Amazing things can happen when societies realize they don’t need an awesomely affluent. What sort of amazing things? Take what happened in the United States between 1940 and 1960, as economists William Collins and Gregory Niemesh do in a just-published research paper on America’s mid-century home ownership boom.
Over a mere 20-year span, the United States essentially birthed a ‘new middle class’. The share of US households owning their own homes, Collins and Niemesh note, jumped an ‘unprecedented’ 20 percentage points. By 1960, most American families resided in housing they owned “for the first time since at least 1870” – for the first time, in effect, since before the Industrial Revolution.
This home ownership surge, the two economists posit, rested in large part on an equally unprecedented surge in worker earnings. Median annual incomes in the mid-20th century ‘nearly doubled’ as Americans realized wage gains “both large on average and widely spread across workers.” This “widespread and sustained increase in the level of income,” Collins and Niemesh detail, “allowed more people to afford and select into owner-occupied housing than in previous generations.”
What brought about that “widespread and sustained” income increase? That question lies beyond the scope of the new Collins-Niemesh paper. But not much mystery surrounds the answer. The years of the mid-20th century saw a vast expansion of America’s trade union movement. The struggles of new unions – in major basic industries ranging from auto to steel – essentially forced the rich to begin sharing the wealth workers were creating.
This massive mid-century labor surge also changed the face of the American political landscape. Union-backed lawmakers put in place programs that helped average families on a wide variety of fronts, everything from making mortgages affordable to expanding access to higher education.
And those union-backed lawmakers helped pay for those new programs by raising taxes on America’s wealthiest. Between 1940 and 1960, the federal tax rate on income in the nation’s top tax bracket consistently hovered around 90 percent.
That worker-friendly world of the mid-20th century has, of course, long since disappeared. Over the past half-century, we’ve witnessed an enormous redistribution – upwards – of the nation’s income and wealth.
Back in 1982, in the early stages of that redistribution, Forbes began publishing an annual compilation of the nation’s 400 grandest private fortunes. The initial Forbes400 list included just 13 billionaires. Their combined wealth: $92 billion. Over the next four decades, Forbes notes, the combined net worth of America’s richest 400 would rise to “a staggering $4.5 trillion – making them nearly 50 times better off than their 1982 counterparts, far outpacing the consumer price index’s near tripling.”
Overall wealth in the United States, the Federal Reserve relates, now totals $140 trillion. The bottom half of Americans hold just $4 trillion of that.
Excerpted: ‘The Two Decades That Created Our World’s First Mass Middle Class’.
Courtesy: Counterpunch.org
With Pakistan Women’s Day having come and gone on February 12, it is worth reflecting on the impact of the efforts...
Pakistan has a troubled history with democracy, often oscillating between civilian rule and military interventions....
Each year more than 35 billion tons of carbon dioxide are released into the atmosphere, which stays there warming the...
In another tragic incident of a boat sinking off near the coast of Libya, at least 16 Pakistani citizens have lost...
Established on the day of President Donald Trump’s inauguration via executive order, the new department is charged...
The Palestinian resistance made the right decision this week by freezing the prisoner exchange after Israel...
Pakistan is a multi-ethnic country created as a result of a democratic process. It can only prosper if it is a robust...
US President Donald Trump announced 25 per cent tariffs on foreign steel and aluminum imports on February 10, doubling...