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Katy Burns: The rich get richer

The rich get richer and the poor get poorer . . .

That’s a line from the 1921 ditty, “Ain’t We Got Fun?” The jaunty tune became a motto for the 1920s – the Roaring ’20s, as they became known – and it popularized that line. But the sentiment has been around for far longer. Money makes more money. Poverty too often makes more poverty.

And at least in this country, that phenomenon is accelerating.

This isn’t really news, but it rarely is noted. Folks who try to point it out are accused of fomenting “class warfare,” which is a dandy way of stopping discussion dead in its tracks.

But every now and then a statistic pops up that is just so striking it has to be noted. And that happened last week when we got the news that just 10 percent of all Americans earned 48.2 percent – nearly half – of all income earned last year.

Even more eye-popping, the very richest Americans – a mere 1 percent of our entire population – earned one-fifth of all income earned in America in 2012. In fact, the incomes of that top 1 percent of Americans rose a whopping 20 percent in 2012, compared with a mere 1 percent increase for the remaining 99 percent of the populace.

Since the official end of the recent recession (June, 2009), thanks to surging property values, corporate profits and stock prices, 95 percent of all reported income gains have gone to that same top 1 percent.

Cold, hard figures

These statistics are amazing. And they aren’t fuzzy theorizing from ideological crusaders. They come from an update of 2011 data by prominent economists Emmanuel Saez and Thomas Piketty.

They’re based on real, measurable statistics derived from cold, hard figures kept by the IRS since 1913 and analyzed by economists from UC Berkeley, the Paris School of Economics and Oxford University. They show that this country’s income inequality has been steadily growing for nearly three decades.

They are stark testimony to an income disparity that hasn’t been seen since the 1920s, when “Ain’t We Got Fun?” captivated the nation, and some say since the Gilded Age of the late 19th century.

It’s not only income disparity that has grown rapidly in recent decades. There is also a so-called wealth gap that has been the subject of numerous economic studies over the years. For example, according to widely-cited statistics compiled and analyzed by economist Edward N. Wolff of New York University, the disparities are significant and growing. In 2010, 90 percent of Americans – almost all of us – held barely half, 50 percent, of the nation’s wealth. But nearly 5 percent of that wealth was held by a minute 0.01 percent.

And while income disparity and the wealth gap have been growing in recent decades, upward mobility in this nation – once the hallmark of the American dream – is becoming a mirage. We treasure the notion that anyone, from the humblest of circumstances, can rise to economic heights if he or she only tries hard enough.

But five major studies in recent years have shown that our vaunted economic upward mobility is increasingly a myth.

Children in Canada as well as in most European countries – including the ones derided as “socialist” – stand a better chance of rising above their economic birth circumstances than those in the United States.

One such study showed that 42 percent of American men raised in the lowest fifth of incomes will stay there throughout their lives. That is a much higher figure than for Denmark (25 percent) or even class-obsessed Britain (30 percent). Conversely, only 8 percent of American men born at the bottom rose to the top fifth, while significant numbers of the British and the Danes did better.

If children born on the lower rungs of the economic ladder are increasingly likely to remain there, children born near the top are likelier to remain there as well – or climb higher. That’s not altogether amazing. Affluent parents have the ability to provide a raft of advantages for their children. Poor parents simply don’t. And so the disparity accelerates.

A well-to-do American usually has the financial cushion necessary to absorb a setback – a drop in the stock market, for example, or an unexpected illness. Poorer people are at the margins to begin with. One body blow can almost ensure a lifetime of struggle and poverty.

Unhealthy disparities

The gross disparities we see now in the economic fortunes of Americans are not healthy. They do not bode well for a prosperous and secure future for any of us. And these statistics are hardly secret. It’s just that no one wants to talk about them, much less try to do anything to ameliorate the inequities of opportunity.

Maybe that’s changing, though. Ordinary Americans might finally be paying attention.

First came the hapless Mitt Romney, whose astonishing assertion that fully 47 percent of Americans were simply takers, eager for others to support them, saw him soundly rejected by the voters.

It was a welcome respite from elected “leaders” who have enshrined tax cuts above all while presiding over a nation of crumbling infrastructure, a stagnant economy and an education system seemingly incapable of equipping new generations of Americans for 21st-century challenges.

