CHARLESTON, W.Va. -- New IRS figures show that earnings by the top 1 percent of Americans leaped more than 20 percent in 2012, while those of the remaining 99 percent rose merely 1 percent. Since the Great Recession ended in 2009, the rich few have grabbed 95 percent of all income gains.
Nobel Prize-winning economist Paul Krugman says most of the wealth goes to the top one-tenth and even one-hundredth of one percent. "We really are talking about the flourishing of a tiny elite."
American inequality keeps worsening -- and now it matches the runaway level of the 1920s just before the historic stock market collapse.
Why are the rich vaulting ever-higher, while the rest of America lags in limbo? Part of the explanation lies in the high-tech, computer-driven "Information Age" that enables privileged and well-educated people to reap enormous rewards not available to less-fortunate folks.
"Globalization and changes in technology have been a boon to owners of capital, allowing them to decrease their labor costs, boost productivity and, in many cases, replace workers' jobs entirely," Benjamin Landy of the Century Foundation says.
Researcher Malcolm Gladwell says inequality has soared because the new economy is a gold mine for "superstar lawyers and math whizzes and software entrepreneurs." Two business professors, Steven Kaplan of the University of Chicago and Joshua Rauh of Stanford, wrote:
"One explanation that has been proposed for rising inequality is that technical change allows highly talented individuals, or 'superstars,' to manage or perform on a larger scale, applying their talent to greater pools of resources and reaching larger numbers of people."
Columbia University professor Thomas Edsall put this question to several experts: Can the government actually do anything about inequality? Edsall cited his findings in Tuesday's New York Times.
Some experts responded that raising income taxes on sky-high incomes would help close the gap -- but this probably won't happen because wealthy interests have "captured" both major political parties, even Democrats who focus chiefly on the middle class.
"The rich have been able to use their resources to influence electoral, legislative and regulatory processes through campaign contributions, lobbying and revolving-door employment of politicians and bureaucrats," says a paper titled "Why Hasn't Democracy Slowed Rising Equality?" published in the Journal of Economic Perspectives.
The paper blames part of the rich-poor gap on "lower marginal tax rates for those with high incomes and deregulation of a number of industries. Financial deregulation, in particular, has been a source of income inequality."
From all this, it seems evident that market forces of the snowballing knowledge-based economy are boosting the elite who know how to exploit high-tech changes. Government is partly powerless to prevent worsening inequality -- but at least politicians shouldn't support policies that give ever more loot to the top 1 percent.