The relationship between today’s inequality and tomorrow’s economic mobility was a key theme of a speech by Alan Krueger, Chair of the President’s Council of Economic Advisers, at the Center for American Progress last week. To show how class has become calcified in America, he showed this chart, which he called the “Great Gatsby Curve”:

Can you feel the sarcasm dripping from that headline?

The Pew Research Center has conducted an inquiry into the degree of divisions within American society and found that conflicts between rich and poor now outpace other sources of group tension.

That result can only be interpreted as a success for the 99% and those who participated in the nationwide Occupy movement. They decisively altered the national dialogue from one that was obsessed with government spending and debt, to one that focused on economic justice and corporate abuse of power.

This is a terrible time for the GOP (Greedy One Percent) to be coalescing around Mitt Romney as their nominee for president. A multimillionaire, corporate raider who specializes in bankrupting companies and outsourcing jobs may not be the ideal candidate in this political environment. But, fortunately for Democrats, they are stuck with him.

The Wealth Gap in American is currently larger than it has ever been. It is larger than it was in the Great Depression. It is even larger than it was during the ancient Roman Empire that collapsed from the weight of its own injustice and oppression.

According to the latest figures by the United States Census Bureau, a large and growing number of Americans are poor. These figures suggest that one in three Americans are living in poverty, or what is sometimes called "near poverty".

And these numbers follow years of stagnating wages for the middle class.

This is the real issue here. There's a sense that a lot of us have that our public policy ought to be aiming to produce large gains for everyone. You often hear that for one reason or another the United States "can't afford" this or that. We "can't afford" to pay people Social Security benefits. We "can't afford" to build high-speed trains. We "can't afford" to give everyone early childhood education. But why can't we afford this stuff? Are we a poor country? No, we're not. We're one of the richest countries that's ever existed. Are we a poorer country than we used to be? No, we're not. But a very large share of the gains we've made over the past three decades have gone to a relatively small number of people. If the gains had been broadly shared, then the burden of paying for that basic infrastructure and public services would have to be very broadly shared. But the gains have been very concentrated, and so if we're going to afford that stuff, a large share of the revenue has to come from the people who've gotten the money.

That's not envy, that's math.

Today in America, the great middle class of our country, the middle class that has been the envy of the entire world, is collapsing, poverty is increasing, while the wealthiest people in this country have never had it so good.

As a result of the greed, the recklessness, and the illegal behavior of the crooks on Wall Street who caused this recession, more than 16 percent of our people are unemployed: twenty-five million Americans. That percentage is even higher for minorities, for young people, for blue collar workers. Today, millions of Americans are working longer hours for lower wages. From Vermont to Wisconsin to California, there are workers who do have jobs but who are earning substantially less than they earned twenty years ago. Can you appreciate what it’s like for somebody to be struggling year after year after year and now at the age of fifty or sixty to be earning substantially less than they were twenty years ago? Do you know why the American people are angry? That’s why they’re angry.

The rich have gotten richer, thanks to the stock market and the Bush tax cuts, a recent report has found. Growth in income from capital gains and dividends has widened the divide between the wealthy and the poor in recent years, according to the non-partisan Congressional Research Service. It supplanted wage inequality as the primary driver of the growing income gap, which helped spur the Occupy Wall Street movement last fall.

In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%. 

A half-century ago, thoughtful Americans considered the Gilded Age ancient history. By the 1950s, robber baron fortunes no longer dominated - or dazzled - America's political and economic landscape. But that's all changed. The awesomely affluent haven't just returned. Today they cast an even greater shadow.

Reversing tax giveaways to the super-rich and the nation's largest corporations could raise $4 trillion within a decade and avert possible government closures.

"We're broke."

Or so claim governors and lawmakers all over the country. Our states and our nation can no longer afford, their plaint goes, the programs and services that Americans expect government to provide. We must do with less. We need "austerity."

But we're not broke. Not even close. The United States of America is awash in wealth. Our corporations are holding record trillions in cash.

It's time to talk turkey about income inequality. It's time for change.

With income inequality being the highest it has been since 1928, you may be surprised at some of the countries who have lower income inequality than we do. You might guess that income inequality would be lower in countries such as the United Kingdom, Australia, Spain, Canada, France, Germany, Switzerland, Japan, etc. But would you have guessed that income inequality is also lower in places like Russia, Thailand, Cambodia, Vietnam, and Egypt for example? Source

Let's take a look how income inequality has grown in our country in recent years.

In 2007, the top 1 percent share of national income peaked at 23.5 percent. The only other year since 1913 that the wealthy had claimed such a large share of national income: 1928, when the top 1 percent share was 23.9 percent. The following year, the stock market crashed, and the Great Depression began. After peaking again in 2007, the U.S. stock market crashed in 2008, leading to what some are now calling the “Great Recession.”

