Chena's Corner: For the First Time in a Century, the Top 10% of Americans Own 50% of the Wealth
Here's a link to the podcast and transcript, and an excerpt from the September 12, 2013, "Diane Rehm Show," entitled:
MR. TOM GJELTEN 10:06:54
Thanks for joining us. I'm Tom Gjelten of NPR sitting in for Diane Rehm. She's on vacation. A new study released this week revealed that for the first time in a century the top 10 percent of U.S. earners took in more than half of the country's total income.
MR. TOM GJELTEN 10:07:09
Joining me in the studio to talk about how America's growing income gap affects our society, politics and economy is Dante Chinni of The Wall Street Journal and American University. Stephanie Coontz of the Council on Contemporary Families is on the phone, and Thomas Edsall of Columbia University joins us from a studio at Columbia. Good morning, folks.
MR. DANTE CHINNI 10:07:31
MR. THOMAS EDSALL 10:07:32
And a little later, we'll be taking your phone calls and reading your emails and tweets. We want to hear your thoughts. Does it really matter that income inequality is on the rise again? Our number is 800-433-8850. Our email is email@example.com. So, Dante Chinni, this week an important study came out showing how income is distributed in the United States now in the aftermath of this Great Recession. Give us the highlights of that study.
Well, I mean, the study showed that for the first time in, as you say, in a century really, you have the top 10 percent with 50 percent of the wealth. And it's something -- we kind of went through this period 100 years ago. We had this period where we had better equality. We had a rising middle class. And there are questions, I think, now with this study about what this means for the future of the middle class in the United States.
Well, Thomas Edsall, what stands out for you in these data that came out this week?
Well, I think that the fact that 95 percent of the total gain in income went to the top 1 percent whereas only 4 percent of the gain went to the rest of all America basically was the really striking figure. These trends have been going on for quite a while. They've become acute in the post-recession period, the recovery period. And they really show a widening divide with the very top doing superbly and almost everyone else having a flatline kind of experience in the economy.
As you say, this trend has been going on for a while, but now we're looking at it in the context of the aftermath of the Great Recession. And, Stephanie Coontz, what, in your judgment has happened in these last five years that seems to have accelerated this trend that was already evident before?
Well, of course, one big thing is the recovery in the stock market. And contrary to what most people think, 90 percent of stocks are controlled by a very small percentage of people and that, increasingly, the stock market seems to be completely out of whack with what's happening to real people's jobs. You know, in fact, it often bumps up when you lay people off. And as a historian, I just want to underline what Thomas Edsall just said, that in the 1960s, the top 1 percent got just 10 percent of the gains, and the bottom 90 percent got 65 percent.
So this really is a change, and it's a long term change. I think it's a mistake to just think of it in terms of the recession. It's actually a 30-year process that has turned around all of the trends that we had after the Great Depression and the move toward greater equality and greater sense of community among the rich as well as the poor. I think the social implications of this are profound at all levels of society.
Well, Stephanie, you know, it's not just since the 1930s. I mean, some of these data suggest that we're back in a situation that we last saw 100 years ago. That was back in the era of the turn of the century and the era of the Gilded Age and the really meta-rich when they first emerged as kind of a super class.
And as you say, you know, throughout the 20th century, there was an effort to sort of mitigate the worst effects of that period of our history. How do you explain or what's the significance of sort of nullifying all that had been done over the last 100 years to sort of put the society back on a more equal footing?
Well, I think that we can get a very good idea of that if we just look back at a moment at that Gilded Age. That was a period, as you said, when you've got the robber barons. You've got this complete celebration of wealth, a blaming of everyone who wasn't getting ahead saying that the whole social Darwinist thing, saying it's their fault and we have no social responsibility for them, a decline in social trust, which I think we've been seeing in the last 30 years, tremendous, tremendous misery at the bottom of the level, insecurity in the middle, and even changes in things like religion and politics.
