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It's commonly suggested that there are two Americas. Left versus right, coastal versus midland, rural versus urban. But the division that I see most clearly is not ideological or geographical. It's the divide between those to whom prosperity is available & those to whom it is not. The fundamental truth about life in America is that the working class is simply competing for the crumbs left out by a smaller group of wealthy Americans around whom the political system, the media, & the tax code revolve.
This divide is so stark that just 59 individuals own more wealth than the the bottom 164 million Americans combined, indicating that something is broken in our economy. With nearly any hardship Americans face, we can point to this fact & say, "That's why." When we see the wealthy escape punishment for their crimes while the poor get locked up for petty offenses, that's why. When we see ordinary Americans getting stiffed on a pandemic stimulus package while hundreds of billions are set aside for corporations, that's why. When we see the wealthy getting priority access to healthcare while working Americans avoid the expense of care at all cost, that's why. Whenever we file our own income taxes & then see that a billionaire paid $0, that's why.
And none of this is by accident, it's by design. There was a time when we all shared in America's prosperity, various forms of social discrimination not withstanding. There was a time when what was good for the wealthy was good for the worker, & quality of life was on the rise across the board. But this changed in the 1970s, when certain Republicans decided that working Americans were dead weight. And so they designed a system that untethered the wealthy from the working, allowing businesses to abandon American workers in favor of cheap overseas labor. They took the credit for what America had become, & left behind those whose hands had built this country from the ground up.
And that's the era we're still in, one designed by Republicans, made possible by Richard Nixon & ushered in by Ronald Reagan. And until we radically change the way that we think about our economy & our politics, we will continue living in this age of unchecked wealth inequality & working class suffering.
To understand the Republican Party, its aims & its motivations, we might first consider what life in America might look like had the trajectory of the working class not been radically altered by Republican intervention in the 1970s & 1980s. In previous decades, workers had enjoyed record prosperity following the Stock Market Crash of 1929, the Great Depression, & WW2 thanks to Franklin D Roosevelt's progressive & regulatory New Deal policies which rebuilt our country, creating the middle class & distributing our newfound prosperity relatively fairly across classes, various forms of social discrimination not withstanding. After years of economic disruption, we had a national appetite for a regulated economy enforced by a novel tax code & strong anti-trust sentiments, resulting in a prosperous middle class that was the envy of the developed world. Things were going terrifically (various forms of social discrimination not withstanding). But something began to change in the 1970s.
It was Republican president Richard Nixon's promotion of unnecessarily expansive post-recession fiscal policy that initially weakened the working class. His intention was to juice the economy for his 1972 re-election. And while this gave him a landslide victory in November, it also ushered in the correction of 1973-1974 & the stagflation of the later 1970s, which would dog his administration alongside the Watergate scandal. More importantly, though, this prolonged precarity, compounded by a temporarily unstable middle-east energy market, set the stage for Ronald Reagan, upon taking office in 1981, to completely rewrite the roles our tax system & the working class played in America's economy. The result would be decades of unchecked upward wealth transfer from workers to the wealthy.
Pre-Nixon, American workers had it better than ever. The minimum wage had been instituted by Roosevelt in 1938 at 25 cents per hour (about $4.50 in 2020 dollars) & had grown over 3 decades to $1.60 (about $12 in 2020 dollars), & more than 85%of Americans were making more than a full-time minimum wage salary (around $25,000 in 2020 dollars). If the minimum wage continued rising relative to increases in production, it would be closer to $20 & a full-time minimum wage salary would be around $40,000.
Instead, our minimum wage has stagnated at $7.25 & a full-time minimum wage job pays just $15,000 per year, barely halfway to the poverty threshold for a family of four. Moreover, the amount of Americans making less than the full-time equivalent salary ($40,000) has grown from 15% to over 40%. And while the American worker's compensation dwindles, costs continue to rise. The median price of a home in 1968 was less than 9x the minimum wage salary. Today it's more than 21x. The cost of a 4-year public college tuition back then was 2/5th of the minimum wage salary. Today it's more than 2.5x. The average cost of an automobile was 4/5th of the minimum wage salary. Today it's 2.5x.
By nearly any measurement, American workers are doing far worse now than they were before Nixon, & each year the American Dream drifts further & further out of reach for the majority. Household debt-to-income ratio was below 70% in 1968, & is now over 100%. Net worth for workers is plummeting. Even prior to the pandemic, nearly 40% of Americans said they would struggle to pay an unexpected expense of $400. And the stability, dignity, & prosperity of the working class, once the envy of the developed world, continues to be pillaged by a capital class that is experiencing obscene prosperity.
