Growing Income Equality

This diary at MyDD talks about the growing income equality in the United States.

Unequal societies have throughout history been prone not just to social upheaval but also to economic turmoil. Beginning in the 1970s and accelerating after 1980, the US began undoing a series of policies that dated to FDR led to what historians call the "Great Compression" a flattening of income so that by 1964 the ratio of CEO pay to average worker pay was 24:1, the narrowest in the nation's history. Before the financial meltdown the ratio was around 400:1, or back to levels last seen in the late 1920s. And this is actually down from a high of 525:1 in 2000 (the reason is that executive compensation is largely paid in stock). In 1970, the top 1% of Americans controlled 8% of the nation's wealth, by 2000 they controlled 15%. In 1973, the income of the top 20 percent of American families was 7.5 times that of the bottom 20 percent. By 1996, it was 13 times. By 2006, it was 18 times.[...]

On almost every measure, Americans grew apart over the past 30 years. The chasm between rich and poor is not just wider but also deeper. As Paul Krugman noted at height of the market turbulence this past month "we are a banana republic with nukes." These results aren't by accident. In 2009, the US is far poorer as a collective society than we were in 1964 despite our many technological comforts. The Reagan economic model gave us cheap imported electronics but at a cost of being able to send our kids to college. The harsh reality is that the United States is a cleft nation as a result of the Friedmanistic economic policies pursued by Republican and Democrat alike since 1968 and cleft nations have a propensity to fail. It is not, I think, a coincidence that 2008 saw an economic meltdown when income inequality in the United States reached the same levels in 2008 that we last saw in 1928.