America had a wonderful run after World War II when the middle class blossomed, but over the past thirty years or so there has been a gradual redistribution of wealth upwards.
Over the decades, the wealthy and powerful have tweaked the tax code and financial regulations to make it easier for them to make and keep money. When rising workforce productivity does not lead to rising wages, something seems unfair.
This trend has been documented in many places, for example:
“Unequal wealth distribution is hardly a new or uniquely American problem. In fact, it’s been prevalent throughout society since humans first built civilizations: A small minority of aristocrats has always wielded the most power throughout history.
“The [top] 1 percent [executives, doctors, lawyers and politicians, among other professions] are worth about 70 times the worth of the lower classes.
“It’s historically common for a powerful minority to control a majority of finances, but Americans haven’t seen a disparity this wide since before the Great Depression — and it keeps growing.” forbes.com
Ideally, the wealth at the top would be used to capitalize increased production and an expanding economy, but America today doesn’t need more production. Wealthy people, quite reasonably, want to invest money in a safe place that earns a decent return, which fueled the 2008 recession debacle – the financial industry decided to meet the demand through fraud.
Are we in the same place again?
I fear we will see increases in corporate corruption and more frequent bubbles. If more of this wealth (and the income that precedes it) belonged to the middle and lower classes, they would spend it on products and services which would grow the economy. That would be good for everyone, but I doubt many wealthy Americans (despite Warren Buffet) see their own enlightened self-interest here.
By the way – it may not be just the wealthy driving the problem. If Wall Street can count on a certain amount of money flowing into the stock market through 401k’s every month, but that money is not needed to increase production, will it just feed corruption and bubbles? More money to Wall Street could have negative consequences. This leads me to deep skepticism about, for example, privatizing Social Security Insurance.
The obvious solution many liberals jump to is to tax the wealthy and use that money for services to the rest of the country – to build roads and bridges perhaps, or provide direct subsidies. It would be better, in my opinion, to reverse the many tweaks to our economy that have lead to this imbalance, but that would involve a huge amount of work. With such polarization in our legislatures today, the problem is overwhelming. But returning the middle and lowers classes’ wealth seems imperative to our future.