Should we take a lesson from Dr. Strangelove about the historic state of inequality in America?
Income inequality in the U.S. has been rising for years, and now it is the highest since 1928. Yes, that’s right: the highest since the year before the stock market crash in 1929 and the beginning of the Great Depression.
Is this something to be concerned about? Or, should we just stop worrying and learn to love inequality?
The Pew Research Center’s Fact Tank just published an article about record-level inequality, drawing on research by economist Emmanuel Saez. He defines “income” broadly to include all income items that would appear on a tax return: “wages and salaries, pensions received, profits from businesses, capital income such as dividends, interest, or rents, and realized capital gains.” All this is before taxes.
What does record-level inequality mean? “In 1928,” says Pew, “the top 1% of families received 23.9% of all pretax income, while the bottom 90% received 50.7%.” All this changed with the Great Depression and World War II. “By 1944 the top 1%’s share was down to 11.3%, while the bottom 90% were receiving 67.5%, levels that would remain more or less constant for the next three decades.”
Inequality started to grow again, attaining 1928 levels in 2012. The top 1% now earns 22.5% of all income before taxes. The bottom 90% gets 49.6% of pretax income.
President Obama recently gave an address expressing his concern about record-level inequality. In a way, he echoed U.S. Supreme Court Justice Louis Brandeis’ remark. “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
But this got me thinking: Maybe we’re too fearful of this income gap. Should we take the logic of Dr. Strangelove and just stop worrying and learn to love inequality? Of course, Dr. Strangelove was talking about the dangers of nuclear weapons. In Stanley Kubrick’s acid satire, Strangelove advises the U.S. president to let the A-bombs fly at the Soviet Union. After all, he argues, anyone who really matters can still be saved.
Does record-level inequality worry you?
Is it a threat to democracy?
Should we just learn to love it?
Tomorrow: The thrive-able wage.