How equal should income in the United States be? The corollary question should be, What is an Economy for? Let’s begin with the later question.
In the USA, from 1933 until 1981, the laws and regulations the US government enacted were intended to increase gross domestic product and spur demand so that a vast majority of Americans experienced rising standards of living.
So with that out of the way, we can determine roughly how equal income and wealth distribution should be in the United States. But first, a little lesson. The United States government determines the distribution of income and wealth via legislation and trade treaties. Since 1981, the rich have been in control of our government. He who has the gold makes the rules.
So if a rising economic tide lifts most boats, and gives most everybody a better future, then that’s about what we want.
The current business expansion (the current rising tide) is leaving everybody behind since the 1 percent have been taking 99 percent of all income growth since 2009. Today, that translates into the 1 percent stealing 37 percent of all income produced in the United States, up from 8 percent in 1980. The economy lifted a lot more people upward back in 1980. As a nation, we were all better off then than now.
In four years under President Jimmy Carter, 1977-81, the US gained more than nine million private sector jobs, and with rising average real wage rates. That’s better per year than job growth under President Ronald Reagan and President Bill Clinton. And Carter did this as the US experienced two recessions. In addition, the US gross domestic product was only 40 percent of what the US produces today, and the population was 60 percent of what it is today.
More jobs were created under Jimmy Carter than under President George W. Bush and President Barack Obama combined. Under the later two, family income dropped $7,000 a year because they focused (along with Reagan, the first Bush and Bill Clinton) mostly on passing legislation that redistributed income from the 99 to the 1 percent, such as Wall Street deregulation scams and free trade schemes.
Meanwhile, during the thirteen years under Obama and Bush, out of pocket health care costs soared 85 percent, tuition and fees at colleges and universities rocketed 86 percent, child care costs rose 37 percent, housing jumped 28 percent, and the median net worth of middle class families has fallen 17 percent since 2010.
Yes, 8 percent of all income going to the 1 percent sounds about right, for starters.