In 1915, a statistician at the University of Wisconsin named Willford I. King published The Wealth and Income of the People of the United States, the most comprehensive study of its kind to date. The United States was displacing Great Britain as the world's wealthiest nation, but detailed information about its economy was not yet readily available; the federal government wouldn't start collecting such data in any systematic way until the 1930s. One of King's purposes was to reassure the public that all Americans were sharing in the country's newfound wealth.Read the rest here.
King was somewhat troubled to find that the richest 1 percent possessed about 15 percent of the nation's income. (A more authoritative subsequent calculation puts the figure slightly higher, at about 18 percent.)
This was the era in which the accumulated wealth of America's richest families—the Rockefellers, the Vanderbilts, the Carnegies—helped prompt creation of the modern income tax, lest disparities in wealth turn the United States into a European-style aristocracy. The socialist movement was at its historic peak, a wave of anarchist bombings was terrorizing the nation's industrialists, and President Woodrow Wilson's attorney general, Alexander Palmer, would soon stage brutal raids on radicals of every stripe. In American history, there has never been a time when class warfare seemed more imminent.
That was when the richest 1 percent accounted for 18 percent of the nation's income. Today, the richest 1 percent account for 24 percent of the nation's income. What caused this to happen? Over the next two weeks, I'll try to answer that question by looking at all potential explanations—race, gender, the computer revolution, immigration, trade, government policies, the decline of labor, compensation policies on Wall Street and in executive suites, and education. Then I'll explain why people who say we don't need to worry about income inequality (there aren't many of them) are wrong.
I am in general no fan of "redistribution of wealth." That said radical concentration of wealth in any society in the hands of such a small minority is dangerous. We don't want to go back to the Gilded Age and all of its social horrors. Beyond which I have not finished reading the entire series so I want to hold off commenting on it in detail. For now I will simply say there is much I disagree with and some that I do concur with. Agree or disagree though, I think this is a well written piece that poses a number of troubling questions.
Well, that sounds like a lot (and maybe it is) but the top 1% owning only 24% of the wealth is actually nearly a record low. The only time is has been a lower percentage of wealth holding by the 1% was in the late 1970's On average is more than 30%.
ReplyDeleteI would direct you to read Wolff, E. N. (1996). Top Heavy. New York: The New Press.
Wolff, E. N. (2004). Changes in household wealth in the 1980s and 1990s in the U.S. Working Paper No. 407. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College.
Wolff, E. N. (2007). Recent trends in household wealth in the United States: Rising debt and the middle-class squeeze. Working Paper No. 502. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College.
All of which states the breakdown of wealth by the 1% vs. 99% thus:
Table 3: Share of wealth held by the Bottom 99% and Top 1% in the United States, 1922-2007.
Year, Bottom 99%, Top 1 percent
1922 63.3% 36.7%
1929 55.8% 44.2%
1933 66.7% 33.3%
1939 63.6% 36.4%
1945 70.2% 29.8%
1949 72.9% 27.1%
1953 68.8% 31.2%
1962 68.2% 31.8%
1965 65.6% 34.4%
1969 68.9% 31.1%
1972 70.9% 29.1%
1976 80.1% 19.9%
1979 79.5% 20.5%
1981 75.2% 24.8%
1983 69.1% 30.9%
1986 68.1% 31.9%
1989 64.3% 35.7%
1992 62.8% 37.2%
1995 61.5% 38.5%
1998 61.9% 38.1%
2001 66.6% 33.4%
2004 65.7% 34.3%
2007 65.4% 34.6%
Sources: 1922-1989 data from Wolff (1996). 1992-2007 data from Wolff (2010).
As someone who personally hopes to earn fully 24% of the nation's income, I'd like to ask which social horrors existed during the Gilded Age?
ReplyDeleteVisibilium, odd question for someone with an interest in Christianity to have to ask.
ReplyDeleteArcher, the article is talking about a percentage of national income, not how much of total wealth is owned.
ReplyDeleteWell, if you look at sources, wealth is calculated in part by a percentage of national income, which factors into the numbers I cite.
ReplyDeleteVis,
ReplyDeleteIs that a serious question, or were you joking? Life in the Gilded Age was great, if you were wealthy or at least in the comfortable middle class (which was not very large by today's standards). For everyone else life tended to be (to borrow Hobbe's famous line) nasty, brutish and short.
For a large part of the population life could be summarized by sweatshops with labor conditions bordering on slavery, 18 hr work days for pennies with employees locked in their places of work and beaten if they did not keep up, child labor was rampant with thousands dying every year in mines and factories, work place safety laws were nonexistent, there was no Pure Food and Drug Act (caveat emptor), industrial pollution was utterly rampant and unchecked, no regulation of Wall Street (insider trading & price fixing… all was fair and legal). More than fifty thousand people died each year in the United States at least in part due to the effects of malnutrition. I would suggest reading almost any social history of the United States or maybe some of the pioneering works of the period like “How the Other Half Lives” (Jacob Riis).
In ICXC
John
How many of those horrors were a result of the "gilded" nature of the age, and how many were attributable to a low standard of living?
ReplyDeleteOn the flip side, how much does the top 1% pay into the government?
ReplyDeleteAngela
Angela,
ReplyDeleteIn taxes or in campaign contributions?
Vis,
ReplyDeleteThe term "Gilded Age" was a backhanded insult coined by Mark Twain and Charles D. Warner. It referred to the process of covering up something unsightly by throwing a layer of gilt on it. It was a very good time for the wealthy or semi-wealthy. For everyone else, it was a pretty rough period to live. If one only looked at the great mansions in Newport and the glamorous townhouses (that took up whole city blocks) in Manhattan it was a glittering era. If one looked at the lives of the dozens of servants who staffed those homes, most of whom worked seven days a week, 18 hrs a day for perhaps .40 cents a day (about $5 in modern money) life might not have been so glamorous.
Angela
ReplyDeleteAny man or woman of great wealth who pays more in taxes than their chauffeur needs to fire their investment and accountant team. The US Tax Code is heavily geared to benefit the very wealthy.
In ICXC
John
We think that those conditions were atrocious only because our living standards are so much better. And since you post so much about gold, you may want to remind yourself about purchasing power differences. An old timer told me about his receiving a salary of $40/week in the 50s and not knowing what to do with so much money.
ReplyDelete