And now we read of the probable success of New York mayoral candidate Bill DiBlasio, who is likely to become the city’s first Democratic mayor since 1989.

DiBlasio ran as an unabashed liberal. He surged to the lead in his primary with a vigorous campaign highlighting “a tale of two cities” – a New York of cossetted rich people in a few extraordinarily privileged precincts and another, larger mass of ordinary New Yorkers who can barely keep their financial heads above water.

After World War II this country invested heavily in education, housing, highways and general infrastructure. We had strong unions, high-paying jobs. We built the strongest middle class the world had seen, and our growing economic power was the envy of other nations. It’s been downhill in recent years, with politicians – and voters – more likely to whine than to dream.

Maybe that’s changing.

(Monitor columnist Katy Burns lives in Bow.)

Legacy Comments51

Any discussion of who pays what needs to include the earned income tax credit and the child tax credit. You also have to factor in corporate tax. Fine to say folks pay payroll taxes, but some of those folks get refunds that make under a certain amount of income.

Earn belos $50000 and have a family and you get those credits and get more income tax money back than would have been withheld in the first place. Payroll taxes are for everyone to pay into and if progressives think that people should not pay into it then they are in essence admitting that the SS program and Medicare programs don't work and should not be funded.

Stay on topic much? Make a coherent argument, ever? You previous post conveniently overlooked the many taxes low income earners pay even if they pay no income tax. Your response, when this 'oversight' regarding the SS tax contribution of those you falsely label 'takers', and the fact this one tax raises almost as much revenue as the federal income tax, was not to acknowledge your 'oversight' or even to admit that the poor do indeed pay taxes. Instead, it was to make a completely new and even more absurd claim--based on what--your mind-reading skills?--imputing views regarding SS and Medicare and who should pay that I do not have. Your last sentence, however, suggests once more how extreme are your own views: "the SS program and Medicare programs don't work and should not be funded."

No, I was saying that progressives designed SS and Medicare and honestly they are the ones now complaining that people in the bottom 50% having to pay those taxes. I will take my share of those funds Bruce and say thank you to the progressives who designed the programs with all good intent, I am sure. But if others want to take money at retirement, they must contribute as well and not be given a "free" ride.

You are wrong--I'm aware of no one on this site who has complained about "the bottom 50% having to pay those taxes". You've made that up, as part of your 'agenda' painting those with whom you disagree as disloyal, and subversive--among other things. As part of a plan to improve the SS program's long-term sustainability, some would like to see the income ceiling on FICA contributions raised--which is entirely different. It requires quite an imaginative leap to go from this fact to your statement.

The highest median Family income adjusted for inflation was when The Great Ronald Reagan was President. The democrats have been in control almost the entire time since........ Except when the Responsible Republicans passed the last balanced budget

Your not saddened by how I feel Tillie, your posts reveal how you deal with folks that disagree with you. The issue was not asking what someone does for work. The issue was personal attacks which you did not address. As far as physical vs mental work. I can tell you from experience having done both that physical work is a lot easier to deal with. You sleep it off after doing physical labor. And chances are if you do physical labor, you most likely are physically fit, or should be, otherwise you can end up injuring yourself. Mental work is a lot harder to get out of your head so you can sleep and often times takes it's toll on your concentration, mood etc. Many folks cannot sleep because they cannot turn off that pile of work they have on their desk, or the responsibility of others depending on you to make right choices so they do not have to be let go. I would take physical work any day over mental work. So stating my remark as being stupid was you doing what you usually do. Looking at one side of an issue, yours. And I might add being not very civil.

oh get off your high horse, Rabbit. (pun intended) I can remember many of your remarks that are not even civil they are down right disgusting. Maybe I would believe your sadness if it was not only directed at liberals that are rude. Have you nothing to say to your cohorts who have been so disrespectful to any Democrat that they can think of. You Republicans can dish it out but can't take it. Also I would like to see you when your are 72 after 50 years of physical labor vs sitting in a chair for 30 yrs. I am going to be rude again and tell you to stop whining.

Dear Rabbit, I am sorry to that you are "saddened" to see personal attacks are making a return here. I think you have not been reading your compatriots' comments, very especially Van and Sail or you would see they have never left. Itsa is the one who constantly brags about how hard he works so I don't think it is out of line to ask what it is he does. And yes physical labor is more demanding than mental labor. I hate to "sadden" you again but that is a stupid remark.

