What is happening to the land of opportunity? The productivity of workers in the U.S. has steadily increased ever since the end of the Great Depression. And for a long while, wages increased with productivity. Then, about the start of the Reagan administration, wages hit a plateau. Since then wages (adjusted for inflation) have not improved, and household income has increased only where more members of the family started working. Where did all the rewards of this increased productivity go?
There has been a huge transfer of wealth during that time of wage stagnation. The top 1 percent of households tripled its share of the wealth. The top 1 percent now owns 35 percent of the wealth, while the bottom 40 percent share three-tenths of 1 percent. We are at parity with many third world countries in terms of the inequality of wealth.
Capitalism works great in many ways, but if it is unbridled, those with the capital get richer and everyone else gets poorer. How level is the playing field when the CEO (who in many cases was born into money) makes thousands of times more than the workers at the bottom?
This is not to say that it is impossible to start from the bottom and be successful, only that it is getting harder and harder. The playing field is seriously tilted.
There are a number of remedies. One has traditionally been the inheritance tax, which ensured that those who received the most from our system paid part of that back. Another was a progressive federal tax system that again ensured that the rich paid their fair share. The rate on the highest part of income during the Eisenhower administration was 93 percent. There were jobs and the middle class was doing well. In fact, in an oped in the New York Times in August 2011, Warren Buffet wrote, People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation. If keeping taxes low on the job creators worked, we should be in the middle of a job boom.
So we have Republicans (and a few Democrats) who think we should do away with death taxes and are holding tax cuts for most Americans hostage to the idea that the richest must also get a tax break. Of course, with their campaigns being paid for by the same group (thanks to the Citizens United decision), can we expect them to bite the hand that feeds them?
It is time for a change in how we finance campaigns. And it is time to elect members of Congress who can work with one another and tilt the playing field closer to level so capitalism can do its best work for all of us.