We’ve got 99 problems, but income inequality ain’t one

Everyone is painfully aware that the proportionate income of the richest Americans is growing. Like a cancerous tumor, the wealth of America’s elite threatens to envelop us all. As their collective fortunes reach critical mass, the moral fabric of our society will tear apart, fire and brimstone will fall from the sky, machines will rise up against the human race, and Nicki Minaj will be the last cultural legacy of humanity.

Or maybe not.

Unfortunately, the dystopian visions enthusiastically broadcast from Zuccotti Park by the Occupy Wall Street movement present a distorted picture of this economic trend. True, the income of the top one percent has increased steadily from roughly 10 percent of the total national income in 1985 to 17 percent in 2009.

This is hardly an apocalyptic development. Shockingly, that 99 percent we keep hearing about still retains over 80 percent of our total national income, and by most measures their purchasing power has actually risen over that period.

Contrary to popular belief, the trend in economic disparity has been primarily driven by two interrelated factors. Since the 1970s, demand for innovation and highly skilled labor (CEOs, people with technical skills, etc.) has dramatically increased. Conversely, demand for less skilled labor has steadily declined.

The flattening of the world markets combined with advances in computing and technology has created broad and systemic efficiencies. The byproducts of those efficiencies are the real issue, not corporate greed or tax loopholes for the rich, as the OWS protesters would have us believe.

In spite of this decline in demand for traditional labor, the real income of all Americans, including the “99 percent,” has steadily increased. In the last 30 years, the real median household income has increased by approximately $5,000, and the material quality of life for most Americans has dramatically improved. The real-life differences between high earners today and middle to lower income Americans has narrowed considerably over the course of this century, mostly in ways not reflected in terms of real income.

Rapid improvements in the quality of cheap goods in comparison to expensive goods have been the greatest factor in improving the lives of the masses. In the early 1900s, income disparity may have meant the difference between owning a horse or a car.  Today, the issue is whether you drive a five-year-old Toyota or a two-year-old Mercedes. 70 percent of Americans living below the poverty line own automobiles, and a greater percentage have personal computers and smartphones.

The more we examine inequality through the lens of real quality of living, the less divergence we see. That is not to say there aren’t excesses in the system or its better for the rich to have more, or that there aren’t plenty of people in real need, but it is important to view the issue of income inequality in a broader historic and economic context.

On a related note, the same segment of the population lamenting the plight of the 99 percent is also incensed that the wealthy are not paying their fair share of taxes. While the word “fair” is subjective, by most definitions the top earners are paying considerably more than their fair share. In 2009, the top one percent of income earners paid over 36 percent of all federal income taxes and the top 10 percent of income earners paid over 70 percent of all income taxes. Such complaints seem especially incongruent since roughly half of all Americans pay no federal income tax at all.

The real victims of Occupy Wall Street, aside from the residents and small business owners of lower Manhattan, are the iPhone-wielding, twenty-something protesters themselves. These would-be leaders are blinded by 1960s nostalgia as they look for excuses in a world that is admittedly a bit tougher to navigate than it was a few years ago. The greatest threat to their future is not the one percent, but the 22 percent, or 79 million people projected to be on Medicare in 2030. That same great generation that helped run up $14 trillion of national debt expects to enjoy a retirement package with $45 trillion plus of unfunded liability.

If the OWS youth were smart, they would channel their outrage 230 miles south in D.C., and do it through social media and grassroots fundraising rather than tents and placards. Really, if you still think that tents and placards are the keys to affecting change in the 21st century, maybe there is a reason why your lot in life is lower than those greedy bankers.