Aug 17, 2011 | By Shannon Hughes
This article from The Atlantic asks a disheartening question, and cites an analysis of our economy in 2005 that explained:
. . . America was composed of two distinct groups: the rich and the rest. And for the purposes of investment decisions, the second group didn’t matter; tracking its spending habits or worrying over its savings rate was a waste of time. All the action in the American economy was at the top: the richest 1 percent of households earned as much each year as the bottom 60 percent put together; they possessed as much wealth as the bottom 90 percent; and with each passing year, a greater share of the nation’s treasure was flowing through their hands and into their pockets. It was this segment of the population, almost exclusively, that held the key to future growth and future returns. The analysts, Ajay Kapur, Niall Macleod, and Narendra Singh, had coined a term for this state of affairs: plutonomy.
So what is our nation's wealth doing so far out there? And what does plutonomy mean for people who are living on Earth? As we drift farther apart, there are rippling effects in education, marriages and families, religious beliefs and practices, and the American promise of social mobility. Read the excerpted paragraphs below, or see the full article here.
Excerpt from the article:
The ease with which the rich and well educated have shrugged off the recession shouldn’t be surprising; strong winds have been at their backs for many years. The recession, meanwhile, has restrained wage growth and enabled faster restructuring and offshoring, leaving many corporations with lower production costs and higher profits—and their executives with higher pay.
. . .
America’s classes are separating and changing. A tiny elite continues to float up and away from everyone else. Below it, suspended, sits what might be thought of as the professional middle class—unexceptional college graduates for whom the arrow of fortune points mostly sideways, and an upper tier of college graduates and postgraduates for whom it points progressively upward, but not spectacularly so. The professional middle class has grown anxious since the crash, and not without reason. Yet these anxieties should not distract us from a second, more important, cleavage in American society—the one between college graduates and everyone else.
. . .
In the March 2010 issue of this magazine, I discussed the wide-ranging social consequences of male economic problems, once they become chronic. Women tend not to marry (or stay married to) jobless or economically insecure men—though they do have children with them. And those children usually struggle when, as typically happens, their parents separate and their lives are unsettled. The Harvard sociologist William Julius Wilson has connected the loss of manufacturing jobs from inner cities in the 1970s—and the resulting economic struggles of inner-city men—to many of the social ills that cropped up afterward. Those social ills eventually became self-reinforcing, passing from one generation to the next. In less privileged parts of the country, a larger, predominantly male underclass may now be forming, and with it, more-widespread cultural problems.
. . .
One stubborn stereotype in the United States is that religious roots are deepest in blue-collar communities and small towns, and, more generally, among Americans who do not have college degrees. That was true in the 1970s. Yet since then, attendance at religious services has plummeted among moderately educated Americans, and is now much more common among college grads. So, too, is participation in civic groups. High-school seniors from affluent households are more likely to volunteer, join groups, go to church, and have strong academic ambitions than seniors used to be, and are as trusting of other people as seniors a generation ago; their peers from less affluent households have become less engaged on each of those fronts. A cultural chasm—which did not exist 40 years ago and which was still relatively small 20 years ago—has developed between the traditional middle class and the top 30 percent of society.
Over time, the United States has expected less and less of its elite, even as society has oriented itself in a way that is most likely to maximize their income. The top income-tax rate was 91 percent in 1960, 70 percent in 1980, 50 percent in 1986, and 39.6 percent in 2000, and is now 35 percent. Income from investments is taxed at a rate of 15 percent. The estate tax has been gutted.
. . .
Even as we continue to strive to perfect the meritocracy, signs that things may be moving in the other direction are proliferating. The increasing segregation of Americans by education and income, and the widening cultural divide between families with college-educated parents and those without them, suggests that built-in advantages and disadvantages may be growing. And the concentration of wealth in relatively few hands opens the possibility that much of the next generation’s elite might achieve their status through inheritance, not hard or innovative work.