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Five years after the collapse of Lehman Brothers, the U.S. economy is emerging from the “Great Recession.” Home sales are rebounding and the auto industry is surging, while banks are showing healthier balance sheets and credit is easing. But according to a new study, not everyone is enjoying the same level of improvement. The top 1 percent of American wages are close to full recovery while the bottom 99 percent have barely begun to recover. In fact, the top 10 percent of U.S. earners took in more than half the country’s total income last year, the first time that has happened in a century. Guest host Tom Gjelten and his guests examine what this income gap means for the American economy, society and political system.
- Dante Chinni columnist, The Wall Street Journal and director, American Communities Project at American University
- Thomas Edsall professor of journalism, Columbia University and columnist, The New York Times; author of "The Age of Austerity: How Scarcity Will Remake American Politics"
- Stephanie Coontz director of research and public education, Council on Contemporary Families and professor of family history, The Evergreen State College; author of "A Strange Stirring: The Feminine Mystique and American Women at the Dawn of the 1960s"
MR. TOM GJELTENThanks for joining us. I'm Tom Gjelten of NPR sitting in for Diane Rehm. She's on vacation. A new study released this week revealed that for the first time in a century the top 10 percent of U.S. earners took in more than half of the country's total income.
MR. TOM GJELTENJoining me in the studio to talk about how America's growing income gap affects our society, politics and economy is Dante Chinni of The Wall Street Journal and American University. Stephanie Coontz of the Council on Contemporary Families is on the phone, and Thomas Edsall of Columbia University joins us from a studio at Columbia. Good morning, folks.
MS. STEPHANIE COONTZGood morning.
MR. DANTE CHINNIMorning.
MR. THOMAS EDSALLGood.
GJELTENAnd a little later, we'll be taking your phone calls and reading your emails and tweets. We want to hear your thoughts. Does it really matter that income inequality is on the rise again? Our number is 800-433-8850. Our email is email@example.com. So, Dante Chinni, this week an important study came out showing how income is distributed in the United States now in the aftermath of this Great Recession. Give us the highlights of that study.
CHINNIWell, I mean, the study showed that for the first time in, as you say, in a century really, you have the top 10 percent with 50 percent of the wealth. And it's something -- we kind of went through this period 100 years ago. We had this period where we had better equality. We had a rising middle class. And there are questions, I think, now with this study about what this means for the future of the middle class in the United States.
GJELTENWell, Thomas Edsall, what stands out for you in these data that came out this week?
EDSALLWell, I think that the fact that 95 percent of the total gain in income went to the top 1 percent whereas only 4 percent of the gain went to the rest of all America basically was the really striking figure. These trends have been going on for quite a while. They've become acute in the post-recession period, the recovery period. And they really show a widening divide with the very top doing superbly and almost everyone else having a flatline kind of experience in the economy.
GJELTENAs you say, this trend has been going on for a while, but now we're looking at it in the context of the aftermath of the Great Recession. And, Stephanie Coontz, what, in your judgment has happened in these last five years that seems to have accelerated this trend that was already evident before?
COONTZWell, of course, one big thing is the recovery in the stock market. And contrary to what most people think, 90 percent of stocks are controlled by a very small percentage of people and that, increasingly, the stock market seems to be completely out of whack with what's happening to real people's jobs. You know, in fact, it often bumps up when you lay people off. And as a historian, I just want to underline what Thomas Edsall just said, that in the 1960s, the top 1 percent got just 10 percent of the gains, and the bottom 90 percent got 65 percent.
COONTZSo this really is a change, and it's a long term change. I think it's a mistake to just think of it in terms of the recession. It's actually a 30-year process that has turned around all of the trends that we had after the Great Depression and the move toward greater equality and greater sense of community among the rich as well as the poor. I think the social implications of this are profound at all levels of society.
GJELTENWell, Stephanie, you know, it's not just since the 1930s. I mean, some of these data suggest that we're back in a situation that we last saw 100 years ago. That was back in the era of the turn of the century and the era of the Gilded Age and the really meta-rich when they first emerged as kind of a super class.
GJELTENAnd as you say, you know, throughout the 20th century, there was an effort to sort of mitigate the worst effects of that period of our history. How do you explain or what's the significance of sort of nullifying all that had been done over the last 100 years to sort of put the society back on a more equal footing?
