U.S. wage data released this week reveal the continuation of a trend that began at the end of the 1970s, and which has given the United States the dubious distinction of having the worst income inequality among most-developed countries.
The Economic Policy Institute reports that between 1979 and 2019, the top 1% of people in the U.S.—whose mean income was nearly $738,000 in 2018— have enjoyed 160% income growth, while wages for the bottom 90% have stagnated, rising just 26% over the same 40-year period.
The figures showed massive inequality even among the top 1%, as the highest 0.1%—those making an average of $2.82 million—skyrocketed 345% since 1979.
While U.S. income inequality is the worst among most-developed nations, its wealth inequality is even more egregious. According to a 2017 report (pdf) from the Institute for Policy Studies, the three wealthiest Americans at the time, Jeff Bezos—who has since become the world’s first multicentibillionaire—Bill Gates, and Warren Buffett, collectively held more wealth than the bottom 50% of the population, or some 160 million people.
Experts say it is no accident that the period in which the yawning, ever-growing chasm between rich and poor began coincides with the rise of corporatist and neoliberal economic policies—colloquially dubbed “trickle-down economics”—implemented by conservative leaders including British Prime Minister Margaret Thatcher and President Ronald Reagan in the U.S.
Thomas Piketty, a French economist whose work focuses on economic inequality and who authored the seminal book Capital in the Twenty-First Century and the recently published Capital and Ideology, says the coronavirus pandemic presents an opportunity for U.S. leaders to finally make a serious attempt to address income disparities.
“We have to revisit some of our ideologies, some of what we believe is the conventional wisdom at a given point in time,” Piketty told Hill.TV last week. “I think we should use this opportunity to develop more social state, social policies in general, by which I mean a better income support mechanism, safety net, and better access to education.”
“There’s nothing natural in the way the economy is organized,” Piketty continued. “It’s all a matter of political choices, of ideology. I think it’s important to send a message to working America and to low-wage America that you can have economic justice together with economic prosperity.”
Piketty implored the incoming administration of President-elect Joe Biden to embrace egalitarian economic policies espoused by progressives such as ex-presidential primary rivals Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.), including a tax on billionaires, which he said is “actually pretty popular if you look at the polls.”
“I think you need to have a more ambitious policy platform of giving a better chance to more disadvantaged socioeconomic groups,” Piketty said. “We’re talking about a higher minimum wage, more investment in public universities, more progressive taxation at the top.”
“I think it will be a big mistake for the Democratic Party leadership to abandon this kind of idea,” he added.
Standing in stark contrast to what economists like Piketty say must be done to combat inequality, the administration of President Donald Trump—who has boasted of giving billionaires a $1.5 trillion tax break—said this week that it supports Senate Republicans’ proposal to freeze the wages of the more than two million people who work for the federal government.
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