The Historical 1%
Every April Forbes releases its list of the wealthiest Americans. This annual event is followed by another annual event in which liberal commentators note that the gap between the wealthiest Americans and the poorest Americans has grown ever wider. One of the favorite cited statistics focuses on what the 1% of the population owns vs. the rest of the population. Because this figure has such play in the media it is not surprising that protesters should use this as a rallying cry. There is a widespread belief that today’s figures are so eggregious as to be justification for a wholesale redistributionist policy yet history, as always, is an inciteful teacher.
The 1% figure historically has been between 20 to 40%. Yet as the chart below shows, the historical percentage today is not fundamentally different than it was 90 years ago.
Share of wealth held by the Bottom 99% and Top 1% in the United States, 1922-2007.
Year | Bulk of the Nation | Top 1% |
1922 | 63.3% | 36.7% |
1929 | 55.8% | 44.2% |
1933 | 66.7% | 33.3% |
1939 | 63.6% | 36.4% |
1945 | 70.2% | 29.8% |
1949 | 72.9% | 27.1% |
1953 | 68.8% | 31.2% |
1962 | 68.2% | 31.8% |
1965 | 65.6% | 34.4% |
1969 | 68.9% | 31.1% |
1972 | 70.9% | 29.1% |
1976 | 80.1% | 19.9% |
1979 | 79.5% | 20.5% |
1981 | 75.2% | 24.8% |
1983 | 69.1% | 30.9% |
1986 | 68.1% | 31.9% |
1989 | 64.3% | 35.7% |
1992 | 62.8% | 37.2% |
1995 | 61.5% | 38.5% |
1998 | 61.9% | 38.1% |
2001 | 66.6% | 33.4% |
2004 | 65.7% | 34.3% |
2007 | 65.4% | 34.6% |
Sources: 1922-1989 data from Wolff (1996). 1992-2007 data from Wolff (2010).
And what was it in the 19th century, prior to progressive government? Records are not as accurate as today but generally less then the rates of today. So these figures can lead to two obvious conclusions. The tax cuts of the Reagan and George W Bush administrations, recently cited as for “millionaires and billionaires,” did not have a long term affect on the accumulation of wealth. What so often goes unsaid is the relationship exploited by the wealthy through their government relationships.
It is also pointed out that historically the rates were the lowest in the 1970s. Yet this was a period of stagflation and economic mailaise. In the past 60 years there have been two great periods of job creation. The first in the 1980s under Republican Reagan. The second under Democrat Bill Clinton. 22 million new job were created in the 1990s which featured the highest 1% wealth rates since 1929, higher than under Reagan or George W Bush.
It is also important to look at the backdrop of the past 90 years. During that period the United States experienced prosperity on level never before duplicated in the history of mankind. Not the Romans, not the Chinese in the Han Dynasty, not the Indians under Ashoka, not even the British in the 1800s. This was unprecedented and one of the mainstays of this prosperity was government policies that encouraged opportunity and focused on economic mobility, not engineering wealth redistribution.
Now is the Conservative Historian satisfied with these statistics? We are not and in fact we would like to see greater distribution. Yet the drive to bigness compelled by government interventions and regulations favors – the big. Look at Obamacare. Since its inception in 2010 we have seen bigger IT providers, bigger insurance companies, and bigger hospital groups. And who do we think is favored by these consolidations? Not small businesses. Instead of thinking the latest redistribution through the tax code, legislators may want to consider leveling the playing field by NOT enacting yet another law and regulation.