The rich are getting richer and the poor are getting poorer. Cliché, sure, but it’s also more true than at any time since the Gilded Age.
The poor are getting poorer, wages are falling behind inflation, and social mobility is at an all-time low.
The information in the charts is scattered here and there on various sites that write about economics, newspapers, blogs etc. One of the perhaps the first times the statistics have been gathered in one place and the charts are such that they are accessible for non-economists to understand. There are a handful of standard replies against the information supplied: 1) Thank goodness for inequalities like this or we’d be more like Europe. 2) The people at the top work very hard and the other 90% are just lazy. This is always accompanied by an anecdote from someone who grew up in a poor family and wore rags for shoes and is now a multi-millionaire – i.e. if I find one black swan it means all swans are black. 3) Income inequality reflects the natural forces of the all-knowing and perfect marketplace. You’re at the bottom because you have not worked hard enough, not saved enough, not managed your money well, did not study hard enough, you’re lazy like all women, blacks, Latins etc. 4) The bottom 90% lack the character and moral fiber of the top 10%. Sometimes accompanied by the assertion this is some god’s will, the way nature intended. 5) Those at the top of the income pyramid – in addition to their exceptional morals – are blessed with special skills and talents, everyone else is dumb or lazy or lacks ambition or is a scofflaw or has bad hair.
I read and clipped this a few days ago – The long reach of public policy — for good or for ill – So rather than go through a standard rebuttal to those who embrace what amounts to some form of social-Darwinism the essay by Maeker might make it easier to see at least part of the human costs and benefits of public policy as it pertains to economics.
In 1837 the “Texians” fought and won independence and became the Lone Star Republic of Texas. Citizenship was granted to all men living in Texas on the day of independence, EXCEPT for Africans, the descendants of Africans, and Indians. In 1845 the new Lone Star Republic became part of the United States as the term “manifest destiny” became the rallying cry for an expansionist sentiment that was sweeping the country.
The U.S.-Mexico War of 1845-48 and the Gadsden Purchase in 1854 resulted in the United States gaining a third of its present landmass — all of the southwestern part of the United States. The Treaty of Guadalupe Hidalgo (1848-50) ended the U.S.-Mexico War and resulted in a massive transfer of land from Mexican Americans to Anglo-Americans.
Into this context came the German immigrants. They had not been part of that history. But these new immigrants, some of whom were my ancestors, arrived just in time to benefit from the government laws and treaties. Some of them were given land grants to settle in Meyersville. This was part of the very land that had in essence been twice stolen, first from American Indian tribes and then from Mexican landowners.
My family became farmers, ranchers, grocers, teachers, postmasters in the community — and they were all landowners. They were poor; they struggled. But they were landowners, and that one fact has made all the difference in our economic situation today. You see, in the 1950s oil was discovered on some of our family’s land. As landowners, my parents owned the mineral rights and soon began to receive modest royalty payments for that oil and gas. And assisted by German frugality, my parents found they could afford that new Ford more easily and send their two daughters to college without taking out loans.
Those curious about the benefits that descended down to present day can read the rest at the link.
The Crédit Mobilier of America scandal might have been one of the longest political/business scandals in U.S. history. Crédit Mobilier construction company was created in 1864, with the stocks and cash bribes at their height in the 1868 under President Andrew Johnson. Things did not start to unravel until the public revelation during the Grant presidency in 1872,
Like all great corporations of the present day, the Union Pacific Road was largely dependent upon the aid furnished by the Government for its success. The managers of the company, being shrewd men, succeeded in placing all the burdens and risks of the enterprise upon the General Government, while they secured to themselves all the profits to be derived from the undertaking. “The Railroad Company was endowed by Act of Congress with 20 alternate sections of land per mile, and had Government loans of $16,000 per mile for about 200 miles; thence $32,000 per mile, through the Alkali Desert, about 600 miles, and thence in the Rocky Mountains $48,000 per mile. The Railroad Company issued stock to the extent of about $10,000,000. This stock was received by stockholders on their payment of five per cent.of its face. When the Crédit Mobilier came on the scene, all the assets of the Union Pacific were turned over to the new company in consideration of full paid shares of the new company’s stock and its agreement to build the road. The Government, meanwhile, had allowed its claim for its loan of bonds to become a second instead of a first mortgage, and permitted the Union Pacific Road to issue first mortgage bonds, which took precedence as a lien on the road. The Government lien thus became almost worthless, as the new mortgage which took precedence amounted to all the value of the road. The proceeds of this extraordinary transaction went to swell the profits of the Crédit Mobilier, which had nothing to pay out except for the mere cost of construction. This also explains why some of the dividends of the latter company were paid in Union Pacific bonds. As a result of these processes, the bonded debts of the railroad exceeded its cost by at least $40,000,000.”