What do I do? Much more than you do, I can assure you. Physical labor is more demanding physically and almost all people can perform that if needed but mental labor is not appropriate for many who excel at physical labor.

Katy...I believe that the beginning of this 'rich get richer' movement can be traced to a memo by Lewis Powell in 1971 to the US Chamber of Commerce. It set forth a road map for 'capitalists' to follow whereby the slowly, methodically, covertly worked to ramp up corporate laws while destroying unions. Would you believe that at one time, there were consultants which worked solely to de-unionize corporations and America. Google Lewis Powell Memo and check it out-it is rather long, so start with a cup of coffee in hand.

democrats had a filibuster proof Congress and a democrat president and still to this day have not proposed even one single legislative effort to fix their perceived problem.

Dear sail, precisely for how many days after Obama's inauguration did the Democrats have 60 reliable votes in the Senate? Please do not count conserva-Dems like Ben Nelson who would only vote with the president in exchange for an unconstitutional bribe to his state or others like him. I think you'll find that the answer - if you care to look it up - is ZERO.

History for democrats - with numbers like the democrats have along with a willing president even Elmer Fud could become a statesmen and create & lead a legislative coalition - unfortunately when the nation needed a leader to pull America out of an economic downturn you and your Ilk elected an failure with zero executive experience. It is a tragedy that democrats can only get legislation passed with a veto proof congress ....even Mr Magoo could find a way to pass legislation with those numbers. History books are full of leaders that have forged successful legislative coalitions with significantly less. Zero promised to unite the USA instead divided it

To sail, below, so it appears your ultimate criticism of Obama as president is that he isn't LBJ and has never learned the gentle art of arm twisting to the point of wrenching them out of their sockets. The reasons so many Democrats voted for GW's bills were 1) many of the D's from the South and Midwest vote R as often as they vote D, and 2) the Democratic party by and large is dedicated to the principle of governing while today's Republican party has been dedicated to opposing Obama's every proposal.

Like I have said before, it's liberals that want to take us back to the 50's. The way it was done was to ramp up production fo a world war, bomb every major economy into submission while leaving yours untouched. Yep, it worked great for 40 years or so, until the world caught up and kicked our unionized butts.

Amazing! 3 non-sequiturs in one brief post!

Yes....perhaps I'm wrong....Japan was the leading economy after the war..or was it Germany? was the UK. Thats it.

In the 1950s the US was building up arms to launch against the USSR which was at best a second rate economy and later China which at the time was no better than third-world. That decade was led by Republicans in the White House and conservative Congresses dominated by Midwestern Republicans and Southern Democrats. Why in the world would any self-respecting liberal want to return to a time before the Civil Rights and Voting Rights Acts, the era of Joe McCarthy and "naming names," before Griswold v Connecticut. The world never "kicked our unionized butts." American companies stopped being world leaders/innovators and believed the world would buy their crap because it was "Made in USA."

I think it was Dick Martin of Rowan and Martin fame, who would sometimes end their routines: "If that's what you'd like to believe." Just know it is at best a distorted and half-true version of history. There are any number of well-written books on post-war American history that will paint a more nuanced and accurate picture of the time than your summary judgement: "kicked our unionized butts"-- a shibboleth the right is using to drive the nation into a race to the bottom.

If WW2 never happened, I wonder what the US economy would have looked like in the 50's. Suffice to say liberals would not want to return us to that time.

You have acknowledged that war-time spending--the ultimate in 'stimulus spending', helped mightily to pull the U.S. economy out of the Great Depression. Coming from one who opposed and opposes 'stimulus' spending to fight the Great Recession, your view on 'then' vs 'now' seems contradictory--even hypocritical. But I'm sure you can weasel your way out of it. As for wondering what the U.S. economy would have looked like: we know that in the years between 1933-37 GNP increased by 33%, and after a dip in 1938--due to reduced government spending, GNP increased by 49% between 1938 and 1942 (when war-time spending ramped up). By most measures, this period marked the greatest stretch of economic growth in U.S. peacetime history--so whatever policies were in place were working. Eventually, we would have recovered, at least to pre-depression levels, thanks in part perhaps because FDR didn't have the Tea Party around as a drag on the economy. As to how different we would have looked in the 1950's, who can say? All that government investment paid back large dividends well into the 1960's--computers, aerospace. Whether all of the advances that came out of the war were worth the pain and terrible suffering of the war is another question--one for the philosophers to ponder.