COONTZWell, I think that we can get a very good idea of that if we just look back at a moment at that Gilded Age. That was a period, as you said, when you've got the robber barons. You've got this complete celebration of wealth, a blaming of everyone who wasn't getting ahead saying that the whole social Darwinist thing, saying it's their fault and we have no social responsibility for them, a decline in social trust, which I think we've been seeing in the last 30 years, tremendous, tremendous misery at the bottom of the level, insecurity in the middle, and even changes in things like religion and politics.
COONTZBefore the Gilded Age, evangelical religions talked about the importance of combating social sins, not just solitary ones, of building a community, not just your own individual family. And it turned inward during the Gilded Age. So what we did after the progressive era with the New Deal, with the reforms of the '60s, we began to actually recreate an earlier period and a better period -- because we'd gotten rid of a lot of the racism and sexism -- of a sense that we're all in this together.
COONTZAnd that has been reversed essentially in the last 30 years with terrible effects for families, for society as at large, for our media, for political representation, which we've found now represents the interests of the rich much more consistently than it did in earlier periods of the 20th century.
GJELTENDante, I mean, the implications of these trends are huge. But before we go into all these implications, let's stay, for a moment, grounded in the data and make sure that we're representing it correctly. So give us a little bit more of a granular look at what we know right now about the distribution of wealth and income in the United States.
CHINNIWell, some of what I do with the American Communities Project is we look at America broken into these different types of place. And using that as a filter, we can kind of look at what's happening to them economically, politically, culturally. The one thing we did that was very interesting, we compared 1980 to 2010, so going back much further, obviously, than the Great Recession, and looked at median household income in these types of place that we'd identified in the United States using demographics and economic data, political data.
CHINNIAnd when we did that, we had 12 kinds of place at the time. We recrunched the numbers. And when we did that, we had 12 kinds of place in the United States. Of those 12 communities, only five, between 1980 and 2010, had seen any kind of increase in median household income. That's adjusted for inflation. That's significant.
CHINNIAnd now, those places where they had seen some kind of uptick were generally places that were around metropolitan areas. Rural places, in particular, are really struggling because, look, it is true, I think, there are these large cultural phenomena going on.
CHINNIBut the thing, I think, that's really pushing a lot of what's going on in the country is economic, and you have the decline of good-paying jobs, of manufacturing jobs. And, you know, they were hard jobs, but they paid well. And they've disappeared, and that's made life very difficult. Also, automation -- there are just fewer jobs available for people who don't have a lot of education and a lot of good skills training.
GJELTENThomas Edsall, if this income gap is caused by demographic changes in the U.S. population, if it's caused by changes in the global economy, automation, et cetera, it raises the question of how much we can really do about it. And you had a really interesting column this week where you took on the question of whether the government, even if it wanted to, could really do anything to reduce inequality. What did you find, Thomas?
EDSALLWell, really, I think, thinking about this that there has been kind of a dynamic taking place. The economy itself has been moving in directions that foster inequality. There's been a hollowing out of the middle level jobs. They've been outsourced or they've been automated, and global competition has really forced companies to push wages down while they try to keep profits as high as possible.
EDSALLAt the same time, the political system has done a number of things that have helped foster inequality. One, the lower capital gains rate, as Stephanie pointed out, stocks are the real source of income for the wealthy compared to the average person and capital gains are the kind of profits you make when you buy and sell stocks.
EDSALLThose tax levels have been kept way down and has been a huge advantage for those on the top. Financial deregulation has had the effect of creating all kinds of new mechanisms that banks that used to be traditionally providing just mortgages now can engage to further their income at the top and, as the recession showed, at great expense for the general public.
EDSALLSo you've had a combination of politics and economics and also a kind of intellectual capture of those elites. If you look at both Democratic and Republican elites during the '80s and '90s and early 2000s, there was a growing acceptance of free market economics. You saw this in the Clinton administration with the deregulatory policies. You saw this in the Reagan administration. At the top, there has been a much more willingness to agree to policies that basically benefit a winner-take-all kind of mentality. And all these factors have worked together.
GJELTENBut, Thomas, we live in a democracy, and everybody has a vote. And there have been these demographic changes, and these new demographic groups have votes. I mean, how can these policies be explained simply by decisions that are made, as you say, at the top?
EDSALLThat's the profound question, in a way. Why hasn't democracy, in a sense, with one man or one person, one vote, resulted in a effort by policymakers to ameliorate the kind of inequalities that have been growing? One is that actually surveys show that the public doesn't really want to impose high taxes on or actually give hugely more benefits to those on the bottom.
