I've written a lot about realignment this year. And in my series "Three Waves and A Wall", I connected the repeated waves of realigning elections with the longer waves of rising and falling world powers. Here's a chart--a modified version of one I came across yesterday (more aesthetic original here), from Visualizing Economics--that helps show how the two are connected. A second chart on the flip completes the process.
The long, relatively constant climb of income from 1933 to 1973 represents the rise of American power to its peak, when, like others before it, America experienced a rude, unexpected military shock, in Vietnam. As Philips explains, the elites continue doing well after such shocks, while the people as a whole do not, a condition that's bouyed by reactionary, jingoist politics. This lasts for a generation and a half or two, before there's a return to the more traditional eglitarian values that were the bedrock of national well-being in the first place. This realigning election should herald the beginning of that return. The dramatic end of that upward slope has given way to a long period in which average incomes have risen so slowly that they've only now reached the point they would have been in 1980 if the pre-1973 pace had continued.
But if average incomes have risen slowly, that hardly means that rich have suffered. Indeed, as this chart shows, the income shares of all other groups have declined markedly in contrast to the top 1%:
In 1980, the income of the bottom 50% was twice that of the top 1%, now it's less than 3/4ths. But it's not just the bottom that's getting squeezed. Even the third quartile (top 26-50%) and the fourth quartile below the top 10$ (11-25%) have fallen from three times the income of the top 1% in 1980 to rough parity today. And rather than countering this extreme concentration of what little growth there is in the hands of the already wealthy, the tax code has increaingly abbetted the concentration, as shown by another graph from Visualizing Economics:
Electing Obama won't magically end this troubled era in our history--particularly given the Wall Street-heavy nature of his inner circle of economic advisors. But it is a first step away from the era of stagnant income growth for America as a whole, and soaring incomes for the elite few.
Both John McCain and Barack Obama have proposed tax plans that would substantially increase the national debt over the next ten years, according to a newly updated analysis by the non-partisan Tax Policy Center. Compared to current law, TPC estimates the Obama plan would cut taxes by $2.9 trillion from 2009-2018. McCain would reduce taxes by nearly $4.2 trillion. Obama would give larger tax cuts to low- and moderate-income households and pay some of the cost by raising taxes on high-income taxpayers. In contrast, McCain would cut taxes across the board and give the biggest cuts to the highest-income households.
In short, Obama's embrace of Reaganite tax-cutting rhetoric, even shorn of its Bush II excesses, is anything but a responsible approach to our future. When you look at what he's actually promising to do, it's not that difficult to understand why he's picking up some of those conservative Republican endorsements. This doesn't mean that things will actually work out that way. But we should be clear that Obama is still playing the game according to the rules that have been in place during this long period of income stagnation and polarization.
If your income isn't going to rise, then tax cuts take on a greater importance. But investing money in future growth is what we did during that long period of explosive growth from FDR to LBJ. It's something we need to return to again--particularly since the threat of global warming demands massive investments to fundamentally change our energy economy.
In short, the campaign has been so wildly distorted and delusional, that we haven't even begun to seriously address the real problems that lie ahead. What we're fighting for these last few countable hours now is the opportunity to engage with those very real problems--not the certainty of having them solved.
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