U.S. Economic History   In his 2007 book The Conscience of a Liberal, Nobel Prize-winning economist Paul Krugmanprovides a detailed history of our transition from a great concentration of U.S. wealth at the top before the Great Depression, to a leveling of wealth disparity resulting from the New Deal and World War II, and then to a renewed inequality starting with the Reagan presidency.

Here are some highlights:
   

The Long Gilded Age (1875 to 1933)

About 32 American billionaires in 1932

Union membership: 11% of the work force

Top federal income tax rate: 24%

Percent of total income earned by the top 10%: 43.6%

Percent of total income earned by the top 1%: 17.3%

Key factors:

The Great Compression (1933 to 1980)

“Bourbon” Democrats
Political corruption
20% of voters disenfranchised
Conservative mentality

13 American billionaires in 1966

Union membership: 35% of the work force in 1945

Top federal income tax rate: 80% to 90%

Percent of total income earned by the top 1%: 9% (approx)

Median wage (2008 dollars): about $25,000

Key Factors:

World War II wage controls
Government support of unions
FDR’s New Deal
Republican acceptance of New Deal legislation

The Great Divergence (1980 to Present)

160 American billionaires in 2007.

Union membership: 12% of work force

Top federal income tax rate: 35%

Percent of total income earned by the top 10%: 44.3% in 2005

Percent of total income earned by the top 1%: 23% in 2010.

Median wage (2008 dollars): about $28,000

Key factors:

Globalization/off-shoring of jobs (Please see “The Betrayal of the American Dream” by Donald Barlett and James B. Steele, and “The Global Class War” by Jeff Faux)
Automation of jobs (Please see “The Lights in the Tunnel” by Martin Ford.)
Growth of a non-productive financial industry
Movement conservatism
Racism (civil rights backlash)
Runaway executive pay