Today’s posts of course will only be about how America is totally awesome and so to celebrate, let’s blow our fingers off with fireworks this evening.
To start with, the U.S. has reached new national highs in income inequality, demonstrating that clearly the Founders wanted the rich to be extremely rich and everyone else to suffer declining fortunes and entrenched poverty.
We know, of course, that incomes are highly unequal today. We can trace the rise and fall of the 1 percent back to the early 1900s, when robber barons ruled and Jay Gatsby partied. But that’s pretty much where the data peter out.
To go back further, Lindert and Williamson spent the better part of the last decade piecing together tax records, local directories and historical accounts in a painstaking effort to reconstruct an economic portrait of the nation’s past.
What they discovered was that we started out from a remarkably egalitarian place. “Incomes were more equally distributed in colonial America than in any other place that can be measured,” Lindert and Williamson write in their new book, Unequal Gains, which traces how inequality surged and receded in American history.
In the Revolutionary era, inequality in America was dramatically lower than it was in England or the Netherlands, in part because of the abundant opportunity (enjoyed at the expense of the Native Americans), and in part because of the kinds of people who immigrated.
We get some impression of this from historical documents. George Washington predicted that the young nation would allow even the lower classes to prosper thanks to “the equal distribution of property, the great plenty of unoccupied lands, and the facility of procuring the means of subsistence.” In his chronicle of the young United States in the 1830s, Alexis de Tocqueville famously said that “nothing struck me more forcibly than the general equality of condition among the people.”
The new data not only confirms these anecdotal accounts, but it also puts the past in perspective. According to Lindert and Williamson’s calculations, today’s income inequality may be the highest the nation has ever known.
Of course, Washington only meant white men, but still, this should alarm anyone who cares about a stable United States.
Financial inequality became even wider in the United States last year, with average income for the top 1 percent of households surging 7.7 percent to $1.36 million.
Income for the richest sliver rose twice as fast as it did for the remaining 99 percent of households, according to an updated analysis of tax data by Emmanuel Saez, an economics professor at the University of California, Berkeley.
Still, the incomes of households outside the top 1 percent appear finally to be recovering from the Great Recession, which officially ended seven years ago. After accounting for inflation, their average income rose 3.9 percent last year to $48,768 — the strongest annual gain since 1998. Contrast that with the period from 2008 to 2011, when the economy remained in a rut and inflation-adjusted income for the bottom 99 percent of households was falling.
“It is indeed the best growth year for the bottom 90 percent and bottom 99 percent since the late 1990s,” Saez said. “At the same time, top incomes grow even faster, leading to a further widening of inequality, which continues an alarming trend.”
Slight recovery for the 99 percent, endless riches for the 1 percent. Truly, the goals of the Founders to create an egalitarian nation have been realized.