EDSALLThey basically want more jobs, and they want an improvement in their life based on a market that helps them. That's a very hard thing for the political system to do. It may well involve a major intervention in the economy.
GJELTENRight. Thomas Edsall is professor of journalism at Columbia University. We're talking about the growing income gap. And when we come back after this short break, I want to raise the question of whether inequality really matters to Americans. Stay tuned.
GJELTENAnd welcome back. I'm Tom Gjelten of NPR and I'm your guest host today on "The Diane Rehm Show." And we're talking about a new study that shows rising income inequality in the United States. And we're discussing all the ramifications of that, for politics, for the economy, for society. My guests are Dante Chinni, who's a columnist for the Wall Street Journal, and he's director of the American Communities Project at American University.
GJELTENJoining us by phone from Olympia, Wash. is Stephanie Coontz. She's director of research and public education at the Council on Contemporary Families. And from a studio at Columbia University in New York, we have Thomas Edsall. He's a professor of journalism there at Columbia and the author of an online column about politics for the New York Times. And, Stephanie, just before the break, Tom Edsall made an interesting point that -- we were discussing why people don't get more worked up about this -- politically worked up about this income inequality.
GJELTENAnd he points out that what people really care about is jobs -- good jobs for good pay. You know, what is your view of this? Do people really feel income inequality personally, or do they only feel their own income situation? In other words, if the people that are worst off are actually gradually getting better, or even rapidly getting better, are they even going to notice income inequality?
COONTZWell, there's certainly something to that. Income inequality is far less corrosive when people feel that they have a shot at moving up, which of course is what increasing people do not feel today. But I'd want to modify a little bit of what Thomas said, although I agree with much of it. There's a certain sense though in which we have historically created a vicious cycle here.
COONTZWhen you show Americans -- researchers show Americans the income distribution of Sweden and the United States, and they always prefer -- without knowing which country it is, they always prefer Sweden, and they think it's us. We live in a society that has had so little discussion of this. And in fact our lack of investment and public rights to property, child care, uniform quality schools, parks, health care, it means that we create a get what you -- my grandmother used to call it get-what-you-can-can-it-sit-on-the-can mentality.
COONTZSo people are afraid to raise taxes because we want to get every little bit that they can use for themselves. They have no confidence -- and with historical reason -- that will be invested in public. And so I think that actually people are very concerned about income inequality even if they don't see it that way. If they see themselves falling behind other people, it tends to lead to a sense of randomness and futility.
COONTZWe know that income inequality, even more than poverty, per se, is associated with rising out-of-wedlock births, with more teen births, with a decline in marriage rates. At the top, it hampers social mobility for the lower down people. It allows the rich to lose touch with the reality of other people's lives. All these things contribute to a malaise that goes far deeper than the lack of jobs, despite the fact that I agree with Thomas that the lack of jobs and well-paying jobs that move you up are sine qua non. You've got to have those.
GJELTENOK. Dante Chinni, let's talk about one factor here which is education, because these studies show -- correct me if I'm wrong -- that education is really important in explaining income and wealth. And yet we have -- as Stephanie points out, we have declining investment in education. Why isn't there more public support for increase investment in education when we now know empirically how important it is to producing income growth?
CHINNII think that's a good question. To me, I think a lot of these issues -- when you talk about where's the outrage, why aren't people more interested in funding the public education system, I think these things -- we're just not -- I honestly view it as we're just not there yet. To me, politics is the lagging indicator. All the other things have to happen first, and I know it's been -- well, it's been 30 years that we've been struggling, but it's been a slow kind of steady chipping away at the middle class.
CHINNIAnd I do think at some point -- I wonder if Tom Edsall's right that you hit a point where there has to be a big time intervention because I understand that everybody wants jobs, but they can't have them. The government just can't create them. On the education point, I think it's very interesting that yesterday the veto -- the governor of Missouri vetoed a huge tax cut and went around the state talking about the reason he was vetoing it was because -- one of the big reasons was because education -- we have to fund education.
CHINNIAnd there was a veto-proof majority -- a Republican majority in the Missouri State Senate. And they did not override that veto yesterday. They did not override -- it was only two votes. It was very close, but it's interesting where those two votes came from. One came from a Republican that was in suburban St. Louis -- exurb in St. Louis really.
