Being a lover of long-term economic graphs, I found this ZeroHedge post intriguing. The theme of the post is the disappearance of the middle class, which (as one chart shows) no longer accounts for half of the country’s population and (as another shows) no longer holds more wealth than upper-income households.
The animated graphic from FT is worth watching through a few times. The first take-away is that much of the middle class has smoothed out upwards since 1971, but with a huge boom at the very top of the income scale (as a percentage of all adults). It’s the animation that tells the historical tale. The ’70s didn’t see much growth, and the ’80s saw about a one-percentage-point increase among the rich. Bill Clinton’s ’90s turned into a big boom for the rich, while George Bush’s ’00s pretty much held them steady. In the wake of the economic collapse, the first three years of Barack Obama’s presidency saw a decrease at the top with more than a recuperation since then.
Scrolling down to the next chart reveals at least part of the reason. The early ’70s saw the end of 30 years of income growth for the bottom 90% of earners, and it hit a ceiling with the death of the gold standard. Money was no longer tied to some finite good, so government policy could be truly redistributive, without being bound by anything of actual value. The bottom 90% have stagnated or drifted down, since then, while the top 1% have taken off. One bump came in the mid-to-late ’80s, but Clinton’s banking and mortgage policies cut the reins.
As I’ve said before, fiscal, monetary, and regulatory policy under Obama have only solidified the tendency to make the well-being of the rich investor class and established players the core basis for policy decisions while shoring up political power by simply giving things to those toward the bottom of the scale.
This scheme wouldn’t work out well under any circumstances, but with the explosion of automation, it’s going to be a recipe for economic disaster, civic unrest, and lost rights.