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Carter C. Price and Kathryn A. Edwards of the RAND Corporation have published a paper entitled “Trends in Income from 1975 to 2018” which tries to quantify how much income the bottom 90% of the US population lost due to departures from the income distributions that existed in the US from 1945 through 1974. It was a counterfactual exercise so its conclusions can only be assessed as speculative. Nonetheless, its conclusions are disturbing:

“This work seeks to quantify the scale of income gap created by rising inequality compared to a counterfactual in which growth was shared more broadly…. We document the cumulative effect of four decades of income growth below the growth of per capita gross national income and estimate that aggregate income for the population below the 90th percentile over this time period would have been $2.5 trillion (67 percent) higher in 2018 had income growth since 1975 remained as equitable as it was in the first two post-War decades. From 1975 to 2018, the difference between the aggregate taxable income for those below the 90th percentile and the equitable growth counterfactual totals $47 trillion.”

The period from 1945 to 1974 was unique in US and global history. The growth the US experienced was extraordinary because of the recovery from the devastation of World War II. But the marginal tax rates on American citizens were quite high, in some cases reaching 90% for the highest income categories. Those high tax rates did not seem to inhibit economic growth and most Americans experiences a rapidly rising standard of living.

That situation changed in the late 1970s and 1980s as taxes were lowered on the higher income groups, and from that period tax rates were continually lowered. The reduction of taxes continued with the tax cuts of 2017 which lowered the taxes on the rich to very low levels. These cuts were justified as a method of stimulating economic activity which would purportedly create new jobs. The ideology behind this action is known as supply-side economics–a souped-up term for “trickle-down” economics.

What has actually happened is that the ideology has created “trickle-up” economics where the money flows from the poor to the rich, and if the calculations of the RAND paper are correct, the upflow was indeed prodigious. And the rich have consolidated their political power to assure that their privileged status is protected.