Unemployment remains at nearly ten percent, the highest level in almost 30 years; foreclosures have forced millions of Americans out of their homes; and real incomes have fallen faster and further than at any time since the Great Depression. Many of those laid off fear that the jobs they have lost -- the secure, often unionized, industrial jobs that provided wealth, security, and opportunity -- will never return.
Yet a curious thing happened in the midst of all this misery. The wealthiest Americans got richer. And not just a little bit richer; a lot richer.
In 2009, the average income of the top five percent of earners went up, while on average everyone else's income went down. The share of total income going to the top one percent has increased from roughly eight percent in the 1960s to more than 20 percent today. Income inequality in the United States is higher than in any other advanced industrial democracy and by conventional measures comparable to that in countries such as Ghana, Nicaragua, and Turkmenistan.
Labor policies have made it harder for unions to organize workers and provide a countervailing force to the growing power of business; corporate governance policies have enabled corporations to lavish extravagant pay on their top executives regardless of their companies' performance; and the deregulation of financial markets has allowed banks and other financial institutions to create ever more Byzantine financial instruments that further enrich wealthy managers and investors while exposing homeowners and pensioners to ruinous risks.
Policymakers have repeatedly failed to enact reforms that would have accommodated new union-organising techniques and empowered unions to counter the growing power of business to resist labor's demands. In this realm, the United States is running a twenty-first-century economy under 1940s rules. Obsessive obstructionism is not just a symptom of general crabbiness; it is a shrewd and sensible part of a larger strategy to enrich corporations.
Rather than titanic conflict between workers and capitalists, so the argument went, pluralist democracy would produce solid incremental policy changes that would inch American society forward toward security and affluence. The dramatic and decidedly nonincremental events of the 1960s and 1970s -- the civil rights movement, the Vietnam War, and broader cultural upheaval -- punctured this view. But to business elites, the 1960s marked the nadir of their influence in American society, and they did not react passively. The era saw the stirrings of a conservative counterrevolution marked by ideological, political, and organizational developments, and particularly by the political awakening of business. So by the late 1970s, dissatisfaction with the state of the government, politics, and policy was rampant across the board, among the wealthy and the middle class alike, and the conditions were ripe for a turn against the political status quo. Conservatives, on behalf of the wealthy, were ready with ideas and organization to seize the moment
ROBERT C. LIEBERMAN, Professor of Political Science and Public Affairs at Columbia University and the author of Shifting the Color Line: Race and the American Welfare State.