06 August 2011

Wealth gap in the U.S.—100 years of progress lost

A lost century—inequality in the U.S. is more extreme than it has been in almost 100 years. The gap between the ultra-rich and the poor and middle class has widened dramatically over the last 30 years. The richest one per cent of Americans now earn almost a quarter of the country's income and control over 40 per cent of its wealth.

The wealth gap between the races is also worsening. According to the Pew Research Center, the median wealth of white households is 20 times that of black households and 18 times that of Hispanic households, the most lopsided ratios since the U.S. government began publishing the data a quarter of a century ago.

Everyone's living standards have improved in the last hundred years, of course, but Americans should nonetheless be worried about this relapse into inequality. Quite aside from the lack of decency and fair play, these inequities carry a heavy price. Demographic analysis increasingly shows a powerful link between inequality and social problems. More inequality means more crime, more drug abuse, more mental illness, more obesity, etc. An equitable society is a healthy society. And a healthy society is a more prosperous society.

American politicians have been intensely involved in debate about their federal government's financial situation as the country attempts to recover from the Great Recession. If they want to maximize that recovery, they should be looking at reducing the country's wealth gap. In the long term, this may be the most important component of not only a healthy society but of a healthy economy.

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