SHARING THE RICHES
January 23, 1996
The media have made much recently about the rise in wealth inequality. Supposedly the rich are getting too rich, while the poor get poorer. But a new study by Benjamin Schwartz in World Policy Journal points out that income inequality has been a constant feature of U.S. economic history.
- In 1828, the richest 4 percent of New Yorkers owned 63 percent of the corporate and non-corporate wealth.
- By 1845, their share had increased to about 81 percent.
- By the time of the Civil War, the same could have been said for the populations of Boston, Philadelphia and all of the major cities of the South and Midwest.
- By 1890, an estimated 12 percent of the population owned about 86 percent of the country's wealth.
The progressive and New Deal eras flattened this out somewhat, but the spread continued well into mid-century. In 1962, the wealthiest 20 percent of households owned 76 percent of the nation's wealth. The difference between today and earlier eras, according to economists, is the explosion of growth in government transfer payments -- from welfare to Social Security. This creates a burden on the productive economy that was not there previously -- and discourages those on the bottom rungs of the income ladder from climbing higher.
Source: Perspective, "Unequal Incomes," Investor's Business Daily, January 23, 1996.
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