Let's talk first about the facts on income distribution. Thirty years ago we were a relatively middleclass nation. It had not always been thus: Gilded Age America was a highly unequal society, and it stayed that way through the 1920s During the 1930s and '40s, however, America
experienced what the economic historians Claudia Goldin and Robert Margo have dubbed the Great Compression: a drastic narrowing of income gaps, probably as a result of New Deal policies.
And the new economic order persisted for more than a generation: Strong unions; taxes on
inherited wealth, corporate profits and high incomes; close public scrutiny of corporate
management--all helped to keep income gaps relatively small. The economy was hardly egalitarian, but a generation ago the gross inequalities of the 1920s seemed very distant. Now
they're back. According to estimates by the economists Thomas Piketty and Emmanuel Saez-confirmed by data from the Congressional Budget Office--between 1973 and 2000 the average real
income of the bottom 90 percent of American taxpayers actually fell by 7 percent. Meanwhile, the
income of the top one- percent rose by 148 percent, the income of the top 0.1 percent rose by 343 percent and the income of the top 0.01 percent rose 599 percent. (Those numbers exclude capital gains.) The distribution of income in the United States has gone right back to Gilded Age levels of inequality.
