HOW THE RICH GET RICHER
Tax breaks for the rich are only the most obvious way to
increase inequality of wealth. Others include:
- The decline of labor unions. The Reagan administration was hostile
to organized labor right from the start, firing thousands of federal airline
traffic controllers who had gone on strike in 1981. This sent a clear signal
to management everywhere that the administration would do everything in
its power to weaken labor's ability to demand higher wages. The resulting
low labor costs increased profits, enabling owners to award the "super
CEO salaries" for which the 80s became notorious.
- Freezing the minimum wage, which allows inflation to effect a wage
cut over time.
- The deregulation of business. Without the costs of complying with
safety and pollution laws, deregulated businesses increased their profits,
which allowed greater executive salaries. Deregulation not only funneled
wealth upward, but also put the consumer and the worker in harm's way.
- Corporate mergers and takeovers. The Reagan Administration tried
to deregulate as many anti-trust laws as possible, and did not enforce
the ones it had. As a result, the 80s saw a record flurry of corporate
mergers and takeovers, both friendly and hostile, which concentrated wealth
in the hands of fewer and fewer owners.
- An orgy of debt. The banking community -- one of the richest segments
of our society -- collects interest on private, corporate and national
debt, all of which reached record levels during the 80s. U.S. bankers will
collect the interest on three-fourths of the $5 billion national debt.1
Combined home mortgage and consumer debt rose from $1.3 trillion in late
1980 to $3.4 trillion at the end of 1990, about 50 percent faster than
the consumer's income grew.2
- Shifts in government spending. Between 1980 and 1987, federal spending
on human resources was reduced from 28 to 22 percent of all outlays, while
defense spending rose from 23 to 28 percent.3
This redistributes income because human resources tend to go to the poor,
whereas defense spending goes mostly to educated professionals in the military/industrial
complex. (This may surprise those who assume that defense spending mostly
goes to the paychecks of military personnel. In 1985, this accounted for
only 28 percent of all defense spending.4)
Taken together, these many mechanisms represented a full-scale effort
to redistribute wealth to the rich. When liberals point this out, conservatives
often accuse them of engaging in "class warfare." However,
it should be obvious which class is successfully lobbying at the other's
Return to Overview
1 That roughly a fourth to a fifth
of our growing debt is owed to foreigners can be found in Benjamin Friedman,
Day of Reckoning (New York: Random House, 1988), p. 38.
2 Federal Reserve Board figures cited
in "85% of All Households in Hock," Investor's Daily,
April 22, 1991.
3 Center on Budget and Policy Priorities.
4 U.S. Office of Management and Budget,
Historical Tables, 1985.