Intelligencer - June 16, 2019
"He found that America’s superrich have grown about $21 trillion richer since Taylor Swift was born, while those in the bottom half of the wealth distribution have grown $900 billion poorer."
... Thus, whether it is truly extreme or moderate to demand sweeping changes to American capitalism depends on the degree to which the existing system aligns with common-sense views of what a just or rational economic system should look like.
Happily, the Federal Reserve just released some data that makes the state of this alignment easier to gauge. In its new Distributive Financial Accounts data series, the central bank offers a granular picture of how American capitalism has been distributing the gains of economic growth over the past three decades. Matt Bruenig of the People’s Policy Project took the Fed’s data and calculated how much the respective net worth of America’s top one percent and its bottom 50 percent has changed since 1989.
Notably, this measure of wealth includes liabilities, such as student debt. And it does not include consumer goods, such as computers or refrigerators, as economists do not conventionally view such products as wealth assets. But if one did include the Fed’s data on the distribution of consumer goods, the wealth gap between the top one percent and bottom 50 would actually be even larger.
So, is an economic system that distributes its benefits in this manner consistent with Americans’ common-sense views of economic justice? If not, would incremental changes be sufficient to bring it into alignment with the median American’s values? Or would more sweeping measures be required?
Put differently: Does the average American believe that, over the past three decades, our nation’s richest one percent have contributed roughly $22 trillion more to our collective well-being than the poorest 50 percent have? Does she think that the tens of millions of working-class people who spent the past 30 years cooking other Americans’ dinner, cleaning their toilets, caring for their children, harvesting their crops, ringing up their groceries — and performing the countless other poorly remunerated forms of labor that our society demands — collectively produced an infinitesimal fraction of the value that America’s corporate lawyers, hedge-fund managers, venture capitalists, specialist physicians, heirs and heiresses, and other high-paid professionals did?
Survey data (and common sense) says otherwise. In 2011, Michael Norton of Harvard Business School and Dan Ariely of Duke University published a study on Americans’ views of how wealth was distributed in their society, and how they felt it should be distributed. They found that, in the average American’s ideal world, the richest 20 percent would own 32 percent of national wealth. In reality, the top quintile owned 84 percent as of 2011. And that share has grown in the intervening years. Today, the one percent alone commands roughly 40 percent of all America’s wealth. ...
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