I’m not an economist, I don’t play one on TV and numbers scare me, but I think everyone should have a basic understanding of why we find ourselves with such gaping income inequality in America today and an economy that is stuck in neutral. There’s a very accessible article in Truthout that explains in language I can grasp how having a middle class in a capitalist society is a conscious choice and not something that naturally flows from a free market economy.
Our economic troubles really began when Ronald Reagan took office in 1980 and started drastically cutting taxes on the wealthiest Americans. Since then, the very wealthy have continued to accumulate money, their income has grown dramatically, while those once considered middle class realized stagnant or negative income growth, eventually plummeting to near poverty levels.
The article points out that the great economic growth and expansion of the middle class we experienced in the 1950s and 1960s was directly related to high taxes on the very rich, a tightly regulated economy and strong labor laws. That’s all gone by the wayside in the last 33 years, and the current Grand Canyon of income inequality is the result.
One point made in the article that I found very interesting was the idea that when you have a middle class, a large group of Americans who were relatively comfortable financially, people are able to focus their energy and attention on broader social issues (civil rights, the war in Vietnam, the environment) rather than the day-to-day struggle for survival. This, of course, scared the shit out of the conservative establishment, and their champion, Ronald Reagan, finally put a stop to all of that as president. Today, a large swath of America is right where conservatives want us to be, scraping to get by and beholden to our employers for letting us keep our jobs.