CHINNIAnd the other one was a voter -- a state senator from Joplin, which we may recall was really hammered by the tornado a while back. It's interesting that those places in particular would not be interested in cutting taxes as much as they would funding public works because those places may see -- I view the world through -- American politics through geography and place.
CHINNIIf you live in Joplin, you're going to have a very different feeling about the government's role in your life because the government really bailed you out in some ways. And I think also if you live outside St. Louis, if you live in a big metropolitan area, you're going to tend to see more need for government intervention in some areas. I just think we're going to have to see what happens with it, but it's a very interesting vote.
GJELTENTom Edsall, you, you know, have looked a lot at demographic changes over the years. When you look at these data, do you see an economic phenomenon or do you see changing America? Do you see this as being all about changing American society, growing immigration, changes in family structure, movement from rural areas to urban areas, which is the phenomenon that Dante is talking about? What do you see here sort of beyond the economic numbers?
EDSALLWell, I think sort of the big issue that has not been raised in a lot of these studies is in fact race. Since the 1960s, there's been a growing sense among many whites that government programs are providing benefits to minorities, blacks at first and now blacks and Hispanics. And that has helped drive up the opposition to raising taxes to provide for more benefits.
EDSALLPeople have made -- a lot of people have made a distinction between -- in their own minds what they see as the deserving and undeserving poor. And add to that racial factors, and you get a very strong core of anti-tax sentiment. And this has been really a profoundly important part of the rise of conservatism. The -- I just read some figures the other day that Mitt Romney -- of the 251 counties that have had double digit increases in food stamp usage, Mitt Romney carried something like 150 of them, a clear majority.
EDSALLThere are a lot of very poor white counties in West Virginia, Kentucky, all through the Appalachian area where the Republican strength has become overwhelming. And a lot of that is based, I think, on racial matters, where people are disregarding their own interest and want to distinguish themselves from minorities in effect.
GJELTENAnd you attribute that to, what, to demagogic politicians, to -- I mean, how is -- I mean, this is something that we have seen in the American society and other societies for decades and decades and decades, isn't it?
EDSALLYes. I mean, it's been an ongoing process. And you -- this may be going a little far afield, but we now have a Republican Party that is overwhelmingly a white party.
EDSALLAnd it is doing gangbusters in areas of deep poverty that were the core of the New Deal Democratic coalition back in the 1930s and '40s and '50s. These places have flipped entirely. And it's certainly not on the basis of economic interest. And so race and this idea of not letting yourself be seen, even if you are as a welfare recipient, I think is a factor going on that gives the conservative stance on reducing government spending. Generally, the added leverage in some states and during the whole period from 19 -- roughly 1968 to 2000 gave the conservative coalition real muscle.
GJELTENDante Chinni, you want to interject here.
CHINNIJust one quick point on race. And when you look at congressional -- the constituencies for congressional Republicans and congressional Democrats, we've looked at this and crunched some numbers on it. And the Republican -- the constituency for Republican House members looks like America circa 1994. The constituency for Democratic House members looks like America as it's projected to be in roughly 2025. Tom is right in that they really are right now representing two very different countries.
GJELTENYou know, I think it's...
EDSALLThat's really interesting actually.
GJELTENI have an email here from Mark who says he wants us to distinguish between income inequality and wealth inequality. As I understand it, wealth can produce passive income which is substantially different from ordinary earned income.
GJELTENThere is an argument here and sort of a pro market, you know, conservative argument that wealth is different from income because wealth -- as wealth accumulates, as wealth is created -- and wealth is created -- that it actually generates income opportunities for a lot of people and so that growing wealth inequality is maybe not such a bad thing for the American economy. Stephanie, do you have a reaction to that argument?
COONTZWell, I do, and I think it builds in some ways on both Dante's and Tom's cogent comments. First of all, wealth -- it may be that in -- where there are fairly small wealth differences or even some substantial ones, but a different economic structure, that wealth can create jobs. Increases in productivity during the 1960s were basically matched in increases in wage rates. But today the increase in productivity has been -- I think it's up about 16 percent over the last couple of decades.
COONTZAnd real wages have been falling for men and rising by about 3 percent for women. So un less you think that 3 percent rise for women is a big victory, it's way out of step with the historical connection between productivity and wages. And I think wealth hurts us in a lot of other ways. For example, to add to Dante's comment about education, it's important to recognize that there's a certain arms race going on in education, that wealth allows people to -- we've been seeing -- it's not just going to college now.
