How should we think about inequality in the United States? Are the differences between the rich and the rest so large that we should make an effort to redistribute some of the wealth of the wealthy?
Since 1970s, the percentage of all national income received by the top 1% of earners has jumped from roughly 10% to roughly 20%.In other words, their real income has doubled, such that the top 1% now gets roughly one in five of all dollars earned by American workers. The median yearly income for this group exceeds $600,000.The mean exceeds a million. The top 1% are now positioned where they were at the end of the 1920s, the so-called Roaring ’20s.
As you read in your lecture on income and welfare policy, the wages of most Americans have stagnated while the income of the top wage earners have skyrocketed. There are many reasons for this change: tax cuts that mainly benefits the rich, the decline of unions, globalization, a decline in the manufacturing sector, and a progressive tax system that is less progressive.
Let’s first look at the ideas of two political figures. First, during the election of 2012 President Obama said the following:
There are a lot of wealthy, successful Americans who agree with me–because they want to give something back . . . look, if you’ve been successful, you didn’t get there on your own. I’m always struck by people who think, well, it must be because I was so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something–there are a whole bunch of hardworking people out there. If you were successful, somebody along the way gave you some help. There was a great teacher somewhere in your life. Somebody helped you to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen. The internet didn’t get invented on its own. Government research created the internet so that all the companies could make money off the internet.
