Eighty Trillion Stolen

Let's get it back.

Photo by Mathieu Stern on Unsplash

Last year a study titled; Measuring the Income Gap from 1975 to 2023 set out to estimate the gap between what workers earned in 2023 and what they would have earned with a more equal income distribution from 1975 to 2023. The study was an update to previous efforts by the researchers behind the report which had originally only run through 2018.

The research shows that following the Second World War incomes for workers across the income distribution all grew at roughly the same pace as the broader economy. That income distribution changed in the late 1970s, when earnings growth began disproportionately flowing to those with the highest incomes leading to four decades of rising inequality.

Cumulatively, the gap between what workers from 1975 to 2023 earned and what they would have earned with the counterfactual income distribution amounts to $79 trillion (in 2023 dollars).

Back in 2018 that difference was only $47 trillion (from 1975 - 2018). The additional $32 trillion dollars comes from extending the time-period by five years, inflating from 2018 to 2023, and additional growth in inequality.

Over that past 50 years a number of factors have contributed to this growing gap. Tax policy has taxed capital gains at an increasingly lower rate when compared to income, meaning that those at the top whose wealth comes from assets, which means the wealth cap will naturally go out by design. Wages have stagnated. The last time the minimum wage was raised was nearly two decades ago in 2009. Unions have continued to wither in power over the past 50 years, weakening workers bargaining power. Fifty years ago, about 18 percent of workers were unionized in America. That number is now about 10 percent. Regulation, policy and culture have also pushed economic growth as our reason for being as a society - further concentrating wealth and power with those at the top, often at the expense of those not in the upper reaches of the wealth pyramid.

Let’s do some math

There are about 340 million people in the United States now. But the population of the United States was about 214 million in 1975. Ninety percent of 214 million is about 193 million.

Let’s start with 193 million people in that 90 percent of Americans who should have had $79 trillion more in wealth over the last 50 years. Now let’s look at each individual’s share of that 79 trillion.

$79 trillion / 193 million = $409,326.43

That is nearly enough to buy a home with cash today, as the median home price in the US now is about $436,000.

A four-year degree at Harvard today costs only about $364,000. You could have gone to the college of your choice with that money, and had money left over.

Let’s look at this a different way.

What could you buy with 79 trillion over 50 years?

That $79 trillion stolen from the bottom 90 percent of Americans comes out to about $1.6 trillion per year over 50 years.

You could have universal healthcare for all Americans. The Congressional Budget Office recently estimated that universal healthcare for all Americans would cost between $1.5 and $3.0 trillion per year.

You could easily have free college for everyone in the United States. If you include tuition, living costs and debt forgiveness, costs could exceed $75 billion/year and rise over time.

You could address climate change. To limit global warming to 1.5 °C, the Climate Policy Initiative (CPI) estimates that global climate finance must rise from about $1.3 trillion in 2021/2022 to between $5.4 trillion and $11.7 trillion per year by 2030. The 1.6 trillion per year stolen from most Americans could have easily mitigated most of the impacts of climate change if action had been taken years ago. But we could still make a huge dent in climate change if we directed that $1.6 trillion number to fight climate change.

We have done nothing about this for 50 years

Instead of making sure most Americans have enough money to get by, we in America operate under a system in which the 1% have all the money and power, and more of that money and power every passing day. The Brookings Institute recently released a report showing that 45 percent of Americans have trouble making ends meet.

For starters, we could give each American in the bottom 90 percent of the income distribution over $5,000 each year that is currently being taken from them and filtered to those that don’t need it.

Or we could just keep on doing what we are doing and wait for the pitchforks and torches to come out.