Photo by Elyse Chia
On February 2nd, Pres. Joe Biden delivered his annual State of the Union address and received considerable praise for both the “progressive” positions he took and his combative tone. He seemed awake, getting ready to announce his 2024 candidacy. According to one source, former Pres. Donald Trump offered some praise.
However, the word “inequality” was absent from Biden’s speech.
Biden came close to acknowledging the growing problem gripping the nation, admitting:
Amid the economic upheaval of the past four decades, too many people have been left behind or treated like they’re invisible. Maybe that’s you, watching at home.
He then added, “You wonder whether a path even exists anymore for you and your children to get ahead without moving away.” And noted, “I get that.”
But did he “get it”? In the speech, he proposes a threefold strategy for “your children to get ahead” — increase taxes on the rich and corporations, get more younger people to college and create more high-tech jobs.
Biden was born in 1942, a son of World-War-II America and the great post-war recovery. His understanding of the nation’s current socio-economic troubles – and solutions — to be addressed by a vision of classical New Deal thinking.
The New Deal was Pres. Franklin D. Roosevelt’s campaign to pull the country out of the Great Depression of the early 1930s. It included a series of large-scale, federally funded public work projects, financial reforms and tightened regulations. Looking back, however, some have argued that the real end to the Depression came with the massive spending for WW-II.
Unfortunately, the great post-war recovery ended a half-century ago, in the 1970s. The era of American middle-class “prosperity” is over. Americans are suffering in more profound terms than Biden probably understands nor knows what to do about it.
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21st century America is a deeply unequal nation.
In a 2020 report, “A Guide to Statistics on Historical Trends in Income Inequality,” the Center on Budget and Policy Priorities (CBPP) points out that “beginning in the 1970s, economic growth slowed and the income gap widened.” It also notes that “wealth — the value of a household’s property and financial assets, minus the value of its debts — is much more highly concentrated than income.” More revealing, it adds, “the share of wealth held by the top 1 percent rose from 30 percent in 1989 to 39 percent in 2016, while the share held by the bottom 90 percent fell from 33 percent to 23 percent.”
Pew Research clarifies the CBPP analysis, noting, “Most of the increase in household income was achieved in the period from 1970 to 2000.” Adding, “In these three decades, the median income increased by 41%, to $70,800, at an annual average rate of 1.2%. From 2000 to 2018, the growth in household income slowed to an annual average rate of only 0.3%.”
This assessment was corroborated by the Congressional Budget Office (CBO), finding “that the average income among households in the highest quintile (or fifth) of the income distribution was 14 times the average income of households in the lowest quintile.” It notes that Americans at the lowest income quintile had income of about $23,800 while the highest quintile was about $332,100.
Furthermore, the higher up the top quintile you go, the richer you get. The CBO reports that households in the 81st to 90th percentiles had income about $180,100; and average income for the 12,000 households in the top 0.01 percent was about $43.0 million. And who made up the families of the top 10 percent of wealthy Americans? According to the St. Louis Federal Reserve, 13 percent were white families, 3 percent of Hispanic and 1 percent of Black families.
“Perhaps the most striking development in the U.S. economy over the past decades is the stagnation of income in the bottom 50%,” [p. 581] wrote Thomas Piketty (Paris School of Economics), Emmanuel Saez (UC Berkeley) and Gabriel Zucman (UC Berkeley) in their essential 2018 analysis, “Distributional National Accounts: Methods and Estimates for the United States.”
Going further, the economists argue “the stagnation of income for the bottom 50% contrasts sharply with the upsurge of income at the top” [p. 586]. They add, “while top 1% adults earned 27 times more income than bottom 50% adults in 1980, they earn 81 times more today [2018].” [p. 588] Digging deeper, they detail the U.S.’s growing inequality gap:
The average pretax income of the bottom 50% of adults has stagnated at about $16,000 per adult (in constant 2014 dollars, using the national income deflator) since 1980, while average national in- come per adult has grown by 60% to $64,500 in 2014. As a result, the bottom 50% income share has collapsed from about 20% in 1980 to 12% in 2014.
In the meantime, the average pretax income of top 1% adults rose from $420,000 to about $1.3 million, and their income share increased from about 12% in the early 1980s to 20% in 2014.
They conclude, “The two groups have essentially switched their income shares, with eight points of national income transferred from the bottom 50% to the top 1%. The top 1% income share is now almost twice as large as the bottom 50% share, a group that is by definition 50 times more numerous.” [p. 557]
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Over the last half-century, inequality in the U.S. has increased substantially, with the overall level of inequality now approaching the level that prevailed prior to the Great Depression. The realignment of income and wealth took place in tandem with a series of other major social and political realignments.
Foremost, decades of globalization and deregulation led to widespread corporate consolidation. The White House ‘s 2021 “Fact Sheet: Executive Order on Promoting Competition in the American Economy” stated: “In over 75% of U.S. industries, a smaller number of large companies now control more of the business than they did twenty years ago. This is true across healthcare, financial services, agriculture and more.”
A century ago, Teddy Roosevelt and the Progressives waged war against growing inequality and the rise of trusts and cartels. They battled the shameless practices of John D. Rockefeller’s Standard Oil, J.P. Morgan’s AT&T and other Robber Barons. Today, Rockefeller’s corporate descendants – e.g., Amazon’s Jeff Bezos, Meta’s Mark Zukerberg and Tesla’s Elon Musk — dominate the American economy.
Much has been said about “Big Tech” companies – i.e., Alphabet (Google), Amazon, Apple, Meta (Facebook) and Microsoft. But there is also Big Phama — i.e., Johnson & Johnson, Roche Holding, Pfizer, Novo Nordisk and Eli Lilly; Big Oil — i.e., Shell, ExxonMobil, BP, Chevron, and ConocoPhillips; Big Tobacco — i.e., Altria, Philip Morris International and British American Tobacco; and Big Telecom — i.e., AT&T, Verizon and Comcast. Collectively, they have transformed the U.S. economy into a cartel nation.
This has occurred as the world order, what John Mearsheimer argues, shifted from a U.S.-dominated “unipolar” system to an increasingly “multipolar” order. This restructuring gained momentum after the collapse of the Soviet Union and the U.S. found itself in an endless series of unwinnable wars. He argues:
The new multipolar world will feature three realist orders: a thin international order that facilitates cooperation, and two bounded orders—one dominated by China, the other by the United States—poised for waging security competition between them.
More troubling, Mearsheimer warns: “Liberal international orders can arise only in unipolar systems where the leading state is a liberal democracy.” What happens to “liberal democracy” in a multipolar world”? This is the challenge facing the U.S. today.
As the era of relative prosperity faded, the Christian right increasingly shifted from a moral to a political movement, and gained increasing political influence and, ultimately, power at both the state and federal levels. It successfully forged a culture-wars campaign that integrating conservative religious groups within a well-funded – and white-identified — Republican Party. As itgained political power, symbolized by control of the Supreme Court, it steadily moved to impose its vision of Christian fundamentalism on American society as exemplified by Gov. Ron DeSantis’s moralistic campaigns in Florida.
The marked increase in inequality is intimately linked to other, equally troubling developments refashioning American life. Most troubling, as a columnist for The Hill makes clear, “the roots of the [January 6th] insurrection lie far deeper — in the theft of enormous wealth from millions of white, blue-collar Americans.” Yes, in American, inequality is theft.
Biden reelection as president in 2024 may well depend on his – and the Democrats – ability to address the growing problem of inequality. Equally troubling, inequality grounds the resentment that infuses Trump supports of the hard right, especially those who backed the January 6th attack on the Capitol. Inequality must be named to be reversed.
