Economists point out that the woes of the middle class are in large part a consequence of globalization and technological change. Culture may also play a role. In his recent book on the white working class, the libertarian writer Charles Murray blames the hollowed-out middle for straying from the traditional family values and old-fashioned work ethic that he says prevail among the rich (whom he castigates, but only for allowing cultural relativism to prevail).
There is some truth in both arguments. But the 1 percent cannot evade its share of responsibility for the growing gulf in American society. Economic forces may be behind the rising inequality, but as Peter R. Orszag, President Obama’s former budget chief, told me, public policy has exacerbated rather than mitigated these trends.
Even as the winner-take-all economy has enriched those at the very top, their tax burden has lightened. Tolerance for high executive compensation has increased, even as the legal powers of unions have been weakened and an intellectual case against them has been relentlessly advanced by plutocrat-financed think tanks. In the 1950s, the marginal income tax rate for those at the top of the distribution soared above 90 percent, a figure that today makes even Democrats flinch. Meanwhile, of the 400 richest taxpayers in 2009, 6 paid no federal income tax at all, and 27 paid 10 percent or less. None paid more than 35 percent.
Historically, the United States has enjoyed higher social mobility than Europe, and both left and right have identified this economic openness as an essential source of the nation’s economic vigor. But several recent studies have shown that in America today it is harder to escape the social class of your birth than it is in Europe. The Canadian economist Miles Corak has found that as income inequality increases, social mobility falls — a phenomenon Alan B. Krueger, the chairman of the White House Council of Economic Advisers, has called the Great Gatsby Curve.
Obviously, the Great Equalizer in American society, at least since the Industrial Age, has been education. Through education, working and middle class children could aspire to greater things than their parents had.
Thirty years ago, Republicans gathered behind Ronald Reagan to begin the dismantling of the public education system in America, a system considered vital just thirty years earlier by no less than Dwight Eisenhower, who felt that the lag in American scientific accomplishment was due in large part to the woefully underfunded process of educating our children.
Sadly, that has continued even to this day with the simplification and idiocratization of education, which has gotten to the point that, rather than teach a subject, we teach a test.
Which is great if, you know, the world is only going to throw the same problems at your citizenry as those tests measure. The problem is, it doesn't.
Worse, this simplification has occured to the benefit of those at the very top, those who are now extracting wealth from America and placing it overseas.
This occurs, even as they run for President.
Say, remember when Mitt Romney had at least enough shame to lecture his gardener not to hire illegal immigrants because "I'm running for President, for gosh sake!"
Now, he doesn't even have enough shame to keep an American flag flying over an American factory.
Conservatives defend this, but anyone recall the flap over President Obama's flag pin?
We've already begun down the same slippery slope that Venice, ancient Rome, pre-revolution France and countless other societies have slid down: we've begun to allow the wealthy to accumulate and aggregate wealth well beyond their value to American society.
Indeed, if anything, we've blessed this venture on their part, agreeing to tax income into which they put absolutely no sweat equity at a lower rate (e.g. capital gains and carried interest rates.)
Really. Is the value of a dollar I invested some twenty percent more than the value of a dollar I earned working? I think not, but the wealthy around me do.
The problem with slippery slopes is momentum: it's easy to stop the slide at its very beginnings, but you have to be alert enough to see it coming and to sway the masses to your side. That takes a rare person (Teddy Roosevelt leaps to mind.)
Now, I'm not sure it's too late. Already both political parties can be found genuflecting before the power of the wealthy and even our grand institutions that were designed to protect the people have been corrupted by that power (cf Citizens United).
There is a bottom and it is coming and it will be harsh and painful, as all slides down a slope go. I don't see it ending well for many years after that, either.
Unless we can somehow remind those who are agglutinating money of the immortals words of one of their own:
In the long history of the world, only a few generations have been granted the role of defending freedom in its hour of maximum danger. I do not shrink from this responsibility -- I welcome it. I do not believe that any of us would exchange places with any other people or any other generation. The energy, the faith, the devotion which we bring to this endeavor will light our country and all who serve it. And the glow from that fire can truly light the world.
And so, my fellow Americans, ask not what your country can do for you; ask what you can do for your country.