Income inequality in America: An illustrated interview

Need to Know contributor and editorial cartoonist Steve Brodner conducts an illustrated interview with author Eduardo Porter on income inequality in America.

Eduardo Porter: Inequality, as I think we can see today, has gotten way out of hand. Right now, we’re in a world where a tiny sliver of the population captures an enormous share of our income. I mean, one out of every hundred people — the top one percent of people captures a fifth of the income of the United States.

Steve Brodner: Would you say it sort of used to be a hill where there was a gentle incline or a gentle slope?

Porter: Yes, the distribution of income really did look like a sort of gentle slope from the end of the Second World War through the late 1970s. But then, something started pulling up, you know, one end of this. And so the income at this end started just growing and growing and growing, while the rest of the slope kind of stayed down here.

So you ended up with this extremely acute slope at the top end with everybody else here at the bottom. In 1987, which we should remember is a year of “Wall Street” and Gordon Gecko and “greed is good” –  so this was a really good year for banks — the average bonus on Wall Street was $16,000, which amounts to about $30,000 in today’s money. The average bonus in 2007 was about $180,000. So it’s six times. The growth over that period is multiplied by six.

Now, look at the average family income. What did that do over that same period of time? It grew three percent.

Since the 1980s, policy has served the belief that deregulation, taking the government out of the way, is always good, is never bad. And so if you look at how policy evolved over this period, it was a constant chipping away at the limitations for businesses and very notably, banks. These mechanisms, these tools that have been created like the super fast trading we see today, all these things are actually zero-sum games, where some people win and some people lose.

So this argument that all this innovation was to serve greater productivity and make the real economy produce more things, and increase everybody’s prosperity, in my view is more like a casino.

Brodner: We do have that spike, where it’s been pulled up, as you said. How would you picture that? As an island, or as another parallel world?

Porter: Suddenly, I was thinking of vampire squids. Because there is something alien about this, right? But there’s also this sucking sound. If the trend that we’ve seen for the past 25 years were to continue over the next 25 years, I can’t imagine what the world would look like. Because suddenly you’ve got two separate education systems, two separate housing places. Two separate levels of experience. So, of course, I do not see how, in a system such as this, somebody that begins at the bottom can end up at the top.

The economist Herb Stein once said, “When something can’t go on forever, it stops.” I hope that our democracy can find in itself the wisdom to put a stop to a trend that I think will ultimately be very dangerous to this very democracy.

More Steve Brodner animated editorials.

Watch the rest of the segments from this episode.

 
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Comments

  • http://www.facebook.com/profile.php?id=135402046 Reynold Nesiba

    This is a simple illustration of how the level of inequality in the US has changed.

  • Pie Hole, INC.

    your Pie chunk for the haves is a bit modest compared to this. http://www.flickr.com/photos/37566903@N02/5500300007/sizes/l/in/photostream/

  • Robert Jordaniii

    Except we do not nor have we ever lived in a democracy. May God save this republic before a few despotic business owners send us all to hell.

  • Billie S.

    Pie Hole, Inc, is correct. Do you still believe you are in the Middle Class?

  • Scott

    It’s more even in Cuba.

  • Male hope

    In these conditions, can the US remain a democracy?

  • GodsLibertyLover

    Interesting animation of the change in incomes and their distribution over the last couple decades. Unfortunately, it is wrong to think that the past few decades were a time of deregulation. The government has been more involved with corporations and banks in the last few decades than the previous 100 years combined. The Federal Reserve’s monetary policies are responsible for most of the sharp increase. Otherwise, I am sure glad we have the internet to read this great article and youtube to watch this great video which we would not have had if it were not for the freedom to innovate.

  • GodsLibertyLover

    Interesting animation of the change in incomes and their distribution over the last couple decades. Unfortunately, it is wrong to think that the past few decades were a time of deregulation. The government has been more involved with corporations and banks in the last few decades than the previous 100 years combined. The Federal Reserve’s monetary policies are responsible for most of the sharp increase. Otherwise, I am sure glad we have the internet to read this great article and youtube to watch this great video which we would not have had if it were not for the freedom to innovate.

  • Anonymous

    Since Ronald Reagan, wages for over 30 years have been depressed. Organized Labor has been crushed. The Fairness Doctrine was eliminated. Corporations like IBM stole half the pension of 150,000 of the older workers that built IBM and used the Pension dollars stolen to boost “vapor Profits” and the CEO became one of the 400 who have more wealth than 150 million Americans. The loss of the 100,000 defined benefit pensions, the destruction of organized labor, around the clock Corporate elite brainwashing of Fox, Hannity, Beck, Limbaugh and others who are paid over $100 million a year to convince everyone that “Let the market decide, the government cannot fix anything, while Corporations outsource jobs around the world and have huge profits.

    We need to raise the Marginal Tax Rate, we need to tax dividends and stock sales at Income Tax rates (the richest 400 pay at 18% tax rates) while the rest of us, in debt, are paying 35% and more.
    We send out kids to war, the rich do not, as we have no conscription.

    We need to draft the Rich guys kids and I bet we would not have so many wars.

    We need to stop the Bribery of Congress with the 14,000 Lobbyists who slither the halls of Congress with bags of money.

    We need to level the playing field in elections with election law reform, the bribes in money fund raising.

    We need to enforce Immigration, deport the illegals, immediately.

    We need to take charge of our country, the masses who live here not just the 1% who take 20% and more of our GDP every year.

    We need to return the estate tax levels to $1 million, more than the $660,000 of 1998. NOT $5 Million of today. An example of which if the kids get too much money inherited, like Osama Bin Laden had $80 million given to him which allowed him to terrorize the world. We need to give back the wealth of a living person recently deceased to the people so the living can use it and not a spoiled Rich Kid like Bin Laden.

    The Rich guys are fighting any tax increase at 35%. Australia is 48% and they spend half of what the USA spends on health care and have Universal Health Care for everyone that is 2% of the Marginal Tax rates. They also do not allow “Big Box” stores in their communities. They also have mandatory voting, if you don’t vote, you are fined $400.

    We out number them, the Rich guys but, we have the vote, we just need to stop voting for Rich Guys and their surrogates.

    Howard Hughes hated taxes, but there was a loop hole, he put all his money in the Hughes Medical Foundation. Well today, the foundation is doing some pretty good things in Cancer research.
    The high taxes of the day forced Hughes to put the money in something that benefited the public verses the Rich Guys who buy islands, pay their people an unlivable wage, and think they are something extraordinary than the people who worked for them and made them rich with low wages and propagandized to weakness.

    You know, we can lose this Democacy, to a Plutocracy which some say we have already reached.

    I hope not.