Why the Rich Are Getting Richer (and you and I are getting poorer)

The news recently has it that income inequality in the United States is at its greatest since the 1920s. That upper 1% owns a staggeringly disproportionate share of the nation's wealth: I think the number is that 1% owns 19% of the wealth.

And if you go "down" to the upper 10%, they control 47% of the nation's wealth.

• The declining membership and power of unions is one factor. Think Wisconsin Governor Scott Walker's successful efforts to strip bargaining rights from public employees. Similar things have recently happened in a few other states.
• For another thing, it's been laws that favor wealthy individuals and large corporations and keep tax rates on the upper income brackets low. Thank your Republican senators and congressmen for that. (In the days of FDR and the New Deal, the top incremental rate of the income tax actually was 98%; today it's 38.5%. Yet the super-rich organize Tea Party rallies and shout that taxes are too high, but they are not trying to lower taxes for you and me, but for themselves.)
• And the lobbyists who do the bidding of extremely wealthy individuals and corporations and even submit to legislatures draft laws which are friendly to their bosses. A number of corporations have banded together in a consortium called ALEC for the purpose of lobbying, and ALEC has been quite effective. (Generally, corporations' legislative aims are fewer regulations as well as lower taxes.)
• And of course court decisions, such as the infamous Citizens United decision which gave essentially free reign to the super-rich to anonymously contribute to election campaigns.
• Yet another culprit: It was recently asserted—and I've heard this twice, now--that the policies of the Federal Reserve Board favor the rich by fostering low inflation over low unemployment. Obviously, if a lot of people are unemployed, that lowers their personal income level and income levels overall.
• Another way that the Federal Reserve's low interest policies are supposed to be favoring the rich: The low interest rate lets the rich borrow cheaply. They borrow, using their homes and/or their wealth as collateral, and buy commodities. (More properly, commodities futures, which are contracts to buy or sell commodities such as precious metals; oil; wheat or corn; coffee, orange juice; and the infamous "pork bellies.") It is true that it's mainly the rich who trade in commodities because the amounts of the contracts, in dollars, are very large.

Update, September 17, 2013. This is truly an update because this is two news items that came out yesterday:
1) In the past year, the individuals on the Fortune 400 (list of 400 wealthiest individuals) saw their incomes rise 19%.
2) Unemployment among those with an annual income of $20,000 is 23%, whereas unemployment among those with an income of $150,000 was 3.2%.
Update, September 18, 2013. Here is a link to a Huffington Post article that says inequality is at a record high, and that the median income has fallen for five years in a row: Median income falls 5 straight years, inequality at record high

Copyright © 2013.