Fighting over crumbs
by Tom Sullivan
Startup billionaire Nick Hanuer published a 2014 open letter of warning addressed to "My Fellow Zillionaires." Hanauer wrote:
But let’s speak frankly to each other. I’m not the smartest guy you’ve ever met, or the hardest-working. I was a mediocre student. I’m not technical at all—I can’t write a word of code. What sets me apart, I think, is a tolerance for risk and an intuition about what will happen in the future. Seeing where things are headed is the essence of entrepreneurship. And what do I see in our future now?
I see pitchforks.
At the same time that people like you and me are thriving beyond the dreams of any plutocrats in history, the rest of the country—the 99.99 percent—is lagging far behind. The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent controlled about 8 percent of U.S. national income. The bottom 50 percent shared about 18 percent. Today the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent.
No, @nytdavidbrooks tremendous gains are not going to the top 20%. They are going to top 1%. Key to understand GOP.https://t.co/vm7j66QrxW pic.twitter.com/DKc38X8f6S
— Gabriel Zucman (@gabriel_zucman) June 27, 2017
In essence, Hanauer's intuition tells him if these trends don't change a revolution is coming (in some form). They come gradually, and then suddenly.
What's tricked downward since the Reagan era have been prospects for paycheck workers in this country. What's trickled up are the anxieties of barely staying afloat in an economy that caters to the wealthy and corporations. It is the "middle class squeeze" Elizabeth Warren described a decade ago.
David Leonhardt provides an eye-popping graph in this morning's New York Times that illustrates what we already know. After seeing a chart from Thomas Piketty, Emmanuel Saez and Gabriel Zucman (above), Leonhardt asked them to produce one to illustrate the shift in income distribution from 1980 to 2014. The animated gif is more stunning than their chart above:
The message is straightforward. Only a few decades ago, the middle class and the poor weren’t just receiving healthy raises. Their take-home pay was rising even more rapidly, in percentage terms, than the pay of the rich."Actually, there’s been class warfare going on for the last 20 years, and my class has won," Warren Buffett told CNN in 2011. He made a splash for his truth-telling and upset members of his own class for giving away the game, but little has changed. Democrats as a national party may be belatedly getting a clue, but they have yet to act on it. The reason they have no power to is their own tardiness.
The post-inflation, after-tax raises that were typical for the middle class during the pre-1980 period — about 2 percent a year — translate into rapid gains in living standards. At that rate, a household’s income almost doubles every 34 years. (The economists used 34-year windows to stay consistent with their original chart, which covered 1980 through 2014.)
In recent decades, by contrast, only very affluent families — those in roughly the top 1/40th of the income distribution — have received such large raises. Yes, the upper-middle class has done better than the middle class or the poor, but the huge gaps are between the super-rich and everyone else.