Between 1979 and 2009, the top 5 percent of American families saw their real incomes increase 72.7 percent, according to Census data. Over the same period, the lowest-income fifth saw a decrease in real income of 7.4 percent. This contrasts sharply with the 1947-79 period, when all income groups saw similar income gains, with the lowest income group actually seeing the largest gains:

Source

It's generally understood that we live in a time of growing income inequality, but "the ordinary person is not really aware of how big it is," Krugman told me. During the late 1980s and the late 1990s, the United States experienced two unprecedentedly long periods of sustained economic growth—the "seven fat years" and the " long boom." Yet from 1980 to 2005, more than 80 percentof total increase in Americans' income went to the top 1 percent. Economic growth was more sluggish in the aughts, but the decade saw productivity increase by about 20 percent. Yet virtually none of the increase translated into wage growth at middle and lower incomes, an outcome that left many economists scratching their heads.

 

Source

The bottom line is that Ronald Reagan's trickle down economics (trickle on economics in my opinion) did not work, and only worked to gradually increase the income inequality to what it is today.

So why is it that Republicans in Congress think that lowering taxes for the wealthy will help create jobs?

There is no evidence to support their claim, in fact history shows us that when taxes are cut for the wealthy, the wealthy simply hoard more wealth. They do not create more jobs. The answer for why Republicans want to cut taxes for the wealthy has one simple answer. Those are the people paying for their election campaigns and they do not want to bite the hands who feed them.

If you look at who's behind the Tea Party, this becomes quite clear. Source

Why do we need to do something about income inequality? Read on...

As our foreign rivals have proved, to succeed in the global economy requires collective action on the part of the people and government to invest in education, infrastructure, industry and technology. As the wealthy become detached from ordinary life, these concerns become less of an issue, making them feel more indignant about having to contribute to these services.

All the while, our schools continue to fall behind the rest of the world, our infrastructure is in shambles, industry has lost millions of jobs, and we are no longer the world leader in technology.

The problem with correcting the problem is that in our political system, wealth begets power. The Supreme Court decision in the landmark Citizens United case decided that corporations can donate unlimited amounts of money to political campaigns, which essentially confirmed the plutocratic state of our government.

The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money has not bought them: an understanding that their fate is bound up with how the other 99 percent live.

Source

For sustained growth to occur, Berg and Ostry found, the most important factors are a relatively equal income distribution and trade openness. (See the chart on the right.) Having healthy, democratic political institutions matters quite a bit, too. Conversely, having a lot of foreign investment or keeping debt under control, among other factors, aren’t nearly as crucial. In the end, the most important factor is inequality: “a 10 percentile decrease in inequality... increases the expected length of a growth spell by 50 percent.”

Why would inequality be so crushing for a country’s economy? For one, the authors note that inequality tends to be associated with financial crises. When inequality runs rampant, people on the lower end tend to borrow more to keep up, which increases the risk of a major crisis. (Earlier IMF research suggested that this may have contributed to the 1929 and 2008 financial crashes in the United States.)

What’s more, inequality can foster political instability, which discourages investment. Berg and Ostry also argue that inequality makes it harder for governments to deal with external shocks — it’s politically dicey to, say, cut public spending to avoid a debt crisis when the middle class already feels like it’s falling behind.

Source

Are you getting the picture yet why the income inequality we are now experiencing in the United States is a bad thing, and changes must be made if our economy is to survive?

Think about this as you enjoy your turkey, and Happy Thanksgiving.

He is political incorrectness incarnate, but he's honest, and he tells the truth.

The ranks of America's poorest poor have climbed to a record high — 1 in 15 people — spread widely across metropolitan areas as the housing bust pushed many inner-city poor into suburbs and other outlying places and shriveled jobs and income.

New census data paint a stark portrait of the nation's haves and have-nots at a time when unemployment remains persistently high. It comes a week before the government releases first-ever economic data that will show more Hispanics, elderly and working-age poor have fallen into poverty.

Whatever the cause, the data are powerful because they tend to support two prejudices. First, that a system that works well for the very richest has delivered returns on labour that are disappointing for everyone else. Second, that the people at the top have made out like bandits over the past few decades, and that now everyone else must pick up the bill. Of course it is a little more complicated than that. But this downturn ought to test the normally warm feelings in America of the 99% towards the 1%.

GOP Sen. Rob Portman of Ohio called the Republican jobs bill, the Jobs Through Growth Act, a “pro-growth proposal to create the environment for jobs.” It is, in fact, a pro-business proposal to permit corporations to destroy the environment for humans. It is another GOP ploy to appease, accommodate and absolve corporations. It is another GOP ruse to firmly establish in America an economy designed for, dedicated to and directed by corporations rather than a just economy controlled by and beneficial to the 99 percent.  