COONTZThere's huge differences in the wages of people who have even completed college, not to mention the people who enter college and have to drop out because of debt and found themselves worse off. Today the wealthy people spend seven times more in enrichment activities for their youth than lower income people do versus a gap of three to four times back in the '60s. There's been this huge escalation in the differences in prestigious colleges.
COONTZAnd wealthy people manage to perpetuate that for their kids, the number of unpaid internships, the amount of nepotism that goes on, so I think that wealth has ceased to be the kind of driver that sometimes it has been in the past and that free market enthusiasts would like to think it always is. And can I just add one other thing about the political situation?
COONTZOne of the things that has really hurt, I think, is that we tried to solve the racial disparities, the historical legacy of racism only through means testing rather than citizen entitlement. And in a period like this, those decrease social trust whereas entitlement citizen rights increase social trust. So we're dealing with so much here that I don't think there's really much of a silver lining (unintelligible).
GJELTENOK. Stephanie Coontz is a professor of family history at Evergreen State College in Washington State. And she's the author of "A Strange Stirring: The Feminine Mystique and American Women at the Dawn of the 1960s." I'm Tom Gjelten. You're listening to "The Diane Rehm Show." In a few minutes, we're going to be going to the calls, which are stacking up right now.
GJELTENA lot of you want to join in on this conversation. Remember our phone number is 800-433-8850. If you have trouble getting through -- and a lot of people have things to say, so it might be hard to get through -- you can always email us, firstname.lastname@example.org. I want to go back very briefly to you, Stephanie, because you have -- and you just mentioned sort of differences between men and women.
GJELTENYou have called attention to what you call two divergences. There's the economic divergence between the wealthy and the less wealthy, but then there is another type of divergence that has more to do with men and women in the economy and the changing patterns of family life. Why don't you talk about that for just a second?
COONTZWell, yes. There's this new report that we're talking about, has talked about the increasing diversity of U.S. families. And I would say there are two types of diversity. One is essentially, I think, healthy, and that is that people no longer have to proceed lock step through a -- you know, you get -- graduate, you get married, you stay in that marriage no matter how bad it is. If you're a woman, you kind of have to because one of the downsides of the real wage increases in the '60s was that they soared for men, but women's wages stayed essentially flat. So women were much more dependent on men.
COONTZYou had gays and lesbians forced into the closet. You had blatant outright racial discrimination. So all that kind of thing has come to an end so that people have much more choice about whether to marry, when to marry, how to raise their kids, how to conduct their lives. And although, of course, there are challenges in trying to figure out how to deal with a new broad spectrum of families, that kind of diversity, I think, is healthier than what we saw in the 1960s and the repression that I've studied in the families of that era.
COONTZBut this other diversity is the one we've been focusing on today, and that's that a diversity of income inequality, which, by the way, is occurring across all family types. It's not just a single parent thing. And it's occurring across all educational levels. And although women have been catching up with men albeit starting from a much lower base, we're also seeing this income inequality now among women. It used to be...
COONTZ...that your average woman, even a high-earning woman, earned less than the average male. Now, high-earning women...
GJELTENDante, you had...I'm sorry.
COONTZ...earn less than the average male. But there's still a growing increase in inequality among women as well as men.
GJELTENThank you, Stephanie.
CHINNIThere was one thing, I think, to keep in mind about wealth, too, just really quickly as we talk about wealth in America. It used to be that if you had wealth and you invested in the stock market, you invested in companies that they were generally American companies, and they built things in America. What was good for General Motors and U.S. Steel was really good for America in some ways because they take that money, and they invest it in things in the United States.
CHINNIWhen you invest in companies now, even if you invest in "American companies," where's the money going to go? I mean, this is not a criticism of these companies. But, look, if you invest in General Motors, General Motors sees its growth in China. So you're giving money to General Motors, an American company. The money goes to build cars in China because that's where the demand is. And, increasingly, you know, it used to be that wealth went into the stock market, and the stock market did slowly trickle back into the U.S. economy. I think this is just less and less true.
GJELTENDante Chinni is a columnist for the Wall Street Journal. He's director of the American Communities Project at American University. We also have Tom Edsall in New York at the Columbia University. He is the author -- his latest book is titled "The Age of Austerity: How Scarcity Will Remake American Politics." We're going to take a short break here. When we come back, we're going to bring all of you listeners into the conversation as well. Please stay tuned.