And the decline of the working class is hidden in plain site because today's workers don't know how good previous generations had it. And previous generations don't know how bad today's generation has it.
Workers in the New Deal era were protected by a robust tax code. In 1968, the top tax rate was still 70% for income earned over $180,000 (around $1,300,000 in 2020 dollars). But the intent was not that high earners cut gigantic checks to the federal government. Instead, the intent was to encourage high earners to spend money in tax deductible ways to avoid paying those taxes. If you made more than $1,300,000 in a year, you might spend that extra money on building new factories to expand your business. You might spend it on higher wages or more benefits for your workers so that you can hire more competitively. You might replace a fleet of work vehicles. The point was to reinvest profits into the economy through your own business, spending yourself down into a lower tax bracket so that you pay a lower rate on a lower total of taxable income. You still reap the benefits of the money you earned by growing your company. You didn't have to forfeit your profits. But what wasn't allowed under the tax code was the accumulation of the obscene amounts of wealth like we see today.
This changed because wealthy donors who had undue influence over politicians saw that the Nixon-induced stagflation of the 1970s had created an appetite for economic change, both in Washington, D.C. & across the country. Workers had become used to a certain level of prosperity, which had been disrupted by the economic turbulence. So the Republican Party convinced them that the way to regain that prosperity was to enter a global marketplace. International labor could be leveraged to manufacture cheaper goods, & a new audience of international buyers could purchase American products. This would unlock untold riches, supercharging our gross domestic product & positioning America as the leader in international trade. And it was guaranteed that these profits would trickle down to the American worker. All we had to do was sign away all of our protections within the tax code by voting for Reagan.
So we did. We elected Ronald Reagan in 1980 & by the time he left office, he'd slashed the top marginal tax rate down to 28% for high earners. And without the 70% penalty for hoarding wealth, American companies no longer had any incentive to reinvest in American workers. American workers were expensive, after all. It was a mature workforce who had fought for & won higher wages & pensions & other benefits. It was cheaper to outsource work to developing nations like China where unionizing was illegal & workers would accomplish the same tasks for pennies on the dollar. This caused entire American towns to disappear as factories closed up shop. Major cities settled into decay. And with cheaper products coming back from these overseas factories, there was less pressure to continue giving raises to the Americans still working. All of the sudden, Americans were competing with Chinese, Taiwanese, & Mexican workers, which drove down their leverage when negotiating wages & benefits. And the wealthy profited like never before in history.
These profits never found their way to the American worker.
The reduced price of foreign-made goods may have produced the illusion of an increased standard of living in the short term, but trickle-down economics turned out to be a bait & switch. And we can clearly see the destruction these policies have wrought among the American working class by examining any facet of the economy. Stagnant wages, high debt, low savings, delayed home purchases, delayed marriages, Gen Y & Gen Z workers commonly living with their parents well into their 20s, etc. And wealth inequality continues to climb unchecked, especially as workers suffer through historic job loss during this pandemic. Workers are being thrown out of their homes, but Jeff Bezos has earned $70b. Bill Gates has earned over $20b dollars & Elon Musk has earned almost $120b. And this is precisely what the Republicans envisioned when they slashed the tax code. It was the wealthy untethering themselves from the American people & taking the whole of American prosperity for themselves. We were cut loose, left for dead, replaced, as far as our usefulness, with cheap foreign labor. And the media framed it in such a way that we didn't even notice. Wages & benefits were no longer a part of the conversation, which instead shifted to the GDP or the stock market… instruments that considered economic growth but ignored the fact that only a small number of Americans meaningfully benefitted from that growth. We cheered as America's prosperity continued to climb, not realizing that this was a prosperity we no longer had any claim to. Not realizing that America the Prosperous was a country that we did not have citizenship to. Instead, we were confined to America the Left Behind. And that is an increasingly unfortunate place in which to live. These two countries, occupying the same continent, but completely different realities, separated by a winding wall of gated community fence, are the legacy of our abandonment of the American worker.
The amount that the American worker is owed is not trivial. It's not just thousands of dollars. It's the freedom & stability to own a home & start a family in one's 20s. It's the ability to navigate a health crisis without going bankrupt. It's the ability to send one's children through college, rather than saddling them with tens of thousands of dollars in debt. It's dignity. It's relief. It's something that you can't put a price tag on. And it's something that is totally & completely ignored by corporate politicians, the corporate media, & everyone else who is benefiting at our expense. Like George Carlin said, it's a big club & you ain't in it.
