Going Full Circle Back to the Heyday of Inequality
America has returned to the same kind of deep economic divide that ushered in the 1930s Great Depression.
The future just keeps getting brighter for Americans with unique specialties.
Randy Stearns has one such specialty: “home-tech integration.” Stearns helps people install and maintain high-tech gadgets. But we’re not talking “Geek Squad” agents and hooking up home networks here. We’re talking rich people — and electronic toys that can cost more than houses.
Randy Stearns offers “24/7 white glove” service for clients who typically pay up to $450,000 per project. Call Stearns and you, too, could end up with a home-tech system that sends out alerts whenever your wine cellar temperature rises too high.
Annual sales in luxury home-tech integration, Randy Stearns estimates, are going to nearly double — to $3.7 billion — by 2016. He may be underestimating his potential market. America’s rich, two top economists revealed last week, are actually getting richer faster than almost anyone thought possible.
Last year, report Emmanuel Saez from the University of California Berkeley and Thomas Piketty from the Paris School of Economics, the incomes of America’s top 1 percent — families making over $393,941 — shot up just under 20 percent over the year before.
And the rest of America? The incomes of the nation’s bottom 99 percent rose all of 1 percent last year. Since 2009, bottom 99 percent incomes have barely bumped up at all, just 0.4 percent, after inflation.
Saez has a stat that puts the matter even more starkly. America’s top 1 percent, he notes, has “captured 95 percent” of all income gains over the first three years of the recovery.
This massive surge at the top has — no surprise — significantly hiked the share of national income that’s flowing to America’s most comfortable.
For most of the middle of the 20th century, America’s most affluent 1 percent took in less than $1 of every $10 in national income. Those days now seem almost mythic ancient history.
In 2007, the year before the Great Recession hit, the share of the nation’s income the top 1 percent claimed hit 23.5 percent, nearly $1 out of every $4. This top 1 percent share did dip with the Great Recession, down to 18.1 percent in 2009. But the “recovery” — for the rich — has since then been almost total. Last year, the top 1 percent income share bolted back to 22.5 percent.
We have come, in effect, full circle back to the deeply unequal America of the late 1920s. That America’s deep economic divide ushered in the 1930s Great Depression.
We finally ended the Great Depression, Berkeley’s Saez points out, by nurturing institutions that narrowed the gaps between America’s wealthiest and everyone else. The two most fundamental of these institutions: a vibrant labor movement that established new social norms about fair pay and a steeply progressive tax system that subjected our wealthiest to still tax rates.
These two institutions have both withered over recent decades, and the Great Recession hasn’t yet done much to reverse that withering.
Recent equalizing policy changes — like the higher federal income tax rates on the rich that came in earlier this year — remain, notes Saez, “modest relative to the policy changes that took place coming out of the Great Depression.”
And this reality has insightful observers deeply worried. The nation’s richest 10 percent, the Atlanta Journal-Constitution‘s Jay Bookman notes, took in just a third of the nation’s income four decades ago. The top tenth last year, for the first time ever, took in over half the nation’s income dollars.
“Great concentrations of wealth” like this, Bookman writes, “create great concentrations of political power and distort the terms of debate.”
How distorted has our debate become? Our lawmakers, observes Bookman, now see no problem cutting food stamps at the same time they refuse to raise taxes higher on America’s ever-richer rich “because that wouldn’t be fair.”
The bright side? In an America growing more unequal, people like Randy Stearns won’t have any trouble finding clients.