GJELTENWelcome back. It's "The Diane Rehm Show." I'm Tom Gjelten of NPR sitting in today for Diane Rehm for this discussion of income inequality in the United States. And I'm going to go to the calls in just a second, but, Tom Edsall in New York, I wanted to go back to you for a minute first. I think it's important to clarify here what we are talking about. Does this all -- does all this commentary that we have contributed this morning amount to a critique of capitalism?
GJELTENI mean, are we just sort of stuck with a system that produces some inequality for lack of a better system, you know? I mean, if you look at some of the failed socialism experiments around the world, you know, those aren't too encouraging either.
GJELTENAnd, in fact, we just had a right wing government elected in Norway this week. So even in European countries where they've had -- where they've experimented with sort of third way type systems, you know, the verdict is not necessarily clear that people find that, you know, alternatives are all that much better. What's the mega political story here, Thomas?
EDSALLI think actually that is the question you're just asking. There's no -- capitalism inherently has inequality. People win and people lose in a capitalist system, and you're going to get some people making more money and some people making less. It's a market system that inherently pays more for more return.
EDSALLThe question, though, is, has capitalism lost the ability -- not to continue to succeed. The country is growing. The stock market is increasing. Company profits are growing. But has it lost the ability to provide social needs? And social needs are good jobs and opportunities to move up the ladder. If you're going to have capitalism and inequality, it has to be counterbalanced by the opportunity for everyone in society to move up the ladder, to make use of their abilities.
EDSALLAnd there's a real question now whether capitalism, as in the current global competitive universe, can provide those kinds of jobs for people who are not super exceptional, but they're good, hardworking, decent people who want a decent life for themselves and for their children. And that's the big question. And it's a very good question.
GJELTENAnd that is why education is so, so important. I mean, that just seems to come through loud and clear in all our comments and in the data as well. I do want to go now to the phones. Jewel is on the line from Tennessee. Good morning, Jewel. Thanks for calling us.
JEWELGood morning, sir, and thank you for taking my call.
JEWELAs I listen to this, I can't help but recall over my 74 years the only one time that I really could point to is when Franklin Delano Roosevelt came out with the New Deal and through government provided a better living -- a better standard in this country. Since then, I've not seen anything through government sources to compare with that.
JEWELSo I would conclude that anyone looking to the government to solve our problem is looking in the wrong direction. It just simply is not going to get done. We have administrations that come through and try to help the situation, this disparity, this inequality, and it just does not get done in the political arena.
GJELTENWell, where do you -- what do you think is the difference, Jewel? What do you think is the difference between Franklin Delano Roosevelt and our current leaders that, you know, in your view, that Roosevelt was able to accomplish something and other presidents have not?
JEWELWell, it was a time when something absolutely had to be done. Things were extremely bad at that time. We haven't had a situation like that since then.
JEWELWe've had it in small doses, and I would refer to our recent bank failures and so forth. And during our recent, if you want to call it a depression or whatever, as I talk to wealthy people -- and I've heard it through the media -- they say that they're afraid. They want to keep their wealth close to their breast.
JEWELIt's just -- things are just too unstable to go out there and invest.
GJELTENOK. That's a really interesting comment because you bring, Jewel, some historical perspective on this issue, and we do have an historian on our panel, Stephanie Coontz. Excuse me. Stephanie, what's your reaction to what Jewel has observed?
COONTZWell, I think that he's responding to, again, one of these vicious cycles that has occurred. Government doesn't seem to make things better because government is not trying to make things better, and it doesn't have that kind of pressure. I referred earlier -- there's a political scientist from Princeton who actually analyzed support groups from different income groups for different policies between 1964 and 2006 and what the policies that were advocated by legislators.
COONTZAnd they've become increasingly oriented to the top one and 10 percent, much less likely to represent the interest and actual policy preferences of lower income individuals. So, in a sense, government, which has to be part of the solution to this crisis, has become less and less attractive even to low income people who rightly regard it with suspicion. And that's another of those vicious cycles we've gotten into.
COONTZAnd I don't know how to break it, but I sure wish we could -- we would focus on trying to do so.
GJELTENWell, let's put that question to some of our listeners. And I have Richard on the line right now from San Antonio, Texas. Good morning, Richard. Thanks for calling us.
