The Myth of Equality September 9, 2010Posted by Dwight Furrow in Dwight Furrow's Posts, Political Philosophy, politics, Uncategorized.
Tags: economic mobility, inequality, Timothy Noah
In 1915, the richest 1% garnered 18% of the nations income, according to Timothy Noah, writing a serious of articles about inequality on Slate
This was the era in which the accumulated wealth of America’s richest families—the Rockefellers, the Vanderbilts, the Carnegies—helped prompt creation of the modern income tax, lest disparities in wealth turn the United States into a European-style aristocracy. The socialist movement was at its historic peak, a wave of anarchist bombings was terrorizing the nation’s industrialists, and President Woodrow Wilson’s attorney general, Alexander Palmer, would soon stage brutal raids on radicals of every stripe. In American history, there has never been a time when class warfare seemed more imminent.
[…] Today, the richest 1 percent account for 24 percent of the nation’s income. What caused this to happen?
Over the next couple weeks, Noah will try to explain this trend toward greater inequality. But getting the timeline right is essential for a coherent account.
Incomes started to become more equal in the 1930s and then became dramatically more equal in the 1940s. Income distribution remained roughly stable through the postwar economic boom of the 1950s and 1960s. Economic historians Claudia Goldin and Robert Margo have termed this midcentury era the “Great Compression.” The deep nostalgia for that period felt by the World War II generation—the era of Life magazine and the bowling league—reflects something more than mere sentimentality. Assuming you were white, not of draft age, and Christian, there probably was no better time to belong to America’s middle class.
The Great Compression ended in the 1970s. Wages stagnated, inflation raged, and by the decade’s end, income inequality had started to rise. Income inequality grew through the 1980s, slackened briefly at the end of the 1990s, and then resumed with a vengeance in the aughts.
…from 1980 to 2005, more than 80 percent of total increase in Americans’ income went to the top 1 percent. Economic growth was more sluggish in the aughts, but the decade saw productivity increase by about 20 percent. Yet virtually none of the increase translated into wage growth at middle and lower incomes, an outcome that left many economists scratching their heads.
Why don’t we pay more attention to this increase in inequality?
One reason may be our enduring belief in social mobility. Economic inequality is less troubling if you live in a country where any child, no matter how humble his or her origins, can grow up to be president. In a survey of 27 nations conducted from 1998 to 2001, the country where the highest proportion agreed with the statement “people are rewarded for intelligence and skill” was, of course, the United States. (69 percent). But when it comes to real as opposed to imagined social mobility, surveys find less in the United States than in much of (what we consider) the class-bound Old World. France, Germany, Sweden, Denmark, Spain—not to mention some newer nations like Canada and Australia—are all places where your chances of rising from the bottom are better than they are in the land of Horatio Alger’s Ragged Dick.
Guyana, Nicaragua, and Venezuela, not to mention Germany, France, and the UK have income distributions more equal than ours, yet this seldom is a successful campaign issue. The myth of American commitment to equality dies hard.
If we are to get a handle on this issue, we will need to know the cause of the growing inequality—so I will be following Noah’s installments as he lays out the explanation.
For political commentary by Dwight Furrow visit: www.revivingliberalism.com