And this post-Reagan new normal has defined parameters under which even Democrats govern. Just as Republicans like Eisenhower, Nixon, & Ford governed under the shadow of FDR, Clinton, Obama, & now Biden will govern under the pro-corporate shadow of Reagan, unable, regardless of willingness, to meaningfully depart from convention. Republicans continue to destroy the working class through expanding tax breaks for the wealthy, denying aid to struggling workers during a historic pandemic & recession, implementing so-called Right to Work laws that weaken worker protections in conservative states across the country, attacking the Affordable Care Act, the repeal of which would be ruinous for many workers, making lifetime appointments of pro-corporate judges who will routinely rule against the interests of workers, encouraging the militarization of police forces to intimidate workers against organizing, deregulating the fossil fuel industry despite its known impact on climate change, deregulating the financial industry despite its responsibility for global economic crises, & gerrymandering districts so that they wield power on behalf of their donors disproportionate to their popular support. And yet Democrats lack any means to meaningfully fight back, thanks to a political unwillingness to reform the tax code.
Republican voters' response to Democratic policies is that we can't afford to do good things. "If we try to reverse climate change, I will lose my fracking job & I'll have to work at Wal-Mart." "If we raise the minimum wage, the restaurant I work for will shut down & I'll have to work at Wal-Mart." "If we require the auto industry to reduce emissions, prices might go up by thousands of dollars & I might not be able to replace my truck when the time comes." And these are all valid concerns. The reality is that we ask the working class to bear a disproportionate cost of these policies, whether it's lost jobs or whether it's regulation costs that are passed onto the consumer. And within the Reagan era, under our current tax code, even Democrats are unable to fairly fund the policies that we need to keep things from getting worse because nearly all of our nation's disposable wealth has been vacuumed up by the wealthiest Americans over the last four decades. It's immoral to ask a working class, the majority of whom are living paycheck-to-paycheck, to pony up for these necessary initiatives. We must find a way to pay for them out of the growing prosperity of our nation.
So what we need is not a Green New Deal. It's not Medicare For All. It's downward wealth redistribution. It's a very sizable wealth tax, & a 70% federal tax on income over a million & a half dollars. We have to deconstruct a predatory ownership class & take back what we are owed, & then we will no longer have to weigh the threat of climate change against the value of our current job. Higher wages or benefits against having any job at all. Our children's education against our ability to put food on the table. When we can finally again put America's prosperity to use, tackling climate change or the health care crisis won't need to be debated.
The original New Deal era was an era of big ideas. We paved the entire interstate system. We built bridges & dams, tunneled through mountains, & landed on the moon. We built a middle class & large portions of an entire country. The Reagan era, by contrast, is an era of small ideas. It's an era of, on the one hand, obscene wealth & decadence. And on the other, poverty & infrastructure decay & opioid addiction. The New Deal era was an era of optimism & unity, various forms of social discrimination not withstanding. But the Reagan era is an era of pessimism & increasing division. The challenges facing our nation continue to grow larger: pandemics, global economic crises, impending climate disaster & the immigration crises that will follow, infrastructure collapse, the untenable costs of health care & education, the burden placed on cities by increasing urbanization & more, not to mention the economic impact of artificial intelligence & increased automation. And yet, we're less equipped than ever to face these challenges. If we plan to go boldly into the future, as we did during the trying times of the 1930s, we must reimagine what it American prosperity really looks like.
The problem with inequality in America is not that certain people are too wealthy. It's not a matter of jealousy or resentment. It's that American workers can create the goods & fulfill the services that make someone else wealthy and yet not share in that prosperity. It's that a company can post billions in profit & yet it might pay its workers so little that they must rely on SNAP benefits to feed their families. And when confronted with the social & ecological impacts of pursuing this prosperity, workers are repeatedly told that there are no resources to address them. It is the post-Reagan idea that we are no longer in this together, that we are to take what we can & fend for ourselves, that is the problem. It's the idea that prosperity is not shared, that it is instead something that only the fortunate few are entitled to.
But we can undo the untethering. Just the same as we voted it in with Reagan, we can vote it out on the next election day. We can assert what we are owed. All we need is the will & a candidate who represents the interest of the American worker. Who will fill that role?