RICHARDGood morning. Your panel has used the term top 1 percent and top 10 percent as it relates to both wealth and income. And I was wondering if your panel could give a dollar definition of those four categories, top 10 percent in wealth, top 1 percent in wealth and then the top 1 percent in income and top 1 percent in income -- or top 10 percent in income.
GJELTENSo you're saying, what's the -- what -- how wealthy are the top 1 percent in terms of their net worth and the top 10 percent, what their annual income levels are compared to everybody else?
RICHARDYes. In both the assets part or the wealth and also in income.
GJELTENWell, you know, we should have invited some statisticians, you know, who have all these data at their fingertips or in their head. Does anyone -- does anyone have any -- Dante, you're here in the studio with me, and you've looked over these data.
CHINNIWhen you get up to the top 10 percent -- I mean, there's a question of whether you have to adjust for where people live. But the top 10 percent goes down, I think, further than most people think. And I know that Tom Edsall, I think, has done some work on this. I think it's -- the top 10 percent is -- it gets down into the lower six figures...
GJELTENIs that right, Tom?
EDSALLI believe so, sure. I'm not really -- I don't -- I wish I had the data right in front of me.
CHINNII know. I don't have them with me either, but when you get up to the top 1 percent, it -- the jump is enormous. I mean, you're talking about -- you're talking about people making hundreds and hundreds of thousands of dollars. It's a huge difference. And, of course, the median household income in the United States, which means half the people in the -- half the households in the United States make less than that is only about $50,000.
GJELTENWell, in fact, if I'm not mistaken, I saw somewhere in this data that even the top 1 percent is almost a deceptive category. You really have to get even more granular than that and get down to...
CHINNIThe top .1 percent.
GJELTENOr the top, you know, one-hundredth of 1 percent.
GJELTENI mean, because at the very top, you get enormous concentrations of wealth.
GJELTENAll right. Let's go now to Mike who's on the line from Columbia, Md. Good morning, Mike.
MIKEMorning, thanks for taking my call.
MIKEInteresting conversation. I just want to say at the inception of our country, there was a hotly debated, you know, what type of monetary system we have. And, you know, Thomas Jefferson was a big proponent of capitalism. But when asked about capitalism, how it would work, that all the people at the top had all the money and all the power and all that, he was very vehement about the fact that morality and capitalism are inseparable.
MIKEFor capitalism to work, you have to have morality. And I would love to know what your panel thinks of -- because, I mean, that's a broad scope. What is moral, you know, as far as -- you know, is it moral to buy yourself another vacation home and lay off 20 people to do it, and where is that line at? And obviously we're not doing it that way now.
MIKESo I don't think the failure is capitalism, but the way we're doing it is not the way it was intended.
GJELTENOn the other hand, Dante, you were pointing out during the break that, you know, you really can't blame companies for investing in areas where it's going to produce the greatest return.
CHINNIRight. And, I mean, it is the big question you asked about. Is this the fault of capitalism? And I think that Tom Edsall is right. Look, there are -- there is inherently in capitalism inequity, and there are winners and losers. The question is, do you get to the point where the divide -- and the divide is so great that something has to be done.
CHINNIAnd, look, my opinion on this -- and for what it's worth -- is that eventually you do reach a point where that gap gets so wide that the political system responds. You know, we have a capitalist system. We have a democratic system of politics. And at some point, you get to a situation where the gap is so wide that the people demand that something be done politically. I just -- look, my personal opinion on this is we're just not there yet.
GJELTENWell, you know, let's look at history, going way back. Kathleen has written an email, and she says, "During the Middle Ages Bruges and Venice were cities of incredible wealth which was attributed directly to their strong middle classes. Time and again," she says, "history demonstrates that a strong middle class is good for everyone, including the wealthy." Stephanie, you're, again, our historian. Do you agree that going back centuries we have seen that strong middle classes are good for everyone?
COONTZWell, I think so. I think that's really true, especially if there is motion between the -- a strong middle class and a bottom floor, basically which was one of the big problems for many of these medieval cities. They didn't have that or the ancient Rome, for example. So you need a situation where there is more mobility, there is a bottom floor. I mean, that, I think, is the big problem that we have that, yes, a certain amount of inequality, a certain amount -- markets, certain plural markets, I think, are obviously healthy.
