Over the past 30 years, since the Presidency of Ronald Reagan, the gap between rich and poor has widened tremendously.
Three decades ago, Americans’ income tended to grow at roughly similar rates, no matter how much you made. But since about 1980, income has grown most for the very rich. For the poorest 20 percent of families, it has dropped.
Incomes for the top 1 percent of American wage earners soared 31 percent from 2009 through 2012, after adjusting for inflation, according to data compiled by Emmanuel Saez, a Berkeley economist. For the rest of us, it crawled up an average of just 0.4 percent.
The trend towards greater inequality is global, not just confined to the United States. In 17 of 22 developed countries, income disparity widened in the past two decades, according to the Organization for Economic Cooperation and Development.
There are numerous explanations for this phenomenon:
- Globalization has made it easier to produce surplus value. Simply put, companies can make things more cheaply in a global economy.
- Due to the weakening of organized labor and the ease of moving the means of production to poverty-wage countries, the share of the return that is going to labor has shrunk.
- By definition then, the share going to capital has increased – markedly so.
- The direction of regulatory and tax policies has followed the rise of the rich, and has served the interests of wealth. The top tax rate under Richard Nixon was 70%; under Reagan, 50%; and under George W. Bush, 35%. Meanwhile, deregulation of the private sector ruled supreme, leading to the housing crisis and Great Recession. Finally, Federal and State legislation, rules and regulations have made it harder to form or join a union.
- The Supreme Court’s Citizens United decision has allowed unlimited, and essentially anonymous, campaign spending.
- The United States has moved from a nation driven by manufacturing to a country fueled by finance capitalism, i.e. Wall Street, where rewards are “Super-sized” and tailored to a “Winner Take All” mentality.
- Technology has made production of many goods possible with fewer human workers.
- Poor people don’t vote. In the 2013 Los Angeles Mayoral primary election, 33% of Pacific Palisades dwellers voted, while only 7% of Watts residents did.
- With so-called “social issues” getting priority treatment and focus in elections, many voters vote against their own economic interests.
Of course, there are other factors, but this is a reasonably comprehensive list of the factors that have primarily contributed to the greatest wealth and income gap since the Great Depression the 1930s.
What Can We Do?
The market is not in the equality business. It will not auto-correct. Capitalism is neither designed nor intended to create or maintain equal playing fields. In fact, if it works according to plan, it does just the opposite.
It is the role of government, legitimized by “we, the people,” to ensure equal protection to each and every one of us, and to enforce our commitment to equal rights.
In his January 1944 State of the Union address, President Franklin Delano Roosevelt outlined a vision of economic security for all Americans:
“We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. “Necessitous men are not free men.” People who are hungry and out of a job are the stuff of which dictatorships are made.
In our day these economic truths have become accepted as self-evident. We have accepted, so to speak, a second Bill of Rights under which a new basis of security and prosperity can be established for all—regardless of station, race, or creed.”
In the seventy years that have passed since FDR’s speech, the self-evident consensus that economic stability is necessary in order truly to exercise freedom has collapsed.
In order to win that consensus back, we must demand it.
In order to be in a position to demand it, we must have power.
In order to build power, we must organize.
Larry Fondation is an internationally-published fiction writer, journalist and community organizer based in Los Angeles. He is the author of Angry Nights, Common Criminals, Fish, Soap and Bonds, Unintended Consequences and Martyrs and Holymen.