CHARLESTON, W.Va. -- Affluent families always have used their wealth and privilege to acquire still more assets -- but "winner take all" forces of the new information-based economy enrich the top elite at ever-faster pace.
That's the conclusion of one of America's top economists, Princeton professor Alan Krueger, outgoing chairman of President Obama's Council of Economic Advisers. In a major address last month, he said:
"Economic forces have been chipping away at the middle class for decades.... We are increasingly becoming a winner-take-all economy. ... Over recent decades, technological change, globalization and an erosion of the institutions and practices that support shared prosperity in the United States have put the middle class under increasing stress. The lucky and the talented -- and it is often hard to tell the difference -- have been doing better and better, while the vast majority has struggled to keep up."
Dr. Krueger didn't specifically blame the Reagan-Bush administration, but he said repeatedly that the 1980s brought far-reaching changes helping the rich.
The presidential adviser coined the phrase, "the Great Gatsby curve." In the 1920s, he said, the top 1 percent of Americans grabbed a lion's share of wealth -- until the stock market crashed and the Great Depression struck. Later, America enjoyed growing equality between classes "and the patriotic spirit that we're all in this together." He continued:
"After World War II, a social compact ensured that workers received a fair share of the gains of economic growth. This was enforced by labor unions, progressive taxation, a minimum wage that increased in value, anti-discrimination legislation and expanding educational opportunities. ... The expanding middle class in the postwar period was a defining experience for our country. ...
"Beginning in the 1980s, however, inequality rose significantly in the United States, with the share of income accruing to the top 1 percent rising to heights last seen in the Roaring '20s."
Today, he said, the snowballing computer revolution undercuts ordinary jobs and gives enormous opportunity to the top few who manipulate information to make money.
"In 1965, the average CEO earned about 18 times as much as the average worker," he noted. "Now the average CEO earns over 200 times as much. ... As a result of the rise in inequality, the amount of income going to the top 1 percent of American families has increased by about $1 trillion on an annual basis. ... Given the dramatic rise in inequality in the United States over the past three decades, we have reached the point where inequality is hurting the economy."
He quoted Theodore Roosevelt: "On the whole, and in the long run, we shall go up or down together."
Dr. Krueger recommended boosting the minimum wage, expanding college opportunity and taking other steps to give the working class a better chance. He quoted President Obama:
"We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by, or we can restore an economy where everyone gets a fair shot."