Inquality.org, which is a portal for news and data about income inequality, has published a particularly well-presented paper, The Political History of American Inequality, by Colin Gordon, a professor of history at the University of Iowa who has focused on 20th century American public policy and political economy. I’ve sampled it, and it’s clear and engagingly written and has great interactive chart porn, as you can see (you can play with the charts below).
So how did we get here? Gordon’s overview:
This shared prosperity of the postwar years was no accident or lucky combination of circumstances. A “rising tide” of robust economic growth does not necessarily lift all boats. Political struggle and policy choices determine whose boats rise. The inequality of the 20th century’s early years actually began closing before economic growth took off in the 1940s, as a consequence of the political response to the Great Depression.
Thanks to this response, federal support for collective bargaining rights sustained a surge in labor organization that dramatically improving the bargaining power of America’s workers. Other political innovations of the New Deal—ranging from social security to the minimum wage—secured a floor for working class incomes. Postwar social movements, especially civil rights and “second wave” feminism, then girded that floor by closing off avenues for discrimination.
The nations’ tax system. meanwhile, and new regulatory obstacles to speculative finance erected something of a ceiling for higher incomes. And substantial public investments—the GI Bill support for access to higher education, mortgage subsidies for veterans, housing projects, the interstate highway system, and the Cold War—would kept the rest of the structure in pretty good repair.
Since then, that structure has essentially collapsed. The conventional wisdom describes this collapse as an unfortunate but necessary response to changing economic conditions. The world has become a leaner and meaner and more competitive place, so the argument goes. As a result, the policies of the New Deal—and the costs they imposed on business—had to go.
But there is little evidence to actually support this account. Indeed the initial handwringing over American economic decline came at a time when our principal competitors, Japan and Germany, boasted both higher wages and more expansive social programs than the United States.6
Political choices, not economic necessity, dismantled the New Deal. Future Supreme Court Justice Lewis Powell would first sketch out the organizational and ideological dimensions these choices in a now infamous 1971 memorandum to friends at the American Chamber of Commerce. The conservative ascendance in state and national politics then etched these choices across the political landscape. The policy consequences have been dramatic: steep cuts in social spending, the political abandonment of organized labor, deregulation and privatization, tax cuts, punitive cycles of unemployment—all justified in the name of lowering business costs, capturing economic efficiencies, and unleashing markets.
But these lofty aims camouflage the real policy goal of the pushback against the New Deal: a redistribution of income upwards via the erosion of the hard-earned bargaining power of ordinary Americans. Rising inequality was not a lamentable side effect of America’s new policy framework. Rising inequality was its intent.
Gordon shows how unequal the US is by world standards:
And the paper drills down into issues like wage structure and benefits (one of multiple data arrays):
… mobility, race and gender gaps:
He also includes a short talk on how America’s wealth distribution stacks up relative to what Americans think is desirable:
Mind you, I’ve only give you some tidbits from this paper. It manages the difficult task of being well argued, accessible, concise and data rich. I strongly encourage you to share it widely.