Congressional Budget Office study that came out last week was  “Trends in the Distribution of Household Income Between 1979 and 2007. Perhaps a more accurate name for the study, based on the results, might be “Why Republican Economic Policies Tend to be Bad for Your Health”. Because what the study essentially shows is that practically from the beginning of Ronald Reagan’s first term in office after being elected in 1980, until 2007 (the time period covered by the study) the massive gap in wealth distribution between the wealthy and the poor went from the size of the Mississippi River to the Grand Canyon. Thanks to Reagan’s “trickle down” economics, and all the related protect-the-rich-at-all-costs policies that have been developed in its wake, the vast majority of Americans have effectively had government-sanctioned weights attached to their ankles as they attempt to climb out of their financial misery while the wealthiest 1 percent have been provided with every conceivable tool to become even wealthier at the expense of the rest of us.

As ThinkProgress’ Zaid Jilani cataloged earlier this month, the Occupy Wall Street demonstrations have helped shift media coverage away from conservative concerns about the federal debt and deficit to the more progressive (and important) issues of unemployment and unequal income distribution.

The Second Gilded Age – Has America Become an Oligarchy.  I’ve been arguing this point for many years, especially in our corporate sector where many industries are dominated by a handful of names.  That dominance feeds into the political system, and self reinforces.  True “free market capitalism” might be seen in the restaurant business and a few others, but a lot of sectors (telecom, defense, banking, retail etc) are dominated by the few and mighty.  Spiegel uses a good term “The winner take all economy”.

From 1979 to 2007, average household income for the nation's top 1% more than tripled, while middle-class incomes grew by less than 40%, according to a new report from a research arm of Congress.

While those at the top have seen their incomes soar over the past three decades, middle-class and lower incomes have stagnated, the report by the Congressional Budget Office found.

One of the dominating justifications that the right uses for its economic policies is that lowering taxes and regulations on society’s wealthiest members and big businesses will cause an explosion of wealth that will eventually “trickle down” to the vast majority of Americans. Yet while a record number of Americans are receiving some form of government assistance as unemployment remains high and the economy is in shambles, one group is doing very well: corporate America. The 2011 Fortune 500 list was unveiled today, surveying the growth and profits of the nation’s largest 500 corporations. It found that the profits of these companies “soared 81″ percent over the past year, causing the editors of Fortune to say that “we’ve rarely seen such a stark gulf between the fortunes of the 500 and those of ordinary Americans”:

But I was struck by something else: in several years during the last decade the top 400 accounted for more than 10 percent of all capital gains income in America. Just 400 people!

Many people don't understand our country's problem of concentration of income and wealth because they don't see it. People just don't understand how much wealth there is at the top now. The wealth at the top is so extreme that it is beyond most people's ability to comprehend.

If people understood just how concentrated wealth has become in our country and the effect is has on our politics, our democracy and our people, they would demand our politicians do something about it.

Countries with wide income inequality are unstable: they have large underclasses, high rates of crime and little opportunity.

Why should a relatively prosperous upper-middle-class family care about inequality? There are lots of reasons, but here's the most personal one: that's our money the very rich are taking! Based on Internal Revenue Service figures, if middle- and upper-middle-class families had maintained the same share of American productivity that they held in 1980, they would be making an average of $12,500 more per year.

That bears repeating: $12,500 of my money every year to the richest 1 percent, and $600 more to pay my share of their tax cuts!

Where did all the money and jobs go?

The Richest 1% Have Captured America's Wealth.

Also see:

http://www.huffingtonpost.com/2010/09/23/olbermann-small-business_n_736418.html

http://www.ourfuture.org/blog-entry/2010020719/income-redistribution

http://ampedstatus.com/part-ii-the-rise-of-the-economic-elite-economic-elite-vs-the-people

http://www.alternet.org/economy/145705/the_richest_1%25_have_captured_america's_wealth_--_what's_it_going_to_take_to_get_it_back

http://www.mybudget360.com/wealth-in-america-corporations-control-grow-income-inequality-top-25-percent-control-87-percent-finanical-wealth/

But some of the wealthiest Americans, including Warren E. Buffett, George Soros and Ted Turner, have warned that such a concentration of wealth can turn a meritocracy into an aristocracy and ultimately stifle economic growth by putting too much of the nation's capital in the hands of inheritors rather than strivers and innovators.

Others say most Americans have no problem with this trend. The central question is mobility, said Bruce R. Bartlett, an advocate of lower taxes who served in the Reagan and George H. W. Bush administrations. "As long as people think they have a chance of getting to the top, they just don't care how rich the rich are."

But in fact, economic mobility - moving from one income group to another over a lifetime - has actually stopped rising in the United States, researchers say. Some recent studies suggest it has even declined over the last generation.

http://www.endgame.org/primer-wealth.html

In terms of types of financial wealth, the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.

(September 2005) http://sociology.ucsc.edu/whorulesamerica/power/wealth.html