Unfair share

Elsewhere in this week's issue, you'll find David Cay Johnston's eye-opening look at America's tax system. It's a subject that the beleaguered workers here at News Hits have been giving a lot of thought to lately.

It's a given that life isn't fair, and we don't expect that to ever change. What we keeping hoping, though, is that it might become a little less unfair. It is not an impossible dream. All it will take for that to happen is the collective will to reverse a trend that's been going on for more than three decades.

Nobel Prize-winning economist and New York Times columnist Paul Krugman calls it the "Great Divergence," and dates its beginning to 1979, just before the beginning of the Reagan era.

He described the concept this way in a 2007 blog: "Since the late 1970s, the America I knew has unraveled. We're no longer a middle-class society, in which the benefits of economic growth are widely shared: between 1979 and 2005 the real income of the median household rose only 13 percent, but the income of the richest 0.1 percent of Americans rose 296 percent."

No matter how you slice the nation's economic pie, the statistics show that the rich — especially the very rich — are hogging more of it.

A recently updated study by sociologist G. William Domhoff, author of the book Who Rules America?, offers a look at wealth in America from 1922 to 2007. In 1922, the richest 1 percent controlled 36.7 percent of the nation's wealth; the bottom 99 percent had 63.3 percent. In 1929, when the Great Depression began, the very rich controlled more than 44 percent of the country's wealth.

Following the reforms ushered in following the Great Depression and the long period of economic expansion following World War II, the disparity between the very rich and the rest of us had shrunk considerably by 1976, when the economic elite held just less than 20 percent of the country's wealth.

By 2007, the numbers weren't all that different from those in 1922, with the top 1 percent again controlling more than one-third of all the nation's wealth.

What happened?

Citing both tax cuts for the wealthy and the "defeat of labor unions," Domhoff reports that, between 1983 and 2004, fully 42 percent of the wealth created by the American economy during that 21-year period went to the top 1 percent. And a "whopping" 94 percent of went to the top 20 percent, which of course means that the bottom 80 percent received only 6 percent of all the new financial wealth generated in the United States during the '80, '90s and early 2000s."

There are many more such statistics. We'll stop with one we've mentioned before. It comes from David Stockman. The former supply-side apostle and director of the Office of Management and Budget in the Reagan administration said during an appearance on 60 Minutes, "In 1985, the top 5 percent of the households — the wealthiest 5 percent — had net worth of $8 trillion — which is a lot. Today, after serial bubble after serial bubble, the top 5 percent have net worth of $40 trillion. The top 5 percent have gained more wealth than the whole human race had created prior to 1980."

> Email News Hits staff