The average wealth of the bottom 90%has plummeted since the recession, without recovering. The wealth of the top 1%, by contrast, is almost back to its pre-recession levels. (Saez & Zucman)
Saez, an economics professor at UC Berkeley, wrote his paper with Gabriel Zucman of the London School of Economics. They draw a line from "Capital in the Twenty-First Century," the magisterial book by Saez's frequent coauthor, Thomas Piketty, to point out that increasing concentration of wealth feeds on itself, becoming ever more difficult to remedy.
Saez and Zucman find that current sharp uptrend in wealth inequality is a reversal of nearly a half-century of "democratization of wealth," from the 1930s through the late '70's. At that point, the top 0.1% owned 7% of total U.S. household wealth. By 2012 that figure was 22%. Today their share of wealth is "almost as high as in the late 1920s." And we know how that turned out.
lRelated A conservative judge's devastating take on why voter ID laws are evil
THE ECONOMY HUB
A conservative judge's devastating take on why voter ID laws are evil
Among the fascinating findings of Saez and Zucman is how thoroughly the top 0.1% have shouldered their way past all other households. While their wealth share was soaring, that of the next 0.9% was barely growing, while that of the "merely rich" -- those ranking in the top 10% but below the top 1% -- actually shrank.
But the real victims of the trend are in the middle class. Saez and Zucman show that the wealth share of the bottom 90% grew from the 1920s through the mid-1980s, from 15% to 36%. Mostly the gain was due to the growth of pensions and of homeownership. Since the mid-1980s, however, middle-class wealth has evaporated, falling to 23% in 2012, about the same level as 1940.
The authors blame sharply rising indebtedness; of course, the collapse of stock values and home prices in recent years has destroyed a huge volume of middle-class wealth. The top 1% have been able to recover much of that wealth, but the bottom 90% have continued to fall. They've continued to be dependent on housing and pensions, both of which have continued to be very shaky legs of a tottering stool.