S. lives in poverty (21%) compared with approximately 4% in Sweden. One out of every 4 (25% of) children in the U.S. is receiving food stamps (SNAP). Social spending makes up most of the difference: in Sweden, social spending reduces child poverty by 70%, while in the U.S. it reduces child poverty only 5%, down from 26%. These differences arise as a result of policies that create these enormous inequalities in resources, or in the absence of policies that would bridge the inequalities.
This is a list of countries or dependencies by income inequality metrics, including Gini coefficients, according to the United Nations (UN), the World Bank, the US Central Intelligence Agency (CIA), and the OECD. The tables there are sortable by column, but in pretty much every case, the United States ranks right near the bottom among both developed and developing countries, meaning it has the highest rate of income inequality. We might expect to see something like this in authoritarian dictatorships, but not in a country like the U.S.
A number of factors may help explain this increase in inequality, not only underlying technological changes but also the retreat of institutions developed during the New Deal and World War II – such as progressive tax policies, powerful labor unions (.pdf), corporate provision of wages/salaries, health and retirement benefits, and changing social norms regarding pay inequality. We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional and tax reforms should be developed to counter it. And we need to vote for politicians that will propose and support those policies.