Rich still getting richer
The rich get richer. Andrew Jackson may have been the first to register the complaint in those terms. “When the laws undertake … to make the rich richer and the potent more powerful, the humble members of society… have a right to complain of the injustice to their Government.”
The phrase was popularized in a sarcastically titled hit song from 1920, “Ain’t We Got Fun?”: “The rich get rich and the poor get poor / In the meantime, in between time / Ain’t we got fun?”
But sadly, it was never more true than today.
Perhaps the leading American scholar of economic inequality — a fine academic phrase but a lousy message — is professor Emmanuel Saez, a Berkeley economist who has charted waxing and waning wealth concentration beginning in 1913.
Today, the wealthiest 10 percent of Americans take home a larger share of the nation’s income than at any point since data became available. The earlier high preceded the Great Depression. But from the mid-1940s until 1980, the richest 10 percent garnered about 33 percent of America’s total income. Their share then began a dramatic climb, culminating in 2012 (the most recent data available), when the wealthiest 10 percent received more than half — 50.4 percent — the nation’s income.
Most of those riches are further concentrated in the top 1 percent, who take home more than 20 percent of the country’s income — a percentage double what it was from 1948 to 1978.
These data answer one question clearly — it does not have to be this way.
Some inequality is inevitable. But America and Americans did quite well in the post-World War II era with vastly less inequality than we have now.
Putting the point more sharply, in terms often used by Republicans, the wealthy do not need to be rewarded at this level to be “job creators.” They are willing to make more money for themselves even if they have to share a bit more with everyone else. In fact, U.S. growth rates were higher in the decades before 1980, when equality was greater, than they have been since inequality took off.
Another often-proffered rationalization for inequality is that “a rising tide lifts all boats” (which, combined with “the rich get richer and the poor get poorer,” illustrates “Mellman’s First Law of Aphorisms” — for every aphorism, there is an equal and opposite aphorism). Economic tides haven’t worked that way.
During the economic expansion of the Bush years, incomes of the wealthiest 1 percent swelled by 61.8 percent, while incomes for everyone else increased by just 6.8 percent. And in the current recovery, incomes for the 1 percent increased 31.4 percent, but that was no help to others for whom the tide only rose by 0.4 percent.
Former President Bill Clinton demonstrated that the economy can be made to work for everyone. During his term, the 1 percent did nicely, seeing their incomes jump by a healthy 98.7 percent, but the rest of the country got a real benefit, too, with incomes growing 20.3 percent. The rich got much richer, but the rest of the country captured some of the benefit.
If inequality is not inevitable, why has it increased? In part, it’s because taxes for the wealthiest Americans have gone down. From 1953 to 1973, when the top marginal tax rates were 70 percent or higher, income growth for both the top 1 percent and the “bottom” 99 percent was strong. When top tax rates began to slide, income for the 1 percent surged, while the rest of the country began to stagnate.
The rich are richer than ever, but that is neither necessary to produce growth, nor does it trickle down. Equally important, the concentration of wealth in the hands of the richest 1 percent is not a natural or inevitable consequence of the free market; it is aided and abetted by government policy.
It’s time, as Jackson advised, for Americans “to complain of the injustice to their Government.”
Reprinted courtesy of The Hill.
Democratic pollster Mark S. Mellman is president of The Mellman Group.