Wealth And Income Disparity

If you are a regular (or even if we’ve met for only a hot second) you know my decidedly negative views of what I call the thirty year old Conservative Economic and Social Experiment America has been suffering under.  It is, for example, incontrovertible that the wealth and incomes of today’s Working and Middle class Americans have declined over this period.  And don’t get me started on the soul-destroying costs of getting a college degree today.   Until 1980, and for a few subsequent years, it was possible for a factory worker with a high school diploma to buy a house, save for the kids’ higher education, buy a new car every two years and take a vacation once a year.  Mind you, all of this on a single salary.  No more.  Those days are gone and I dare say they will never return during anyone’s lifetime who’s not on life-support in America today.  (I hope I’m wrong about this assessment but I’m not optimistic.  It’s going to take a long, long time to recover from the past thirty years.)    

So as shorthand to the Wealth and Income anomaly that I often speak and write about, here a few charts and graphs to consider if you remain unconvinced.  Most of the information comes from Piketty and Saez's work.  

Above:  Note that it was not during the Great Depression that the top 10% share plunged but during and after World War II when ordinary folks were started doing well. 

 Below:  Note the extraordinary growth between 2009 - 2011 of the Top 1%.

Above:  A large part of the reason for our current disparity - cuts in marginal tax rates.  

Below:  Is there a direct correlation here? 

Below: What Americans think wealth distribution is (top bar) and what we see as the ideal distribution (bottom bar).

Below:  But here's the REAL deal:

Below:  WOW!

Below: Ideal Distribution of Wealth According to Americans

Below: Actual Distribution of Wealth

Above: Back in the 1970's CEO's earned around 40 times the average worker's pay.  Today it's close to 400 times. 

All righty then.  As I've said many times, I can't prove that what these charts catalog is directly related to the Milton Friedman/Chicago School of Economics Free Market conservative economic policies we've had in place for the last thirty years.   But I don't see any other explanation on the horizon either.  

You will read and probably already have, many economists and media pundits defending this skewed distribution of wealth and income.  Typically they argue that it's the wealthy who are the job creators and the wealthy who invest money that expands the economy.  To me this line of reasoning is no different than saying that Romney's Bain Capital was a job creator.  It wasn't.  We have a consumer economy and rich people don't keep buying cars or houses or boats every year.  Maybe four or five of each and they're done.  They do invest heavily in stocks, bonds and mutual funds which, indirectly at least, does flow to corporations. And Wall Street brokers, of course.  On the other hand, if there is reduced effective demand for goods and services as happens during recessions, companies aren't going to produce goods and services that they can't sell.  It's really the rest of us who keep the economy pumping, not the rich, and the more disposable income we have to spend, the more the economy grows.

Of course, our economic situation is influenced by a myriad of factors - trade laws, labor force participation rates, wages, Federal, state and local laws, etc. etc. - but looking back over the past thirty years it would seem that public economic policy benefits have been highly skewed in favor of the wealthy.  Maybe it's time to rethink where we're going.  

The charts I've posted here are only a smattering of the top notch information that's included in the video where this information came from.  It's well worth you time.    


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