The Rise of Inequality and Decline of the Middle Class

In the early part of the twentieth century the wealthy 1% of our citizens had 23.5% the total wealth of the country –until the crash of 1929 and into the beginning of the Great Depression.  During the depression the New Deal was used by the government to change labor laws, regulate industries, increase wages, introduce pension and social programs, and increase the taxes of the wealthy. By the mid-1970s the 1% had only 8% of the total wealth of the nation and the average worker was now sharing in the prosperity of the country.

In the late 1970s the multinational corporations, their shareholders and their associations developed a plan to increase their share of wealth again. They began by hiring thousands of lobbyists to buy congressional votes to begin changing labor laws, deregulate industries, and reduce their taxes. The primary goals were to lower labor costs and increase profits.

The wealthy were brilliant at selling these changes to the average citizen and workers as benefiting the economy, tax payers, and working families. This plan worked so well that by 2010 the wealthiest 1% again controlled 23.5% of the total wealth of the country.

But this turned out to be a zero sum game where their success was at the expense of the middle class. It dramatically increased inequality and led to stagnant or declining wages for the majority of Americans. This book reveals the strategies they used to achieve their goals and how the few succeeded at the expense of the many.

The primary driver of their plan was the adoption of the economic philosophy called Free Market Capitalism (FMC) and how it was used to replace the traditional Democratic Capitalism that was created by the New Deal. The adoption of FMC created many problems for working people, the economy and even democracy.
  • Problem #1 – The gradual shift in wealth to the top 1% has been a redistribution of income and wealth at the expense of the middle class.

  • Problem #2 – Because the shift in wealth was at the expense of the middle class it created a continuous growth in inequality not seen since the 1920s.

  • Problem #3 – The shift towards Free Market Capitalism and away from Democratic capitalism resulted in the middle class not sharing in the prosperity of the country like they did from 1940 to 1980. 

  • Problem #4 – The shift in wealth led to a concentration of political and economic power into the hands of the few, which allowed them to control the rules of the game.

  • Problem #5 - The concentration of political and economic power has also eroded the Madison definition of Democracy and fewer citizens have any voice in politics.

  • Problem #6 – To makeup of for declining wages women went to work, people worked longer hours, and went into debt. But these coping mechanisms no longer work and eventually they led to lower consumption.

  • Problem #7 - Instead of drawing its power from the people, control of the economy and politics is in the hands of the few who have the money. – The author believes that this shift of wealth and power is a threat to democracy.
This plan was not a conspiracy it was a plan by the moneyed elite that had defined strategies and was well executed. I have identified 17 primary factors that led to the decline of the middle class. This book will explain each of these strategies, how the strategies are connected, and how they were used to attain their phenomenal success.
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My hope is that this book will provide enough understanding of our economic problems to begin the task of reversing the plan and the strategies. I think the Rise of Inequality and the Decline of the Middle Class is a valuable tool in understanding the most destructive issue of our time.
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