Reply to Bruce..Apparently, we need another World War.

Reply to GWTW below: Thanks for the weasel words.

A French Revolution redux?

Indeed Katy, the top 10% of wage earners (a club which I do not belong to as I am in the top 15%) do earn the most money or 48.2% of all earnings annually. Beyond your partisan, ideological rant you omitted a couple of valuable pieces of information. That top 10% pay 71% of all income taxes as well. Just to break down the brackets, let's let the readers decide how fair things are. The Top 1% of all wage earners earn $323,927+ per year. The top 1% - 5% earn $154,643-$343,927, the top 5% - 10% earn $112,124-$154,643, the top 10-25% earn $66,193 - $112,124. The top 25% of wage earners pay 90% of all income taxes. Moreover, the bottom 50 percent paid 2 percent of income taxes but earn 13 percent of total income. About half of tax filers pay no federal income tax at all. Social Security and Medicare which are trust funds that are paid to recipients in the future, are far less than income taxes. Often people who pay no income taxes actually receive tax refunds which are greater than what they paid in, in the first place. But indeed, progressives are playing the class envy card, attempting to divide the country by telling people....."look at what you have and earn and what that guy has and earns, doesn't that make you work as hard as he does". Divide and conquer is the mission of progressives, the president, Democrats, Socialists, most major media outlets including the Monitor, your column and small minded people everywhere who lack the ambition and wherewithal to determine their own path in life; instead they pine for equal outcomes, demonizing success as if it was a sin. Sorry, Katy, you are usually wrong and this Sunday is no different. It would be nice if you research some of the facts. I was happy today to add those and hopefully readers can get a sense of the truth.

Are you accusing those that don't agree with you of being small-minded and demonizors of success? I find that to be small-minded.... Personally, I think motivation for success is critical to our well being, but I think the point in Katy's article is that wealth is getting too concentrated and it is tilting the balance of power. All it takes is a few bad players who funnel some of that extra money into politics and buying elections to further favor one's own position or power, playing Monopoly for real. This is very bad and this element needs to be booted from political superfunding and politicians need to get back to running the government on behalf of the people instead of for their political party and private donors. We don't need to be protecting the interests of the oil barons and the like. They are already rich and powerful enough.

Actually Red Bird ITSA said no such thing. He just stated Katy does what she always does, gives one side. This whole deal of pitting folks against each other has been brought to you by the Left. They do it all the time. If you are successful in the US, pay big bucks in taxes and give to charity, your not paying your fair share. If you disagree with the President it has to be based on his ethnic background not his policies, And if you state a govt program is not working, you are deemed mean and greedy. No talk about fixing anything. The left and the media have kept you informed with sound bytes and hiding what is really the truth. They count on you being uninformed and repeating their sound bytes. I do agree with you that we need to get money out of politics though. Put a limit on how much a politician can spend on campaigns like say 250,000. Cut out everything in the way of donations from groups like Oil, PP etc. Make them do more town halls with no pre approved questions, Only then will you actually know what that person is about. If they are bought by any group with big bucks, like the MAFIA they got that money because they promised something in return. That applies to all politicians.

What is wrong with you people? Do you completely fail to understand that a column, such as written by Katy Burns or Grant Bosse, is purely the expression of one person's opinion? What do you think of Grant's opposition to virtually every government program? Ooooh, he must be one of the good guys, eh? And which "left" is hiding the truth from everybody? The Wall Street Journal? Fox News? Rush? Perhaps MSNBC? Oh, not them, what with Scarborough in the morning? Boston Herald? New York Daily News? Nope, I guess there's no way for your slant on the truth to get out.

I seem to see attorneys making tons of money on poor people, are they part of the problem. I see attorneys donating tons of money to political campaigns, unions as well, state employees as well.....all interested in their own interests. Congress is comprised of primarily "lawyers" (or liars as most of us call them) and millionaires who are Democrats and Republicans. Why not support term limits? What about ACORN? The balance of power needs to be in the hands of the people, not government.

