I was watching Your Money on CNN this weekend and Pete Dominick - who I guess is more of a radio host/comedian than economist or political analyst - made a good observation about growing income inequality in the United States.
They were showing a graph - which, unfortunately, I can not find online - showing the growth of (real) wages of the top 5% of wage earners compared to the growth in median wages since 1917. The graph showed that median wages were rather flat-ish (but trendly slightly upward) throughout the past century and, for the most part, moved parallel to the income of the higher wage earners; however, it showed that the line for those in the top 5% had a couple distinct upward spikes.
Mr. Dominick opined that the first spike came about from the degradation of private sector unions in the 1970s and 1980s (along with outsourcing) and the second spike came about as Wall Street was deregulated and, as Matt Taibbi wrote, Wall Street became "a giant vampire squid wrapped around the face of humanity, relentlessly jamming it's blood funnel into anything that smells like money"*.
Actually, I think I've added in some of my own analysis there... but really what Mr. Dominick said that I appreciated (even if he was not the first to point it out) is that this was not an economic phenomenon. It is a political phenomenon. Somehow the top 5% got the middle class to vote for the economic interests of the ruling class.
Yes! Ding-ding-ding! We have a winner!
Why do they do it? It could be human psychology. I think my co-blogger has at times pointed out studies that indicated that large percentages of people expect someday to find themselves in the higher tax brackets (see this example).
Is that it? I'm not certain because that study shows it's younger people who are more likely to expect to get rich (read: they have not reality crush their dreams yet) - but young people still remain largely in the base of the Democratic Party - not that the Democratic Party is necessarily that great at representing the working class either (remember all the Democrats that voted against the Brown-Kaufman Amendment last summer? I do.).
So whatever the reason - kudos to Pete Dominick for his observation that basically echoed a main argument of Thomas Frank in What's The Matter With Kansas? that somehow the rich and conservatives have gotten a significant percentage of the middle class and poor to vote against their own economic interests.
* Note: I think Mr. Taibbi used this line specifically referring to Goldman Sachs. I hope he does not object to my broadening of it's scope.
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