Wealth distribution, growth rate, and income inequality are massive problems and this graph is indeed scary.
And, for reference, here is a graph on entitlement spending:
I don't draw any conclusions on this, but I think it is naive to expect that Republican economic policy is responsible. If any such conclusion was reasonable based on this extremely limited set of data, it would be that increasing entitlement spending is responsible for greater inequality. Certainly both graphs are moving in the same direction.
Obviously, it is not that simple. But that's my point. Demonstrating that Republican economics are wrong carries a potentially dangerous consequence: assuming that Democrat economics are right.
To me, the data suggest both are wrong.
And if I earnestly felt I knew better, I wouldn't be doing my day job nor posting on these forms, but I do have some hypotheses that may be worthy of exploration:
- First, we focus so heavily on the income side of personal finance that we neglect both costs and assets. Growing income itself is useless if costs keep pace, and if the balance isn't positive, asset growth is impossible. Thus, not only are incomes skewed, wealth is too. Wealth might be more important, and certainly we have seen things like home ownership and retirement investment plunge.
- Within costs, fixed costs are much more important. If it costs everyone a basic $20k to live and costs scale from there depending on lifestyle, changing that $20k to $30k will cripple the lower earners and do almost nothing to the higher earners.
- You can argue as to why, but for whatever reason even people who can afford to save or invest are doing so less often.
- I see less and less alignment between employer and employee, customer and merchant. We are less and less seeing each other as people who are like us and more and more as things who want from us. This disincentivizes cooperation. With good alignment, it could be possible for many businesses to pay employees more and profit by doing so because they get more in return. It ain't working that way anymore, so each side is focused on themselves in return. And the guys with the resources are going to win more often than not.