Understanding Inequality, Part II

The importance of worker power

For more than a generation after World War II income disparities in America were relatively narrow. Some were rich and many were poor, but there was nothing like today’s extreme inequality, economic fragmentation and class warfare.

Then, beginning around 1980, inequality surged, leading to the incredibly high levels we see today. As I documented last week, not only have the top 1% in the income distribution pulled away from the remaining 99%, but within the top 1% the top 0.1%, the top 0.01% and the top 0.001% are pulling even further away. And this concentration of wealth at the top is corrupting our politics. Elon Musk’s claim that Trump would not have won in 2024 without him is quite plausible, while those currying favor with Trump by giving millions to his inaugural fund and buying his crypto-coins are clearly receiving favorable treatment.

I will discuss how we got to this point — but not in today’s primer, saving it for next week. For today I want to continue the discussion I began last week of the causes of rising inequality in America.

In last week’s primer, I asserted that the most important reason for rising inequality since 1980 has been a shift in political and bargaining power against workers. While globalization and technological change have certainly been contributing factors, the numbers just don’t justify the claims that they are the primary reasons for rising inequality in America. Mostly it was about power.

I’ll now begin to flesh out that argument. For the most part, however, today’s primer will be about the drivers of rising inequality between 1980 and 2000. Why stop there? Because I need more space and time to adequately discuss the effects of “financialization” and the rise of giant tech fortunes, which mostly kicked in after 2000 and accelerated the concentration of wealth at the very top. I’m well aware that these are also the factors driving today’s headlines. But the surge in inequality before 2000 set the stage for the oligarchic moment we’re now experiencing.

Beyond the paywall I’ll discuss the following:

1. Why power is key to the inequality story

2. Unions and why they matter

3. The rise of the imperial CEO