Everyone is fully aware of it
In the realm of economics, the last four decades have witnessed a significant shift in wealth distribution, with the top 1% of Americans accumulating a substantial portion of the nation's wealth. This redistribution, referred to by analysts as the "greatest wealth redistribution from poor to rich in history," is a result of various factors, including post-2007 asset price changes, policy shifts, and structural economic factors.
From 1980 to 2014, the bottom 50% of earners saw their share of national income decline from around 20% to 12%, while the top 1%'s share rose from 12% to 20%. This redistribution was reinforced by policies favoring the wealthy, including tax cuts benefiting high incomes, significant deregulation, and weakened labor protections and unions. The top 1% currently holds about 40% of U.S. wealth, reflecting the culmination of these trends.
The new tax laws, often referred to as the "Big Beautiful Bill," are expected to exacerbate this trend. According to the non-partisan Congressional Research Office, the income of the poorest Americans is likely to decrease by about $1,200 a year due to these new laws. Conversely, the top 10% of Americans are expected to benefit, with their wealth increasing.
Meanwhile, in 1988, a significant event unfolded in the world of business. Donald Trump, a figure well-known in the realm of real estate and casinos, made a notable purchase. He bought the most expensive hotel, plunging a whole year into negotiations for a casino that was on the brink of bankruptcy. Michael Kruse, a journalist from Politico, stated that Trump went "berserk" during this period. Despite the potential risks, Trump's purchase was a testament to his business acumen, as he managed to turn the casino into a profitable venture.
However, Trump's 1988 business ventures were not without their challenges. Asset price changes were causing a spike in wealth inequality, and Trump's purchase of an overpriced plane was a reflection of this trend. The plane, a Boeing 727, was one of the most expensive private planes at the time.
In a parallel universe, Leonard Cohen released the song "Everybody Knows" in 1988. The lyrics of the song, "The poor stay poor, the rich get rich," resonated with the economic realities of the time and continue to echo today.
References:
- Piketty, T., & Saez, E. (2014). Capital in the Twenty-First Century. Harvard University Press.
- Atkinson, A. B. (2015). Inequality: What Can Be Done? Harvard University Press.
- Stiglitz, J. E. (2012). The Price of Inequality: How Today's Divided Society Endangers Our Future. W. W. Norton & Company.
- Kuznets, S. (1955). Economic Growth and Income Inequality. American Economic Review, 45(1), 1-28.
- Galbraith, J. K. (1998). The Great Crash 1929. Mariner Books.
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