Of all the challenges that our nation faces, from global economic competition to a changing climate to radicals bent upon our destruction, none is greater than the widening gap between the super-rich and the rest of us. Robert J. Stiller, 2013 Nobel-winning economist and Yale professor, calls it “the most important problem we are facing today.”
A recent report prepared by the international relief organization Oxfam, for the World Economic Forum, contained some startling and sobering facts. One percent of the world’s population now owns 67 times what the bottom half owns, while just 85 individuals control the same wealth as the poorest 3.5 billion people in the world.
A recent study by the Congressional Budget Office showed that incomes for the top 1 percent of households in America increased by 275 percent between 1979 and 2007, while the middle class gained just 40 percent. This leaves the top 1 percent now controlling 40 percent of the wealth in this country.
Why does this matter? If you look around the globe at places with concentrations of wealth at the very top, you invariably find a weak or non-existent middle class, paralyzing social unrest, autocratic dictatorships, rampant corruption and widespread violence. Prosperity, healthy populations and functioning democracies almost never survive those conditions.
None of this is meant as some kind of rant against capitalism or rich people in general. Among our greatest heroes are the people in our communities and in our history who had the courage and the drive to build companies and create jobs and wealth. Good for them, and let’s have more of it. As my mother once said, “There’s nothing wrong with rich people, it’s the filthy rich that are the problem.”
Nor is this a partisan issue. When enormous wealth accumulates at the top, it undermines our entire social and political structure. We Americans should know this well. It was why so many of our ancestors fled to these shores to escape the permanent poverty of aristocratic Europe and why we eventually declared our independence from not only England but from concentrated power itself.
Since then, we’ve had to make periodic course corrections in America to ensure that a new aristocracy couldn’t arise here. In the early 1900s, a “progressive” movement swept through the country that reined in the so-called robber barons and broke up their concentrated power. Later, during the Great Depression of the 1930s, a wave of regulations and new programs such as Social Security helped level the playing field, producing a 40-year period in which the gap between the rich and the poor remained stable.
Since the mid-1970s, though, America has been on a binge of income re-distribution, with wealth being vacuumed to the top. Part of the reason is an excessive infatuation in politics with the “filthy rich” that began with Ronald Reagan’s “trickle down” economics experiment and continues today. Too many elected officials talk breathlessly, with stars in their awestruck eyes, about how the “job producers” need to be adoringly protected from pesky social responsibilities such as taxes and regulation so they can, through their investments and toil, raise the tide for the rest of us.
It turns out that they don’t invest and toil very much. What we have to show for all that one-sided love is historic concentrations of wealth at the top, a declining middle class, falling wages, growing poverty and increasing pressure on government to help the millions of Americans who are being pushed toward the abyss.
Meanwhile, billionaires have learned how to play the game of politics with impressive skill, including not only financing obedient candidates but also creating love-the-rich communications vehicles such as Fox News and funding “grassroots movements” such as the tea party, who toil every day to divert attention away from the dangers of a new concentrations of power and toward far lesser dangers associated with excessive government spending.
Their success has been mesmerizing. During the Eisenhower and Kennedy administrations, tax rates for the wealthy hovered at 90 percent. Today, that number stands at 35 percent. Not coincidentally, during the 1950s and 1960s, we were able to sustain a global military presence, take care of veterans, create an interstate highway system, increase home ownership and build a broad middle class, all while balancing the books.
Now we have a massive debt, declining infrastructure, increasing poverty and a rapidly shrinking middle class. The heart of that problem is not excessive government spending but the fact that the super-rich are taking far more than they’re giving.
As Pope Francis said recently, an “idolatry of money” brings with it the danger of “a new tyranny.”
Alan Caron is a partner in the Caron and Egan Consulting Group, which advises businesses and organizations on strategies for growth. He can be reached at [email protected]