Writing in the New York Times, Thomas Edsall assembles an impressive array of facts that illuminate the realities of wealth inequality in America.
Citing Federal Reserve figures, Edsall reports that household net worth, corporate profits, and the value of real estate have been going up at an impressive pace. If you think that sounds like evidence of recovery you’d be mistaken, at least if you equate “recovery” with economic conditions that are improving for most workers.
“The September Federal Reserve Bulletin graphically demonstrates how wealth gains since 1989 have gone to the top 3 percent of the income distribution,” he writes. “The next 7 percent has stayed even, while the bottom 90 percent has experienced a steady decline in its share.”
It’s not just wealthy individuals getting wealthier; it’s also the corporations they own and run. Citing statistics from Goldman Sachs, Edsall says corporate profits rose five times faster than wages last year. And he quotes an article from Business Insider that stated,
“America’s companies and company owners — the small group of Americans who own and control America’s corporations — are hogging a record percentage of the country’s wealth for themselves.”
Edsall asks, “Why don’t we have redistributive mechanisms in place to deploy the trillions of dollars in new wealth our economy has created to shore up the standard of living of low- and moderate-income workers, to restore financial stability to Medicare and Social Security, to improve educational resources and to institute broader and more reliable forms of social insurance?”
It’s the right question.
For answers he turns to a bunch of economists, who provide data about tax rates, labor force participation, the declining growth of well-paying jobs, globalization, and the reduction of labor’s share of profit relative to capital in a time of rising productivity.
My answer is a bit more straightforward: America’s companies and company owners — the small group of Americans who own and control America’s corporations — are hogging the political system. This is nothing new, but in the legal environment created by recent Supreme Court decisions (Citizens United and McCutcheon in particular) it is becoming easier for corporate interests to wage class war and win. Simply put, the people who make the laws and set the policies have their receptors tuned to the frequency where the corporations are broadcasting.
Edsall notes survey data that reveal corporations are not so popular in the USA and other so-called “advanced countries.” He asks if the legitimacy of free market capitalism in America is facing fundamental challenges.
My gut response is to say “I hope so.” But the dynamics described by all those economists are not the workings of “the invisible hand.” The market is operating under a set of rules established by those who already have more than their fair share of power, wealth, and privilege. The legitimacy of our corporate-directed political system must be challenged as well.