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.
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.)