Before the Gilded Age, evangelical religions talked about the importance of combating social sins, not just solitary ones, of building a community, not just your own individual family. And it turned inward during the Gilded Age. So what we did after the progressive era with the New Deal, with the reforms of the '60s, we began to actually recreate an earlier period and a better period -- because we'd gotten rid of a lot of the racism and sexism -- of a sense that we're all in this together.
And that has been reversed essentially in the last 30 years with terrible effects for families, for society as at large, for our media, for political representation, which we've found now represents the interests of the rich much more consistently than it did in earlier periods of the 20th century.
Dante, I mean, the implications of these trends are huge. But before we go into all these implications, let's stay, for a moment, grounded in the data and make sure that we're representing it correctly. So give us a little bit more of a granular look at what we know right now about the distribution of wealth and income in the United States.
Well, some of what I do with the American Communities Project is we look at America broken into these different types of place. And using that as a filter, we can kind of look at what's happening to them economically, politically, culturally. The one thing we did that was very interesting, we compared 1980 to 2010, so going back much further, obviously, than the Great Recession, and looked at median household income in these types of place that we'd identified in the United States using demographics and economic data, political data.
And when we did that, we had 12 kinds of place at the time. We recrunched the numbers. And when we did that, we had 12 kinds of place in the United States. Of those 12 communities, only five, between 1980 and 2010, had seen any kind of increase in median household income. That's adjusted for inflation. That's significant.
And now, those places where they had seen some kind of uptick were generally places that were around metropolitan areas. Rural places, in particular, are really struggling because, look, it is true, I think, there are these large cultural phenomena going on.
But the thing, I think, that's really pushing a lot of what's going on in the country is economic, and you have the decline of good-paying jobs, of manufacturing jobs. And, you know, they were hard jobs, but they paid well. And they've disappeared, and that's made life very difficult. Also, automation -- there are just fewer jobs available for people who don't have a lot of education and a lot of good skills training.
Thomas Edsall, if this income gap is caused by demographic changes in the U.S. population, if it's caused by changes in the global economy, automation, et cetera, it raises the question of how much we can really do about it. And you had a really interesting column this week where you took on the question of whether the government, even if it wanted to, could really do anything to reduce inequality. What did you find, Thomas?
Well, really, I think, thinking about this that there has been kind of a dynamic taking place. The economy itself has been moving in directions that foster inequality. There's been a hollowing out of the middle level jobs. They've been outsourced or they've been automated, and global competition has really forced companies to push wages down while they try to keep profits as high as possible.
At the same time, the political system has done a number of things that have helped foster inequality. One, the lower capital gains rate, as Stephanie pointed out, stocks are the real source of income for the wealthy compared to the average person and capital gains are the kind of profits you make when you buy and sell stocks.
Those tax levels have been kept way down and has been a huge advantage for those on the top. Financial deregulation has had the effect of creating all kinds of new mechanisms that banks that used to be traditionally providing just mortgages now can engage to further their income at the top and, as the recession showed, at great expense for the general public.
So you've had a combination of politics and economics and also a kind of intellectual capture of those elites. If you look at both Democratic and Republican elites during the '80s and '90s and early 2000s, there was a growing acceptance of free market economics. You saw this in the Clinton administration with the deregulatory policies. You saw this in the Reagan administration. At the top, there has been a much more willingness to agree to policies that basically benefit a winner-take-all kind of mentality. And all these factors have worked together.
But, Thomas, we live in a democracy, and everybody has a vote. And there have been these demographic changes, and these new demographic groups have votes. I mean, how can these policies be explained simply by decisions that are made, as you say, at the top?
That's the profound question, in a way. Why hasn't democracy, in a sense, with one man or one person, one vote, resulted in a effort by policymakers to ameliorate the kind of inequalities that have been growing? One is that actually surveys show that the public doesn't really want to impose high taxes on or actually give hugely more benefits to those on the bottom.
They basically want more jobs, and they want an improvement in their life based on a market that helps them. That's a very hard thing for the political system to do. It may well involve a major intervention in the economy.
Right. Thomas Edsall is professor of journalism at Columbia University. We're talking about the growing income gap. And when we come back after this short break, I want to raise the question of whether inequality really matters to Americans. Stay tuned.
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