Tale of two economies

There seems to be an air of optimism that’s starting to emerge surrounding the United States economy.

The stock market is booming, television pundits are trumpeting an economic recovery and corporate profits are up.

For a Democrat like me, that sounds like great news because I want President Barack Obama’s economy to be a good one. Unfortunately, as much as I wish it were true, things haven’t really gotten better for the middle and working classes lately.

Job creation seems to be stalling, middle class income is falling and the middle class itself is shrinking.

We are seeing a disturbing phenomenon in which there is one economy for the rich, and then there’s the economy for everybody else.

Whether we like to admit it or not, there is a polarization of the economic classes and a stratification of wealth that has been taking place for the last four decades.

“American Exceptionalism” is a phrase we like to use here in the States, and in one important way, we are exceptional.

The U.S. has one of the highest levels of income inequality in the industrialized world, and it’s a relatively recent phenomenon. From 1945 to 1970, the share of total market income going to the top one percent of earners dropped from 12 percent to 9 percent.

This period was also one of the best economic times for the U.S., with job creation booming and middle class wages soaring.

However, in the 1970s things started to change. More and more of the economic pie started filtering up to those at the top.

From 1970 to 2010, the wealth of the top one percent doubled from 9 percent to 19 percent, while at the same time, taxpayers in the bottom 90 percent of the income ladder saw their wages decline.

From Aristotle and Plato to Adam Smith and Thomas Jefferson, great thinkers throughout human history have warned against the concentration of wealth into a few hands and have criticized wealth inequality. It’s not only bad for society, dividing us into unequal classes of citizens. It hurts our democracy.

Wealth inequality dramatically affects political participation.

A 2009 study shows wealthy people making more than $125,000 give 35 percent of campaign donations, but only make up 4 percent of the votes. The rich are overrepresented and the poor underrepresented in the voting population.

Not only are you more likely to give money if you are rich, you’re more likely to vote.

This means wealthier Americans are having a disproportionately greater say over who is elected and how our country is run. This goes against the entire point of the American system of government.

I didn’t write about America’s wealth inequality to provide policy solutions to the problem. That’s not something an opinion column can effectively accomplish.

I’ve raised this issue because I believe it deserves more attention, and it should be a part of the public consciousness. Surveys show Americans think the wealth distribution in the country is much more equal than it actually is, and they believe it should be more equitable than the status quo.

We hardly hear the pundits and politicians talking about income inequality, or if they do, it’s usually in vague and ambiguous terms, with little attention paid to the enormous scale of the problem.

Raising the issue of economic inequality isn’t an attack on success, wealth, or the instigation of class warfare.

Individuals who believe this and use this line of argument need to have some perspective.

We have the highest level of income inequality in American history since the Great Depression, and it’s still growing.

If we want the whole economy to succeed, the enormous imbalance in power, wealth and political participation in our country must be addressed.

­— samblatt@indiana.edu