Former Secretary of the Treasury and gifted face-maker Larry Summers has calculated how much more middle-class households would make if the United States enjoyed the same income distribution it had in 1979, and the results are startling. According to his calculations, households in the bottom 80% of incomes would be making another $11,000 a year, on average, if we had experienced the same economy of the last 35 years without the growth in inequality. Households in the top 1%, on the other hand, would get $750,000 less. If you’re having a hard time wrapping your head around those two numbers, NPR’s Planet Money podcast has produced a helpful graph. Scroll down to see the whole thing—like six screens down.
If you are unfortunate enough to know me in real life, I have probably already tried to make you read Nick Hanauer’s Politico piece on how rising inequality is not in the best interest of the very rich. If you haven’t, you should read it now. I’ll wait here and look at
fourth-quarter economic projections cat videos. Hanauer essentially makes the same argument that Henry Ford made in his defense of so-called “welfare capitalism:” the people who make Ford cars are the same people who buy Ford cars, so it’s good for business to pay workers a higher wage. The case for welfare capitalism is a case for a strong middle class, and it’s particularly relevant in a consumer economy. I’m more interested in Hanauer’s other argument, though: if inequality continues to increase, the inevitable consequence will be either revolution or a police state.
The New York Times is running stories about inequality, and they are running hard. Today brings news that the American middle class is no longer the richest in the world. Our hardworking suburban football fans were tied with Canada’s hockey-gazing layabouts in 2010, and data suggest we’ve been surpassed since. Our poor—families at the 20th percentile of US income—make substantially less than families in Canada, Sweden, Norway, Finland and the Netherlands. But those are all socialist countries. Our working poor may not have as much money, but they have freedom. In the decade since “freedom” became the most important word in American rhetoric, per capita income has shrunk at the 40th, 30th, 20th, 10th and 5th percentiles.
If you like totalizing theories of economics the way I do—which is to say, if you like reading descriptions of those theories—you have probably heard about Thomas Piketty and Capital In the 21st Century. The English translation of the 700-page book has been well-received since its publication last month, and Piketty has been interviewed in just about every outlet imaginable, including the New York Times. That one is worth reading, if for no other reason than for his observation that the income distribution that characterized the late 19th and early 20th centuries, when “the top 10 percent of the distribution was full of rental income, dividend income, interest income,” is coming back.
Robert Putnam, author of the unfalsifiable big-think text Bowling Alone, told Maclean’s last week that “America is moving toward a caste society.” His next book is called Our Kids: The American Dream in Crisis, which sounds pretty exciting if you, like me, are obsessed with the question of whether life in America is easier or harder than it was 30 years ago. In this case, “easier” means “more fair.” I think we can agree that in the ideal America, the decisions an individual makes would be more important to the course of her life than the circumstances of her birth. Getting born to two married, upper-class parents is difficult to pull off, and we should probably offer a second chance to the kids who blow this crucial first choice.