March 11, 2011- Need to Know contributor and editorial cartoonist Steve Brodner conducts an illustrated interview with author Eduardo Porter on income inequality in America.
Eduardo Porter: Inequality, as I think we can see today, has gotten way out of hand. Right now, we’re in a world where a tiny sliver of the population captures an enormous share of our income. I mean, one out of every hundred people — the top one percent of people captures a fifth of the income of the United States.
Steve Brodner: Would you say it sort of used to be a hill where there was a gentle incline or a gentle slope?
Porter: Yes, the distribution of income really did look like a sort of gentle slope from the end of the Second World War through the late 1970s. But then, something started pulling up, you know, one end of this. And so the income at this end started just growing and growing and growing, while the rest of the slope kind of stayed down here.
So you ended up with this extremely acute slope at the top end with everybody else here at the bottom. In 1987, which we should remember is a year of “Wall Street” and Gordon Gecko and “greed is good” – so this was a really good year for banks — the average bonus on Wall Street was $16,000, which amounts to about $30,000 in today’s money. The average bonus in 2007 was about $180,000. So it’s six times. The growth over that period is multiplied by six.
Now, look at the average family income. What did that do over that same period of time? It grew three percent.
Since the 1980s, policy has served the belief that deregulation, taking the government out of the way, is always good, is never bad. And so if you look at how policy evolved over this period, it was a constant chipping away at the limitations for businesses and very notably, banks. These mechanisms, these tools that have been created like the super fast trading we see today, all these things are actually zero-sum games, where some people win and some people lose.
So this argument that all this innovation was to serve greater productivity and make the real economy produce more things, and increase everybody’s prosperity, in my view is more like a casino.
Brodner: We do have that spike, where it’s been pulled up, as you said. How would you picture that? As an island, or as another parallel world?
Porter: Suddenly, I was thinking of vampire squids. Because there is something alien about this, right? But there’s also this sucking sound. If the trend that we’ve seen for the past 25 years were to continue over the next 25 years, I can’t imagine what the world would look like. Because suddenly you’ve got two separate education systems, two separate housing places. Two separate levels of experience. So, of course, I do not see how, in a system such as this, somebody that begins at the bottom can end up at the top.
The economist Herb Stein once said, “When something can’t go on forever, it stops.” I hope that our democracy can find in itself the wisdom to put a stop to a trend that I think will ultimately be very dangerous to this very democracy.