Please distribute to interested individuals • Public domain, free to use and reproduce • References for statistics cited in this commentary are available in Falling Behind: Why Wealth Gaps Are Preventing You and Half of America from Getting Ahead, a draft of which is available online at https://www.DrDavidDemers.com/falling-behind.html
Excuse Me, Wealth Gaps Are Not a Sign of Prosperity
Libertarian Institute Known for Spreading Misinformation Is at It Again
(659 words)
By David Demers
A conservative libertarian institute known for spreading misinformation during the COVID-19 pandemic has a new deceptive crusade: promoting the idea that increasing wealth inequality is good because it’s a sign of prosperity.
“[W]ealth inequality is largely a result of general prosperity,” asserts Jason Sorens, a senior research fellow at the American Institute for Economic Research, in a September 25, 2024, posting on the organization’s website. “Wealth has risen across the generations and across the economic spectrum ... But there’s little evidence the American economic system is fundamentally ‘rigged’ against those without wealth.”
Excuse me, but the claim that inequality leads to prosperity is akin to telling people violent crime is good because it’s a sign of economic progress.
Let there be no mistake: Crime and inequality are both bad, and neither should be normalized.
In fact, social scientific research shows that excessive wealth gaps are extremely harmful. They increase crime; kill 45,000 Americans people a year who don’t have access to affordable health care; drive up prices of concert and sporting events tickets; boost the chances that Americans will embrace fascism and radical right-wing politics; and pose a grave threat to democratic processes.
Although Sorens is correct that wealth has increased for all income groups (see Figure 1), the poorest 50 percent of Americans are not getting wealthy. Their inflation-adjusted income has only increased about 1 percent ($200) per year since 1989, compared to nearly 6 percent each year for the top 10 percent ($70,000) and 14 percent for the wealthiest 25,000 Americans ($370,000) (see Figure 1.5 at bottom of this commentary).
The gaps in wealth are expanding so rapidly that in 10 years the wealthiest top 10 percent will see their share of all wealth increase from about two-thirds to three-fourths. In contrast, the bottom 90 percent (working and middle classes) will see their share drop from about one-third to one-fourth.
Sorens’s claim that the economic system is not rigged also is false.
Most of the wealth gaps that exist today stem from massive tax cuts that began with the administration of Ronald Reagan in 1981 and continued through the administrations of George W. Bush and Donald Trump. Reagan cut capital gains and earned income taxes, which reduced federal taxes on the wealthy by about 50 percent.
Figure 2.1 (see end of this commentary) shows that from 1960 to 1980, the inflation-adjusted wealth gap between the top 1 percent and bottom 50 percent was about $3.3 million and relatively stable. But wealth gaps began to expand rapidly during the 1980s, when Reagan radically cut earned income and capital gains taxes on the wealthy. Bush and Trump also enacted tax cuts that included major reductions in estate (inheritance) and corporate taxes.
Today, the inflation-adjusted wealth gap is about $17.6 million. The top 1 percent have 1,317 times more wealth than bottom 50 percent. The working and middle classes are paying 59 percent more in local, state and federal taxes today than they were during the 1950s.
Sorens argues that because “all wealth groups have more than doubled their wealth in real terms since 1989,” this means that “we should [not] even care that inequality is going up, so long as everyone is benefiting.”
Excuse me, but if inequality is going up, how can everyone benefit?
That’s a non sequitur.
The only way everyone benefits is if wealth inequality declines and real incomes and wealth increase. But that can only happen if taxes on the wealthy are raised substantially. — a scenario that isn’t likely because, excuse me again, the system is rigged. The wealthy, which includes many Democratic politicians, control the political process and don’t have the will to tax themselves and their wealthy political friends.
The national debt is basically funding tax cuts for the wealthy. Today’s $34 trillion debt load will explode to $70 trillion in about 10 years, at which time it will be about twice as high at the gross domestic product — a ratio that the Wharton School says could lead to a catastrophic economic event.
Excuse Me, Wealth Gaps Are Not a Sign of Prosperity
Libertarian Institute Known for Spreading Misinformation Is at It Again
(659 words)
By David Demers
A conservative libertarian institute known for spreading misinformation during the COVID-19 pandemic has a new deceptive crusade: promoting the idea that increasing wealth inequality is good because it’s a sign of prosperity.
“[W]ealth inequality is largely a result of general prosperity,” asserts Jason Sorens, a senior research fellow at the American Institute for Economic Research, in a September 25, 2024, posting on the organization’s website. “Wealth has risen across the generations and across the economic spectrum ... But there’s little evidence the American economic system is fundamentally ‘rigged’ against those without wealth.”
Excuse me, but the claim that inequality leads to prosperity is akin to telling people violent crime is good because it’s a sign of economic progress.
Let there be no mistake: Crime and inequality are both bad, and neither should be normalized.
In fact, social scientific research shows that excessive wealth gaps are extremely harmful. They increase crime; kill 45,000 Americans people a year who don’t have access to affordable health care; drive up prices of concert and sporting events tickets; boost the chances that Americans will embrace fascism and radical right-wing politics; and pose a grave threat to democratic processes.
Although Sorens is correct that wealth has increased for all income groups (see Figure 1), the poorest 50 percent of Americans are not getting wealthy. Their inflation-adjusted income has only increased about 1 percent ($200) per year since 1989, compared to nearly 6 percent each year for the top 10 percent ($70,000) and 14 percent for the wealthiest 25,000 Americans ($370,000) (see Figure 1.5 at bottom of this commentary).
The gaps in wealth are expanding so rapidly that in 10 years the wealthiest top 10 percent will see their share of all wealth increase from about two-thirds to three-fourths. In contrast, the bottom 90 percent (working and middle classes) will see their share drop from about one-third to one-fourth.
Sorens’s claim that the economic system is not rigged also is false.
Most of the wealth gaps that exist today stem from massive tax cuts that began with the administration of Ronald Reagan in 1981 and continued through the administrations of George W. Bush and Donald Trump. Reagan cut capital gains and earned income taxes, which reduced federal taxes on the wealthy by about 50 percent.
Figure 2.1 (see end of this commentary) shows that from 1960 to 1980, the inflation-adjusted wealth gap between the top 1 percent and bottom 50 percent was about $3.3 million and relatively stable. But wealth gaps began to expand rapidly during the 1980s, when Reagan radically cut earned income and capital gains taxes on the wealthy. Bush and Trump also enacted tax cuts that included major reductions in estate (inheritance) and corporate taxes.
Today, the inflation-adjusted wealth gap is about $17.6 million. The top 1 percent have 1,317 times more wealth than bottom 50 percent. The working and middle classes are paying 59 percent more in local, state and federal taxes today than they were during the 1950s.
Sorens argues that because “all wealth groups have more than doubled their wealth in real terms since 1989,” this means that “we should [not] even care that inequality is going up, so long as everyone is benefiting.”
Excuse me, but if inequality is going up, how can everyone benefit?
That’s a non sequitur.
The only way everyone benefits is if wealth inequality declines and real incomes and wealth increase. But that can only happen if taxes on the wealthy are raised substantially. — a scenario that isn’t likely because, excuse me again, the system is rigged. The wealthy, which includes many Democratic politicians, control the political process and don’t have the will to tax themselves and their wealthy political friends.
The national debt is basically funding tax cuts for the wealthy. Today’s $34 trillion debt load will explode to $70 trillion in about 10 years, at which time it will be about twice as high at the gross domestic product — a ratio that the Wharton School says could lead to a catastrophic economic event.