On Labor Day weekend, eight weeks before one of the most consequential elections in American history, it’s useful to consider the inequalities of income and wealth that fueled Donald Trump’s victory four years ago – and which are now wider than ever.
No other developed nation has nearly the inequities found in the US, even though all have been exposed to the same forces of globalization and technological change. Jeff Bezos’s net worth recently reached $200bn and Elon Musk’s $100bn, even as 30 million Americans reported their households didn’t have enough food. America’s richest 1% now own half the value of the US stock market, and the richest 10% own 92%.
American capitalism is off the rails. The main reason is that large corporations, Wall Street banks and a relative handful of exceedingly rich individuals have gained enough political power to game the system.
Chief executives have done everything possible to prevent the wages of most workers rising in tandem with productivity gains, so most gains go instead into the pockets of top executives and major investors. They’ve outsourced abroad, installed labor-replacing technologies and switched to part-time and contract work. They’ve busted unions, whose membership shrank from 35% of the private-sector workforce 40 years ago to 6.4% today.
They’ve pushed government to slash their own taxes, unravel safety nets for the poor and middle class and reduce investment in education and infrastructure. They’ve eliminated a raft of labor protections. They’ve defanged antitrust enforcement, allowing their monopolies free rein. The free market has been taken over by crony capitalism, corporate bailouts and corporate welfare.
This massive power shift laid the groundwork for Trump. In 1964, almost two-thirds of Americans believed government was run for the benefit of all the people. By 2013 almost 80% believed government was run by a few big interests. The erosion in public trust was particularly steep in the wake of the Wall Street bailout and Great Recession. In 2006, 59% of Americans thought government corruption was widespread. By 2013, 79% did.