Fantasy quote of the week: "I seem to see attorneys making tons of money on poor people." That must be why Legal Aid is such a thriving part of the profession.

Redbird...I get a big laugh of the conservatives that have given their opinions. They follow Lewis Powell's Memo almost to the letter. I'm convinced that the National Republican Party is made up, for the most part, of poorly educated folk. The well educated Republicans are, of course, the rich getting richer. Pew Foundation did a survey back couple years ago and asked the National Science Foundations for a list of scientists to be surveyed; at the end of the survey, it asked for political party affiliation. No surprise: 55% were Democrats, 6% Republicans. Those poorly educated folk keep believing that the Republican Party supports and works for them; they ignore that the Republicans have fought EVERY social program introduced by the Democrats. Furthermore, I'm willing to bet that all those poor Republican folk listen to Fox News; which helps them stay poorly educated. University of Maryland has done studies over the years and consistently find that Fox News listeners are LESS knowledgeable about current affairs than those who listen to Jon Stewart (who is NOT a news reporters).

Dear Itsa: Never use logic or facts when arguing with a liberal like Katy. Liberals, progressives, socialists and Democrats can't understand them or are confused by them.

Your advice would have aptly descriptive had you stopped after the word "facts".

As ever, you conveniently overlook the many other taxes paid by the bottom 50%., that give the lie to your argument. For instance, the payroll tax is capped at the first $110,000 of an individual's income, yet revenues from payroll taxes nearly equal those from the federal income tax. The real class war is being waged by the rich and the powerful, and as Warren Buffet said, his side is winning.

So when Concord gets a $280k grant for a Bearcat, that money comes from payroll taxes?

Payroll taxes are supposed to be used for social security. Are you advocating that those earning $50,000 or below pay NO taxes, make NO contribution to their retirement and pay NO payroll taxes. Are you suggesting that the rest of us provide for their entire retirement just because we earn in the top 10% $66,000+? "From those according to their ability to those according to their need".......Karl Marx.

Maybe I'm missing something, but as I read Bruce's post, I don't see him advocating for any policy in particular. Instead, he's describing a major source of federal revenue that was not mentioned in your comment. He's also pointing out that because this source of revenue was omitted, your comment leads the reader to an erroneous conclusion. In response, you could have explained why you didn't think that data was important, but instead you used it as an opportunity to put words in someone's mouth and then you used those words to support your suggestion that he's a marxist. And people wonder why the tone of these comments has become more contentious.

Publius, he stated the I "conveniently" overlook other taxes paid by the bottom 50% which includes social support taxes and then called my argument a "lie". Medicare and SS taxes are separate from income taxes for a reason, they are the responsibility of EVERYONE to contribute to a time later in their life when they retire. Then he mentions that the payroll tax is capped at $110, kidding, then find the votes to change that. He is advocating for those who are not wealthy (folks like me for instance) and those in the bottom 50%. There is no "class war" being waged by rich people saying: "I am going to amass millions and screw the little guy and then I will sit on this wealth".....that it a fairy tale. A person who works for me a legal immigrant who has lived here 4 years invested $25,000 and made $400,000 last year in the stock market. He gave notice today as he plans on being a day trader. In Bruce's world, he would be "rich" but in my world he is "smart", "clever" and he set himself up so that he does not have to work a 9-5 job. Anyone who applies themselves can do similar things. Is he waging war on the bottom 50%? Class warfare starts with people complaining about those who have accomplished something and pushing the theory that some how it is ill gotten gain and they need to share it with everyone else. Again: "from those according to their ability to those according to their need".

For Itsa below. Thanks for the substantive response. I think we're getting somewhere. I'm sorry that you've lost who is very likely to have been a valuable employee - someone who is working like mad to better his and his family's position, and I wish him well. Maybe rather than arguing about whether there is or is not a class war, we should discuss the barriers to upward mobility and how to remove them. I won't speak for Bruce, Gracchus or others on my side of the aisle, but it wouldn't surprise me if they would willingly participate.

