Record income inequality threatens democracy

By The Editorial Board
STLToday
Posted: Thursday, September 30, 2010 9:00 pm

“With the middle class gone and the laborer condemned to remain a lifelong wage-earner ... all the conditions are ripe for a crowning class-conflict equalling in intensity and bitterness anything pictured by the most radical follower of Karl Marx.”

Income inequality is at record levels in the United States, the Associated Press reported earlier this week after crunching new numbers from the Census Bureau.

In fact, income inequality was only slightly greater in 2009 than it was in 2008. But the trend toward greater income inequality has been apparent since the early 1980s — the decade when Gordon Gekko, a fictional character in Oliver Stone’s “Wall Street,” first extolled the virtues of greed.

History — even fairly recent history — is not America’s strong suit. We ignore it at our own peril.
As far back as 1915, when Wisconsin statistician Willford King published the first comprehensive study of income and wealth in the United States, income inequality stoked fears of those concerned for the future of democracy.

Mr. King, whose words are quoted at the top of this editorial, was no socialist. His intention was to demonstrate that all Americans were sharing in the nation’s explosion of wealth. But that’s not what he found.

Instead, he discovered that the richest 1 percent of Americans controlled a staggering 15 percent of the nation’s wealth.

In the end, Mr. King decided that conditions weren’t yet quite ripe for the kind of class warfare that soon would break out in Russia.

As bad as things were here, he found, there were even greater concentrations of wealth and less social mobility in European nations such as Prussia and France.

That’s not true any more. So why aren’t more ordinary Americans concerned about the growing chasm between the super rich and everyone else? Perhaps it’s because they have no clue how wide it has become.

A new study by Michael I. Norton and Dan Ariely, professors at Harvard Business School and Duke University, sheds unflattering light on the question. They asked a nationally and politically representative group of 1,000 Americans to estimate how much wealth is controlled by the wealthiest 20 percent of Americans.

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