During the 1930s and 1940s the New Deal did much to narrow income gaps, reduce social inequality, increase social mobility, and swell the middle class:
- strong unions
- taxes on inherited wealth
- taxes on corporate profits
- taxes on high incomes
- close scrutiny of corporate management
In recent years these have all been attacked and curtailed. Public policy has been altered to shift the tax burden to the payroll tax and other evenue sources that bear most heavily on people with lower incomes.
Results:
- The poor are more likely to stay poor, no matter how hard they work. Evidence: a survey cited in "Business Week" (late 2003) showed that in 1978, adult men whose fathers were in the bottom 25% of population as ranked by social and economic status, 23% had made it into the top 25%; today this has dropped to 10%.
- Public spending has been reduced on healthcare for the poor, on public education, and on state aid for higher education. This makes it more difficult for people with low incomes to climb out of their difficulties and acquire the education essential to upward mobility.
- Thomas Piketty (worked with Emmanuel Saez researching income distribution and using data from the Congressional Budget Office): Current policies will create "a class of rentiers in the US whereby a small group of wealthy but untalented children controls vast segments of the US economy and penniless, talented children simply can't compete." We will suffer from injustice and vast waste of human potential.
- Other important researchers: Claudia Goldin and Robert Margo; economist Kevin Murphy; many more.
- Goodbye, American Dream.