Itsa starts out with some factual information, then leaps to the polemic about how this is all about class envy and divide and conquer. But that's simply incorrect, and it could be seen as, well, whining. "Poor, poor pitiful me - I make so much money that everyone hates me and wants to take it all away. It's just not fair!" The historical facts are that the income tax, along with the estate tax (now rebranded by a brilliant bit of propoganda by Frank Luntz as the "death tax") were originally instituted after the turn of the 20th century, following the "roaring 90s" when there was what we now call "income inequality" like crazy, and a growing, entrenched aristocracy in the US. Just visit the mansions in Newport for a view of how this aristocracy lived. And remember, those were the VanderBilts' and their friends' summer cottages. There was a growing concern that the US would become like Britain, with its rigid class structure. To combat this, the federal government instituted the graduated income tax and the graduated estate tax. These were intended to guard against such an established aristocracy and to keep the US a meritocracy by making sure that we don't have a group of haves and have-nots. And it has worked pretty well. The VanderBilts and the Rockefellers are still here, still reasonably wealthy, but they are not in control of our economy any more. We have an open and mobile society that allows us to watch - and celebrate - the rise of new millionaires and billionaires without having to worry that they will become our new economic overlords. And it allows everyone else to aspire to wealth and to know that it is not a mere pipe dream. That's why we have what others call an immigration problem. Opportunity is a wonderful thing.

Ah yes, Republican hired gun Frank Luntz, the marketing genius who also renamed 'global warming': "Let's call it 'climate change'--it sounds less scary," he said.

The conservatives have had their way since Bush was made president by the Supreme Court. We may have a Democratic president but the obstruction of the tea party Republicans is what is causing this recession to continue. I finally see in the one day strikes by minimum wage workers that the working class Americans are getting sick of this situation. Not only are they not getting ahead but the very rich that are making all the money blame them for the country's problems. There are more of us than there is of them so watch out, the underdogs are starting to bark.

I guess that if you say something often enough, even the person saying it will believe it. Bush was not made president by the Supreme Court but you know that. Conservatives can not and should not be lumped into one group and they have as much right to an opinion or to shape policy as you do. No one is obstructing the president, he wants to dictate and people are standing up to him and saying "no". He wants to rule by fiat and he can't, it's un-Constitutional. The rich are not making all of the money, they are also paying 71% of all taxes. Minimum wage is for teens, not adults who should have skills beyond holding down a minimum wage job. Work two if you need the extra cash. I work 80 hours per week. But keep barking, like my coon hound, he barks so much that sometimes I am not even aware that he is barking, I filter it out.

Itsa, you keep bragging about working 80 hrs a week. Doesn't leave you much family time does it? Do you sweat when you work these 80 hrs? Do you stand on your feet, use your arms, legs, back? Since you spend so much time commenting on the Monitor page I feel some how you a computer has something to do with your work. You might work, but I doubt you labor.

What are you doing Tillie? You are questioning Itsa now how much time he spends with his family, stating that physical work is more demanding than mental work and telling him he does not labor. I understand that you and many others on this forum do not want to deal with opposing views at all. But again, I am saddened to see that personal attacks seem to be making a return here. Just think how boring it would be if all you did was post on this forum with folks that agree with you.

Huh, maybe the scotus should appoint GWB again and get the economy moving.

Reagan took us out of a recession with much higher unemployment and 5 times the interest rates and did it with a 100% democrat controlled congress. Obama and the democrats are simply lousy statesmen when they cant pass legislation when they control the Presidency and the senate - heck - democrats haven't even passed a budget in 5 years

Well said Sail. Reagan is an American Hero. Obama is an American Zero when it comes to leadership.

This post is partisan nonsense, comparing 2 very different recessions, in 2 very different times. Reagan's involved stagflation, the Bush Recession--the worst since WW2, was the result of a financial bubble. Taxes and tax revenues are at historic lows during Obama's presidency--running less than 15% of GDP, and according to GOP conventional wisdom this should make for the best of all possible worlds. In Reagan's day, taxes were about 18% of GDP. Perhaps most significantly, Reagan had a bipartisan Congress willing to work with him. That is most assuredly not the case today--and hasn't been since Obama was first elected.

" and an education system seemingly incapable of equipping new generations of Americans for 21st-century challenges."...yes, but we sure do charge taxpayers a hefty sum for it...don't we.

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