Getting to Know the 99%
More in Common than Revealed in Mainstream Media
by Tod Westlake
One of the viral jokes being
posted on Facebook in recent weeks goes like this: Three people are sitting at
a table—an executive, a union representative, and a worker. There are ten
cookies on the table. Suddenly, the executive grabs eight of the cookies, leaving
one each for the other two. He then points to the union rep and says to the
worker, "Look out for this guy. He wants to steal your cookie."
This joke encapsulates what many
are feeling these days, that the economic playing field has been tilted too far
in one direction. The Occupy Wall Street (OWS) movement, for example, has spent
quite a bit of time talking about what has become known as the "1%,"
that group of individuals at the top of the income scale who seem to have the
vast majority of the cookies. With annual incomes in the millions of dollars,
this upper strata of earners are the ones who call the economic shots—often at
the expense of the rest of the 99% who are left to fight over crumbs.
George Washington at Federal Memorial on Wall Street. |
And there's no doubt that the
huge disparities between the haves and the have-nots is a significant part of
the angst many are feeling. For those sympathetic to the Occupy Wall Street
movement, income disparity is just another symptom and sign that something in
this country has gone terribly amiss. We work longer hours, see fewer benefits,
make less money in real dollars, and see our already inadequate social safety
net being slowly dismantled.
But how do we quantify this? In
other words, just how far has the playing field tilted? According to an article
by Dave Gilson and
Carolyn Perot published in
Mother Jones magazine earlier this year,
one percent of Americans currently account for 34.6 percent of the net worth in
this country. That's one person in a hundred wielding over one third of the
economic power. When you extend this outward a bit further, to 10 percent of
the richest Americans, the numbers are even more startling. Currently, 10
percent of Americans control a staggering 73.1 percent—or nearly
three-quarters—of this nation's wealth.
Income, too, shows huge
disparities between the top and bottom tiers. According to the Congressional
Budget Office, the top one percent of Americans have seen their income increase
nearly fourfold in the past 30-plus years (adjusted in 2007 dollars).
Meanwhile, the bottom 20 percent hasn't had a raise. Translated another way,
the top one percent have seen their share of the nation's income more than
double, while the bottom fifth have seen their piece of the pie shrink by
nearly a third. Numbers like these should give pause to even the most ardent
free marketeer.
Princeton economist and Nobel
laureate Paul Krugman has spent quite a bit of ink on this phenomenon. Writing
on his NY Times blog, The
Conscience of a Liberal, Krugman identifies
three key periods in the 20th century when it comes to wealth distribution in
the US. After what he refers to as the Long Gilded Age (the late 19th and early
20th centuries), the nation underwent what Krugman refers to as a Great
Compression (late 1930s through mid-1940s). During these decades economic
disparity dropped considerably. And from the late 1940s onward, things were
much more equitable, according to Krugman.
"It was a society without
extremes of wealth or poverty, a society of broadly shared prosperity, partly
because strong unions, a high minimum wage, and a progressive tax system helped
limit inequality," he writes. "That’s the country I grew up in."
But the late 1970s came along and
things started to skew back in the other direction. Slowly, inexorably, we've
managed to get back into a situation in which wealth continually creeps upward,
while poverty continues to roll downhill with increasing velocity. Krugman
calls this, the period in which we are now living, the Great Divergence.
"Between 1979 and 2005 the
real income of the median household rose only 13 percent, but the income of the
richest 0.1% of Americans rose 296 percent," Krugman writes.
And things have only gotten worse
in the past several years.
This has led to a situation in
which the fruits of living in the world's largest economy have for many become
all too bitter. There are currently 42.6 million Americans living in poverty,
which is defined as a family of four earning less than $22,350. Stop and think
about this for a minute. This is 15.1 percent of the population who are
attempting to live, and raise two children, on a sum that would barely support
a single person here in Ulster County.
So, these are the numbers. We can
massage them all we want, but it won't change the fact that these statistical
abstractions have embedded in them the lives of real people. In another example
of how far off the economic rails we've gone, the advocacy group Wider
Opportunities for Women (WOW) recently released a report entitled: Living
Below the Line: Economic Security and America's Families. The report concludes that, currently, 45 percent of
Americans "struggle to make ends meet." These are the folks who live
just above the poverty line, a group of people for whom even the smallest
unexpected expense—car repair, a doctor's bill—can mean months of hardship.
The folks in this segment of the
population have become what is known as "the working poor," people
who have jobs, sometimes several jobs, none of which pay a living wage, provide
good benefits, or offer any kind of long-term economic security.
College graduates do fare much
better in the current economic climate, according to WOW. But even this group
is beginning to feel the relentless creep of poverty. Currently, 21 percent of
households headed by someone with a college degree lack economic security.
"In the past, threats to
economic security were supposedly clear—dropping out of high school, being a
single parent, or having a large family. In today's economy, we cannot assume
we know who lacks security," the WOW report states.
So, where do we go from here?
Many have advocated for a modest adjustment on the top-tier tax rate. This will
happen automatically at the beginning of 2013, when the Bush Tax Cuts expire
and the top marginal rate moves from 35 percent up to 39 percent on income in
excess of $250,000 per year. Deficit hawks will also be pleased to know that
this automatic adjustment will close the nation's debt by $3.6 trillion dollars
over the next ten years.
But won't an increase in marginal
tax rates stifle economic growth? If history is any guide, the short answer is
"no". Throughout most of the 20th century, the top tax bracket was
actually much higher than it is at present. The fact is, we have to go all the
way back to the era prior to WWI to see a period in which marginal rates are
lower than they are now. In 1916, the top tier paid 10 percent of its income
over $250,000 in taxes. This was changed two years later, in 1918, when the top
rate jumped to 72 percent! Yes, you read
that number correctly. The rate was more than double what it is now. This
actually peaked in 1952, when the top bracket paid a staggering 92 percent.
From 1942 through 1962 marginal rates never dipped below 88 percent. Those who
are a bit older will remember these two decades as being among the most
prosperous in this nation's history, an era in which our government had the
resources to take care of its own—and a one-income household could afford to
purchase a home and send its kids to college.
Whether we can ever return to the
prosperity that our parents and grandparents knew remains an open question. In
the interim, we need to be keenly aware that many of our neighbors continue to
struggle. And now that the holidays are upon us, we should also remember that
this is the season when poverty really hurts. Whether it's a senior citizen
neighbor, a down-on-his-luck member of the family, or a complete stranger, we as
individuals can make a big difference in the lives of the less fortunate. And
if our government can't, or won't, provide a strong safety net, it's up to the
rest of us to make this holiday season one that is remembered not for what we
received, but what we gave.
Resources
wowonline.org
krugman.blogs.nytimes.com
Food Pantries in Ulster County
nyconnects.ulstercountyny.gov
(click "emergency food pantries" in the left column)
Posted by Chris Hewitt
on 12:39 PM.
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