Popular Economics Weekly

ANSWERING the KENNEDYS CALL

In a new Economic Policy Institute report entitled The New Gilded Age, income inequality has risen in every state since the 1970s, and in most states it has continued to grow in the post–Great Recession era.

Why should we care? The most dire economic consequences of income inequality are recessions, including the Great Depression when inequality was as high as it is now. And since 1980, such inequality has resulted in 5 recessions, including the Great Recession.

Are there more on the horizon in this ninth year of this long-in-the-tooth recovery from the Great Recession? The Economic Policy Institute map shows the income disparities in the U.S. today. In Alaska the top 1 percent earns 12.7 times the 99 percent, whereas New York has the highest multiple, at 44.4 percent.

From 2009 to 2015, the incomes of the top 1 percent grew faster than the incomes of the bottom 99 percent in 43 states and the District of Columbia. The top 1 percent captured half or more of all income growth in nine states. In 2015, a family in the top 1 percent nationally received, on average, 26.3 times as much income as a family in the bottom 99 percent.

Today, the top 1 percent has garnered 24 percent of national income once again, as happened in 1928 just prior to the Great Depression, and which today is $1.3m. The 99 percent rest of us have an average annual income of $50,000 per year. And now we have to worry that the current geopolitical uncertainties—a Trump trade war, breaking up of western treaties (TPP, NAFTA, NATO), global warming that is causing mass migrations, the threats of more terrorism, or ongoing regional military conflicts—could plunge us into another recession or worse.

There is a way out of this mess, other than another recession or war. We could shift the balance of power to those that want to rebalance the income equation by rescinding those tax cuts that only benefit the 1 percent longer term.

Or, we could shift more spending away from the military’s $600B budget that just increases the likelihood of war to badly needed infrastructure improvements, boosting educational opportunities of the disenfranchised blue collar workers, or more R&D to create the next generation of innovators and entrepreneurs.

There are countless ways we can use those revenues, in other words, that would benefit 99 percent of Americans, instead of the 1 percent.

Harlan Green © 2018

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