What the Occupy Wall Street protestors are angry about – another chart

Posted by AzBlueMeanie:

The Demos organization is a think tank that works with advocates and policymakers around the country in pursuit of three overarching goals:

• A more equitable economy with opportunity for all;
• A robust democracy in which all Americans are empowered to participate;
• A strong public sector that can provide for our common interests and shared needs.

Through our core programs, a partnership with The American Prospect magazine, and additional special projects Dēmos combines insightful research with support for on-the-ground action to make equality and democracy more than just ideals.

Demos provides research on wealth inequality at inequality.org.

Our latest troll recently commented that "Wealth distribution has been extremely concentrated throughout American history, with the top 1% already owning 40-50% in the 19th century. It remained stable over the course of the 20th century." No citation to sources, of course.

As for the 19th Century, this was true in the latter half of the 19th Century due to the Robber Barrons of the Gilded Age (circa 1877-1893). The end of the Gilded Age coincided with the Panic of 1893, a deep depression, which lasted until 1897 and marked a major political realignment in the election of 1896, and ushered in the Progressive Era. Which is what Tea-Publicans and the über-rich Predator Class they serve fear today.

The claim about the 20th Century is unsupported by the facts, as one would expect. (See the chart below). The spike during the 1920s was the result of exotic investment devices, much as we have seen over the past decade, that led to the Crash of 1929. The top 1% share of total pre-tax income steadily declined between 1933 and 1976, which coincided with the post-war rise of the American middle-class and the period of greatest economic prosperity in American history.

The supply-side "trickle down" GOP economics of the past thirty years has entirely reversed this progress. The chart below goes to 2005. In 2007, U.S. income inequality hit its highest mark since just ahead of the Great Depression in 1929. Left behind in America: Who's to blame for the wealth divide? – Political Hotsheet – CBS News (September 7, 2011):

According to the CIA's World Factbook, the United States now ranks 39th in the world when it comes to income inequality. What that means is that only 38 out of 136 countries have a less equitable distribution of income than the United States.

* * *

As economist Joseph Stiglitz documented in Vanity Fair in May, the top one percent of Americans have gone from taking 12 percent of the nation's wealth 25 years ago to taking nearly a quarter today. Over the past decade, the income of the top one percent has risen 18 percent; the income of Americans in the middle, meanwhile, has fallen. 

And consider this: As of 2009, according to Politifact, the net worth of the nation's 400 wealthiest Americans was higher than the net worth of the bottom 50 percent of the nation's households.

"We have this growing elite that makes the economy of the United States look more like a banana republic than an economic democracy," says Democratic Rep. Jan Schakowsky of Illinois.

Source: Thomas Piketty and Emmanuel Saez, "Income Inequality in the United States, 1913-1998," Quarterly Journal of Economics, 118(1), 2003. Updated to 2005 at http://emlab.berkeley.edu/users/saez. Download high resolution TIF

Our Tea-Publican troll may be happy living in a Banana Republic corporatocracy, but the vast majority of Americans are not. They want the American Dream and the American middle-class restored.

UPDATE: our commenter has provided a link to the source for his comment without attribution, an article by Prof. G. William Domhoff Who Rules America: Wealth, Income, and Power (with which I am familiar) and which taken in full context does not disagree with the above analysis. It is a difference of opinion with Prof. Domhoff over the meaning of "stable" over time, which even the professor concedes caveats immediately after this assertion in his article:

Historical context

Numerous studies show that the wealth distribution has been extremely concentrated throughout American history, with the top 1% already owning 40-50% in large port cities like Boston, New York, and Charleston in the 19th century. It was very stable over the course of the 20th century, although there were small declines in the aftermath of the New Deal and World II, when most people were working and could save a little money. There were progressive income tax rates, too, which took some money from the rich to help with government services.

Table 3: Share of wealth held by the Bottom 99% and Top 1% in the United States, 1922-2007.

	Bottom 99 percent	Top 1 percent
1922	63.3%	36.7%
1929	55.8%	44.2%
1933	66.7%	33.3%
1939	63.6%	36.4%
1945	70.2%	29.8%
1949	72.9%	27.1%
1953	68.8%	31.2%
1962	68.2%	31.8%
1965	65.6%	34.4%
1969	68.9%	31.1%
1972	70.9%	29.1%
1976	80.1%	19.9%
1979	79.5%	20.5%
1981	75.2%	24.8%
1983	69.1%	30.9%
1986	68.1%	31.9%
1989	64.3%	35.7%
1992	62.8%	37.2%
1995	61.5%	38.5%
1998	61.9%	38.1%
2001	66.6%	33.4%
2004	65.7%	34.3%
2007	65.4%	34.6%

Sources: 1922-1989 data from Wolff (1996). 1992-2007 data from Wolff (2010).

Figure 5: Share of wealth held by the Bottom 99% and Top 1% in the United States, 1922-2007.

Then there was a further decline, or flattening, in the 1970s, but this time in good part due to a fall in stock prices, meaning that the rich lost some of the value in their stocks. By the late 1980s, however, the wealth distribution was almost as concentrated as it had been in 1929, when the top 1% had 44.2% of all wealth. It has continued to edge up since that time, with a slight decline from 1998 to 2001, before the economy crashed in the late 2000s and little people got pushed down again. Table 3 and Figure 5 present the details from 1922 through 2007.Here are some dramatic facts that sum up how the wealth distribution became even more concentrated between 1983 and 2004, in good part due to the tax cuts for the wealthy and the defeat of labor unions: Of all the new financial wealth created by the American economy in that 21-year-period, fully 42% of it went to the top 1%. A whopping 94% went to the top 20%, which of course means that the bottom 80% received only 6% of all the new financial wealth generated in the United States during the '80s, '90s, and early 2000s (Wolff, 2007).

Prof. Domhoff's points above are points I have posted about numerous times over the years.