But for the vast majority of Americans another story is emerging: a new plutocracy of the super-wealthy is cementing its hold on the top. Only low-wage jobs that lead nowhere are being created at the bottom. The middle class is being hollowed out because manufacturing has been shifted out of the country and new digital technologies, which outsource white-collar work to consumers themselves, are replacing everyone from bank tellers to airline clerks.
Just connecting the dots with a few key figures paints a clear picture of how America’s foundational creed is under assault.
Today, as Chrystia Freeland reports in her new book, “Plutocrats,” the top 20 percent of Americans own 84 percent of the wealth. And since the financial crisis of 2008, that skewed distribution has sharpened. While the income of the 99 percent has “recovered” by 0.2 percent, for the top 1 percent it has improved by 11.6 percent.
While the top 1 percent of Americans held 8 percent of all income in 1975, by 2012 they held 22 percent.
Much of this wealth is concentrated in the so-called super-elites of finance, who claimed 40 percent of all corporate profits at the time of the 2008 crash. The “winner-takes-all” access to global markets is another key factor.
At the same time, American manufacturing has dropped to less than 12 percent of GDP from about 24 percent over the past two decades. Nearly a quarter of those jobs were lost as a result of trade with China. (Through a series of policies that invest in skills and training while trimming benefits to make them sustainable, Germany has retained a competitive manufacturing base of 24 percent of GDP that is the key pillar of its middle class prosperity. China is one of the biggest markets for its machine tools and well-known engineering prowess.)
As Eric Brynjolfsson and Andrew McAfee argue in their recent study, “Race Against the Machine,” the spread of digital technology throughout the economy, reorganizing nearly every pattern of work, has increased productivity enormously while not adding new jobs. The “ghost of the ATM machine” haunts the white-collar middle class.