After 30 years of deregulation and privatization income inequality is greater today than at any other point since World II. That fact should surprise nobody. What is startling however is that America maintains greater levels of income inequality today than we did in 1774—even if slavery is factored in.
This discovery comes from a new paper published by University of California – Davis professors Peter Lindhert and Jeffrey Williamson. Jordan Weismann summarizes the two professors’ findings in The Atlantic:
Not only was income more equally divided in the colonies, but Americans across the economic spectrum tended to be richer than their European equivalents. Even slaves, who were sometimes paid a tiny sum for their forced labor in addition to shelter and food, technically earned more than the poorest Europeans, Lindert and Williamson write. (From a human rights perspective, they were obviously worse off). The one big exception to this rule was the top 1 percent: Europe’s elite were still wealthier than ours.
On measures of equality, the colonies also compare extremely well to the latter-day United States… By the time the Civil War came, the top 1 percent of U.S. households laid claim to 10 percent of the nation’s income, versus about 7 percent during the founders’ era. Today, the same group accounts for about 19 percent.
One factor that might explain this is the relatively modest role and influence of corporations in 18th century America. The non-partisan organization Reclaim Democracy describes the role of corporations in America after we achieved independence:
-Corporate charters (licenses to exist) were granted for a limited time and could be revoked promptly for violating laws.
-Corporations could engage only in activities necessary to fulfill their chartered purpose.
-Corporations could not own stock in other corporations nor own any property that was not essential to fulfilling their chartered purpose.
-Corporations were often terminated if they exceeded their authority or caused public harm.
-Owners and managers were responsible for criminal acts committed on the job.
-Corporations could not make any political or charitable contributions nor spend money to influence law-making.
Compare that with how today’s politicians pander to corporations and –voila!- you have the beginnings of an explanation for why America has greater levels of income inequality today than it did in 1774.