October 21, 2011
The Debate Room (Bloomberg), October 21, 2011
Economic inequality has been growing steadily for three decades. According to the most definitive data, assembled by economists Emmanuel Saez and Thomas Piketty, the top 1 percent received 10 percent of all U.S. income in 1979. By 2007, just before the Great Recession, that share had risen to 23 percent.
What most Americans don’t know, however, is that before the late 1970s, inequality had been falling for five decades. The Golden Age of capitalism — the 30 years from the end of World War II through the mid-1970s, when gross domestic product, wages and incomes grew faster than at any comparable period in American history — was marked not by financial excesses and widening inequality, but by equalizing growth and broadly shared prosperity.
Of course, not every Occupy Wall Street protester has reviewed the hard data. But the thread running through the range of grievances voiced at occupations around the country is anger over high and rising inequality.
Few measures would help the long-term health of the economy more than reducing the economic and political clout of Wall Street. The financial sector exists to connect savers with investors and to do so at the lowest feasible cost and risk. In a sensible world, we would view the financial sector as nothing more than a transactions cost to be minimized along the way to producing the goods and services that the economy is really about.
For all the counter-culture on display, Occupy Wall Street is pushing us exactly in this sensible direction.