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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Opinion

Class disparities unfair

David Moberg Progressive Project

Imagine a country with 100 people, whose economy generated $1,000 in new income over the year. One guy at the top got $500, the next nine share $250 and the 90 at the bottom get the rest – less than $3 each, on average.

You would not call that country a fair one. But that’s what our economy looks like, only on a much larger scale.

And this inequality is getting worse.

In 1975, the richest 1 percent received 8.4 percent of national income before taxes.

In 2005, they received more than double that share – 19.3 percent, according to economists Emmanuel Saez and Thomas Piketty.

The after-tax share of income that the top 1 percent gets each year has jumped even more dramatically, returning the country to the level of inequality just before the Great Depression.

How did it happen?

During World War II, the government trimmed the income share of the rich with salary controls and progressive taxes. Even after the war, popular opinion helped keep executive salaries down, and the working and middle classes gained a growing share of income, spreading prosperity widely and stimulating growth.

In the early 1970s, as a new era of globalization unfolded and there was high inflation and low growth, workers stopped making gains in real income. The assault on unions and the social safety net accelerated in the 1980s, and workers lost even more ground.

That same decade, with more lax financial regulations and celebrations of the corporate chief executive as culture hero, the old restraints on exorbitant CEO salaries came off.

The gulf between the rich and everyone else widened.

U.S. corporations have used the global economy to weaken workers and enrich themselves.

But other advanced countries are exposed to global pressures, and they haven’t experienced the same redistribution of income to the rich, nor have workers lost ground the way they have in the United States.

Stronger unions, more expansive social policies – such as national health insurance and better public pensions – and cultural constraints on rampant inequality made a difference in those countries.

We should use the same tools to make our own economy more fair and prosperous.