The Great Divergence

• In the early 1900s, the richest 1% owned 18% of the nation’s income. This prompted the creation of the modern income tax to prevent America from becoming an Old Europe-style aristocracy. Today, the 1% own 24%.

• The post-war boom saw the Great Compression; an egalitarian period which saw top tax rates between 70-90% and all classes did better economically.

• The 80s saw the beginning of the Great Divergence; an inegalitarian period where Reagan cut taxes on the 1% down to 25%. From 1980-, more than 80% of the increase in income went to the 1%.

• Americans haven’t paid attention to inequality because of the enduring myth about social mobility in the US.

• But the US has become less socially mobile than countries we used to regard as class-bound Old Europe: France, Germany, Sweden, Denmark, and Spain. Newer nations like Canada and Australia also exceed us.

• The US is becoming a banana republic; Our income inequality is starting to resemble Latin American countries we used to call failed societies.

 

The United States of Inequality
The Great Divergence - PDF