The income inequality gap grew larger as the middle class shriveled up
FRANCES MOORE LAPPÉ in Common Dreams
And our poverty rate? Today, at 12.4 percent, it’s the
highest among almost all 38 OECD nations. Only the newest member, Costa
Rica, suffers a higher poverty rate.
So, how did our view of ourselves become so distorted?
We were once indeed primarily middle class because we had
stepped up to tackle poverty. In the late 1950s, our official poverty rate was
about 22 percent, but Lyndon Johnson’s War on Poverty cut that rate in half,
hitting a low of 11 percent in 1973. Then Reaganism struck, and by 1983 poverty
had spread to nearly 15 percent.
And now?
While our official rate is indeed lower, it is still high
and misses millions struggling to meet essential needs.
Our path to this sad outcome began in the 1980s.
Reversing the War on Poverty, Reagan began dismantling welfare protections
while slashing taxes on the ultrarich. Capturing the tenor of the time, in the
1987 film “Wall Street”, Gordon Gekko declared “greed is good.”
Reaganomics paved the way for today’s shocking
inequality.
In 1978, the top 0.1 percent held roughly 7 percent of wealth. By 2018, this tiny group enjoyed about 18 percent. Most shocking: By 2019, America’s three richest families held more wealth than the bottom half of us.
Hardly a middle-class nation, today’s concentration of
wealth ought to make a Russian oligarch blush. Out of 178 countries the CIA ranks by
income inequality, the U.S. lands between Micronesia and Morocco—at 56th. No
industrial democracy is near us. The closest—New Zealand—is 31 places less
extreme, at 86th.
An additional injustice?
While workers’ share of national wealth has been
shrinking, their productivity has soared. Between 1979 and 2017, worker productivity grew by 70
percent, while hourly compensation rose by a meager 11 percent.
And who benefited?
As earnings for the bottom 90 percent of
Americans rose by just over a fifth, the wealth of the top 0.1 percent grew by
343 percent. That's 17 times more!
Thus, we shouldn’t be surprised that in 2019 the bottom
half of us held only 2 percent of the
nation’s wealth.
Moreover, while American workers had to take on more
hours to boost their relatively stagnant earnings and as healthcare and housing
costs climbed, the wealthy increased their gains and used it to further warp
our nation’s democratic institutions: By funding candidates and hiring
lobbyists to ensure their interests were heard at the expense of ours. From
1998 to 2023 alone, dollars spent paying Washington lobbyists grew almost
three-fold, from $1.5 billion to $4.1 billion.
Thus, when our rules are set to bring the highest return
to those with the most, a market economy not only selectively rewards the
already wealthy; it undercuts democracy.
The pain of Reaganomics should have taught us one clear
lesson. A market economy can only work for the common good within
rules set democratically—free from private control—to ensure opportunity for
all. The beginning of these rules would be basics such as an enforced, livable
minimum wage, as well as strong and enforced anti-trust laws.
Such steps could move us toward a market serving the most
basic freedom of all—the freedom to thrive.
FRANCES MOORE LAPPÉ is the author of 20 books, beginning with the acclaimed "Diet for a Small Planet." Most recently she is the co-author, with Adam Eichen, of the new book, "Daring Democracy: Igniting Power, Meaning, and Connection for the America We Want." Among her numerous previous books are "EcoMind: Changing the Way We Think to Create the World We Want" (Nation Books) and "Democracy's Edge: Choosing to Save Our Country by Bringing Democracy to Life." She is co-founder of the Cambridge, Mass.-based Small Planet Institute.