Greatest economy in history? Nope. Greatest inequality in history.

“We can have democracy in this country or we can have great wealth concentrated in the hands of a few, but we cannot have both.”
~ Supreme Court Justice Louis D. Brandeis

Donald Trump launched into his day at 7:30 this morning by brag-tweeting about the state of the economy.

He then promptly returned to attacking Democrats, the impeachment inquiry, and the news media. All in all, a normal kind of morning for the child king.

But his “greatest economy” tweet stands in stark contrast to a study released last month by the Census Bureau that reports something truly historic: income inequality in the U.S. is at its highest level in the 50 years since the Bureau started tracking the data.

Income inequality in the United States has hit its highest level since the Census Bureau started tracking it more than five decades ago, according to data released Thursday, even as the nation’s poverty and unemployment rates are at historic lows. Washington Post 9/26/19

The report seems to have received scant notice. In this age of daily Trump-initiated outrages, I’m afraid a lot of important events are going unremarked.

The Census Bureau uses an index number to convey the level of inequality it finds. The “Gini index” (named for its Italian statistician inventor, Corrado Gini), measures the distribution of wealth in a society. A Gini score of 0 would be total equality, showing that wealth is spread perfectly evenly among all parts of society. A Gini score of 1 would indicate that a society’s entire wealth was in the hands of a single household.

The current score for the U.S. is 0.485, meaning we’re almost halfway to total inequality. When the Census Bureau first began indexing inequality in 1967 it stood at 0.397, an 18% increase (if I’m doing the math right). By comparison, no European country topped 0.38 last year.

There is some data in the report, that, at first glance, might be good news. For example, the study found that the figure for national median income broke through $63,000 for the first time. But when that figure is adjusted for inflation, it shows that median income has hardly changed in the last 20 years. Incomes are flat, inequality is up. That’s only good news for the economic elites.

The important thing to bear in mind when you hear about reports and studies such as the Census Bureau’s examination of inequality, is that ever-increasing inequality doesn’t just happen as if propelled by natural forces. Inequality is created by policy decisions made in Washington. Trump’s infamous tax “reform” bill, which he never tires of bragging about, is a prime example of a conscious policy decision that drives inequality higher.

Thanks to the 2017 tax cut, which greatly favored the wealthiest in the country, for the first time ever, the wealthiest 400 Americans now pay a lower tax rate than any other income bracket — from the upper middle class to the poorest, we all pay a higher tax rate than the very 400 wealthiest families in the country.

And this reveals the insidious nature of inequality. Economic inequality equates to political inequality. To be economically disadvantaged is to be politically disadvantaged. That’s the point Justice Brandeis was trying to make when he said we can have concentrated wealth or we can have democracy, but we cannot have both.

This is why the “wealth tax” plans espoused by Bernie Sanders and Elizabeth Warren are so significant. Despite their differences in various details, both plans strive to strike at the heart of the economic — and thus political — imbalance in this country.

Can a wealth tax actually work? You bet. An excellent article from The New Yorker’s John Cassidy goes into the details and I highly recommend reading it. Especially since the debate over a wealth tax will be fierce as the coming election nears. (Cassidy’s article focuses on Warren’s plan, but the arguments are also applicable to Sanders’ plan.)

…the arguments for taxing wealth directly remain strong. If you believe, as Barack Obama said in 2013, that rising inequality is the defining issue of our time, you are obliged to try to do something about it.

Inequality is indeed rising. And democracy is declining. The effort to balance both sets of books, if successful, truly would be historic. And worth tweeting about.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.