COONTZThey do inspire people to work harder. But when you have a market that organizes everything -- and this comes back to the question of morality -- then you lose. I mean, my grandpa was a logger who became a logging entrepreneur, and he used to say, a man's good enough to work for me, he's good enough to eat with me. How many times do you see that nowadays?
COONTZThis kind of -- and I agree with Dante, that you can't really blame the individual. I mean, if I am a -- employing people and somebody else cannot have family friendly work policies and can lay everybody off and hire part-time workers and pay them a lot less for doing the same work -- a lot less per hour for doing the same work than they did their full-time workers and not provide any benefits, well, then, I can't really compete unless I do the same thing. That's why you need government in here somewhere.
GJELTENStephanie Coontz at the Evergreen State College in Olympia, Wash. I'm Tom Gjelten, and you're listening to "The Diane Rehm Show." And, Tom Edsall, I want to read an email here and have you respond to it. This is from Keith. He says he's a bus driver, and he's active in the labor movement. And his -- this is his observation.
GJELTEN"In the past, it was all about growing the pie. Benefits were shared whether it was equal or not, and people actually respected the effort to raise all boats. Now I don't see that. Now it appears the wealthy and elite treat the middle class with disdain. I'm not looking to get rich. I just want to be able to survive and be respected for what I do." Keith's comment there reinforces a point you made earlier in the program, doesn't it, Tom?
EDSALLYeah. I think there's also another factor here that -- basically starting in the 1970s is when you get global competition coming -- suddenly hitting the United States, where we had had in the post-war period a lock on car manufacturing, steel manufacturing. Suddenly, just what Stephanie described, foreign competitors with lower labor costs started killing our automobiles and steel manufacturers and a lot of other industries.
EDSALLCompanies are generous when they can be generous and keep market share. When they -- things start getting competitive, they start getting nasty and selfish in a way -- or in the way that the bus driver said that people become disdainful of their workforce and treat them badly. When the economic pressure's on them are, to survive, you've got to hurt people. And in a market system, that's what will happen. It's not a pleasant thing, but it's a fact of life in a market system.
GJELTENAnd we've been talking here a little bit about the politics and why political movements haven't been more successful. But I think what you're saying, sort of suggest that market forces may be stronger than political forces. And no matter the political will and no matter the political representation trying to counteract the effect of market changes and changes in the global economy, it might just be too big a task.
EDSALLThat's a question that has been on my mind for a long time. Although I think there is a good case that the political system has been aiding and abetting market misallocation and there could be corrections in that sense, but whether the economic forces are larger and stronger than the political forces is a -- that goes to the core of this question, can democracies -- can a one person, one vote system actually correct inequality given our current economic pressures?
GJELTENWell, we do have a lot of listeners who want to make that point talking about, for example, the debate over what the marginal tax rate should be. Mary Claire in Madison, Wis. says that, "It seems as long as electoral success is dependent on enormous quantities of money, our legislators' priorities will reflect those of their wealthy donors. Campaign finance reform is critical to resolving income disparity." I think there's actually some debate recently about whether the extent to which that is true, but it's certainly a point that a lot of listeners feel. Dante, a final comment from you.
CHINNIJust the point on the middle class, which I think is crucial. Look, when you have a -- when you have the U.S. economy where you have two-thirds of the economy is driven by consumer spending in some way or form or shape, you have to have a middle class because if you don't -- if you don't have enough people -- look, the thing that really makes the economy go is people going to the store every weekend and buying things.
CHINNIAnd if you don't have the people buying enough stuff, the economy won't move. There aren't enough people to buy yachts out there. You have to have a middle class that's going to the store every weekend and spending money. You have to have a middle class to survive in this economy.
GJELTENWell, apologies to all our listeners who called and didn't get their questions put on the air. We just had a tremendous amount of interest in this topic today, which is not surprising at all. I do want to thank our guest, Dante Chinni, who you just heard from, a columnist with The Wall Street Journal and director of the American Communities Project at American University.
GJELTENOut there in Olympia, Wash., Stephanie Coontz, direct of research and public education at the Council on Contemporary Families, she's also a professor of history at Evergreen State College and the author of "A Strange Stirring: The Feminine Mystique and American Women at the Dawn of the 1960s." And Thomas Edsall, professor of journalism at Columbia University, thank you, Tom, for going into your studio there. I'm Tom Gjelten. I've been sitting in for Diane Rehm. Thanks for listening.
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