22 July 2018   Leave a comment

The Economic Policy Institute has released a new report on income inequality in the US.  The conclusions of the report are distressing:

“The rise of top incomes relative to the bottom 99 percent represents a sharp reversal of the trend that prevailed in the mid-20th century. From 1928 to 1973, the share of income held by the top 1 percent declined in every state for which we have data. This earlier era was characterized by a rising minimum wage, low levels of unemployment after the 1930s, widespread collective bargaining in private industries (manufacturing, transportation, telecommunications, and construction), and a cultural, political, and legal environment that kept a lid on executive compensation in all sectors of the economy….

“So far during the recovery from the Great Recession, the top 1 percent of families have captured 41.8 percent of all income growth. The distribution of income growth has improved since our last report, when we found that the top 1 percent had captured 85.1 percent of income growth between 2009 and 2013.

“From our 2016 report to this one, cumulative income growth during the recovery for the top 1 percent increased from 17.4 percent (looking at changes from 2009 to 2013) to 33.9 percent (2009 to 2015)—almost doubling.

The dramatic change in income inequality came about because of political changes that allowed greater concentration of economic power beginning in the 1970s.  Meagan Day writes in the reliably lefty journal, Jacobin:

“In the 1970s a series of crises presented an opportunity for pro-capitalist conservatives to reassert themselves in the political sphere. Over the next two decades, with the assent of both major political parties, capitalists won favorable neoliberal reforms dedicated to deregulating business, lowering top-marginal taxes, weakening unions, imposing economic austerity on state budgets, and then — when social services inevitably faltered as a result — privatizing public functions to create new market opportunities for corporations.”

The concentration of income is close to the levels in 1928 when the concentration of income led to a dramatic fall in consumption because of insufficient demand–a condition known as underconsumption.  That circumstance led to the Great Depression and the US may be close to a similar collapse in demand.

Posted July 22, 2018 by vferraro1971 in World Politics

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