Understanding Inequality, Part I

Why did the rich pull away from the rest?

Between World War II and the 1970s income disparities in America were relatively narrow. Some people were rich and many were poor, but overall inequality among Americans in terms of wealth, income and status was low enough that the country had a sense of shared prosperity. Things are very different today, as American society is beset by extreme inequality, economic fragmentation and class warfare.

What happened? The economic data show a huge widening of disparities in income and wealth starting around 1980, eventually undermining the relatively equal distribution of income we had from the 40s to the 70s. Moreover, growing disparities in income have led to growing disparities in political influence and the reemergence of what feels more and more like an oppressive class system.

So today’s post is the first of two posts exploring the rise of American inequality and its consequences. This will be a double-header because I feel I need a whole post to discuss what I believe to be the most important factor in rising inequality, the shift in political and bargaining power against workers.

Beyond the paywall I’ll address four issues:

1. Four facts about inequality that any story should explain

2. The role of globalization

3. Did technology do it?

4. The role of power