Posted by Bob Lord
John Edwards spoke about our country being "two Americas." Edwards was attempting to shine a light on poverty in America. By "two Americas" Edwards meant the America most of us knew and the poor in America. But there's another way to view America as two Americas: The rich and everyone else.
But we can have alternative views of "two Americas" only as long as you have a real middle class. As the middle class evaporates, the alternative views merge. Of course, in a merger, only one party survives. In the "two Americas" merger, it very clearly will be the "rich and everyone else" view that survives.
In a post yesterday at inequality.org, Why Are Luxury Car Sales Growing at Record Rates, Salvatore Babones describes the transfer of wealth and income from the rest of us to the rich.
Bentley sales are also up 35% in the United States.
To put this in perspective, the US economy grew by just 2.2% in 2012. The UK economy grew even less: 0.2%, according to statistics from the International Monetary Fund.
How can sales of super-luxury cars grow at super-fast rates during a recession? The answer is simple: it’s not a recession for everyone.
The last five years have been one of the best times in human history to be rich, and an even better time to be super-rich. The plutonomy — the economy of the super-wealthy — has been growing by leaps and bounds.
The results of the last five years:
American national income per person is now just about back at 2007 levels. The losses of the Great Recession have been made up. In a very real sense, every American could be doing just as well as in 2007.
The reality is that America’s plutonomy is doing fabulously better than in 2007, while America’s realonomy flounders along at rock bottom. The Great Recession hasn’t meant so much the destruction of wealth as the transfer of wealth. The poor have gotten poorer and the rich have gotten richer, leaving the whole country right back where it was.
Except that the country as a whole is now even more unequal than it was in 2007.
So, how should we view this development?
We have to ask ourselves: how unequal should a country be? Was the America of 2007 really just too equal for our taste? Were there simply too few Bentleys on our roads in 2007?
Or was the America of 2007 already dangerously unequal — in which case the America of 2013 is even worse?
Personally, I find it hard to believe that 2007 America was a dangerously equal communist worker’s paradise. If you think that 2007 was about right, then you agree that we need to correct the country’s income distribution to bring down our grotesque level of inequality. If you agree with me that America was already grotesquely unequal in 2007, then we have that much farther to go.
Should we have a Bentley tax? Perhaps not. But we should have a seriously progressive income tax that restores some sanity to our economy and our income distribution. Until we do, America will keep moving backwards as the rich get richer and the poor get poorer.
But then, we’ve been moving backwards for forty years now. Working Americans reached their highest income levels in 1973. We have a lot of lost ground to make up. As of 2013, we haven’t even started. That more perfect union is going to be a long time coming.
A more perfect union? I'd settle for a return to 1973 levels of inequality. I'm guessing Babones would as well.