Share The Wealth!

"The Spiral of Inequality" by Paul Krugman, in Mother Jones (Nov.–Dec. 1996), 731 Market St., Ste. 600, San Francisco, Calif. 94103.

The facts about growing income inequality in the United States are no longer much in dispute, says Krugman, an economist at the Massachusetts Institute of Technology. Consider this: in 1970, American families in the top five percent of earners enjoyed an average income 12 times that of families in the bottom 20 percent; by 1994, the rich were raking in more than 19 times as much as the poor.

The only real question remaining, Krugman says, is what’s behind the shift. Foreign trade and "skill bias" (which skews pay toward brain workers) are not as important as many people assume, he argues. What’s changed most is values. In 1970, the CEO of a typical Fortune 500 company earned about 35 times as much as the average manufacturing employee. "It would have been unthinkable to pay him 150 times the average, as is now common," Krugman says, "and downright outrageous to do so while announcing mass layoffs and cutting the real earnings of many of the company’s workers."

Though America a quarter-century ago had large disparities between economic classes, it also had "an egalitarian ethic that limited those disparities," he maintains. The labor movement fostered those egalitarian values and enforced them at the bargaining table and in the political arena, providing a counterweight to the political influence enjoyed by wealthy individuals and corporations. How can America become again "the relatively decent society we had a generation ago"? Strengthen unions, Krugman says.