Graph of the Day: Take from the Middle, Give to the Rich
We'll start diving into a new strand of graphs soon, but I wanted to make another point related to how the growing income inequality is a result of our new aristocrats enriching themselves at the expense of everyone else.
Here's the graph:
(Data from CBO.)
Today, income has been divided into quintiles for the bottom 80%, and the highest-paid group has been divided into the top 1% and then everyone else.
Before going further, I want to note that this is income after subtracting taxes and after payments from the federal government (Social Security, Medicare, etc.) have been added. In other words, the poor are shown at their richest and the rich at their poorest.
The blue bars show the distribution in 1979, and the red bars show the distribution in 2007. First off, let's take a moment to recognize just how unequal even the 1979 numbers are. Remember, in a developed country, income inequality is a bigger predictor of general welfare than per capita GDP.
Okay, now let's look at how things changed from a year before Reagan's election to a year before Obama's. You'll notice that the bottom four quintiles have all seen their share of income decrease. Not everyone in the top quintile has benefited equally from that, however. In fact, most of the top 20% have barely seen a change in income share at all. No, the gains have all gone to the top 1%, who have seen their income share go up 222%. Again, this is after taxes have been paid and government payments received.
The richest 1% now take home more every year than the middle 20% of Americans, the very definition of the middle class. This is not a stable system, nor is it a fair one. If we want to stabilize this economy, we need to demand a fairer distribution of what we've all worked to create. Our modern aristocrats should be paying themselves less and the middle class more, but that won't happen without us forcing a serious intervention.