Our Common Good

In recent years, the fortunes of the Romneys and others in their cohort have continued to grow, notably diverging from the majority of Americans still struggling to deal with a slow economic recovery. The Occupy Wall Street protestors stole the media spotlight this past fall by creatively highlighting these discrepancies. President Obama has taken notice and, as reflected in his State of the Union address, is teeing up inequality as a major a campaign theme for the fall. But it is not enough to highlight the gap between incomes of the top 1 percent and the bottom 99. What’s more alarming—and consequential over the long haul—is the growing concentration of wealth.

Recent estimates indicate that the while the top 1 percent earn 21 percent of the nation’s income, they possess 36 percent of total wealth. This is especially troubling because while income dictates how well you’re doing today, it is access to wealth (the stock of resources) that creates opportunities down the line. Wealth is the bundle of assets, investments, and savings that can be tapped at will and strategically deployed. Or it can be used to generate passive income, as it does for the likes of Warren Buffett and Mitt Romney. There certainly is an issue of fairness to consider. As long as we tax capital gains and dividends well below the tax rate on earnings gained through work, the rich will have much lower marginal tax rates than the rest of us.

There’s an additional problem. When wealth is concentrated at the top, there are fewer resources available for everybody else to deploy. And in the aftermath of the Great Recession, we should recognize that the dynamics of inequality have fundamentally shifted.