average household income — that is, the average for all Americans — has steadily fallen year over year, from $53,644 in 2008 to just over $51,000 in 2012.
As might be expected, the numbers for wealth inequality track with income. According to studies cited in Bloomberg BusinessWeek, the top 1% of American households own 40% of American financial assets, and the top 10% own 75%. That leaves 25% for the bottom 90% of households. And the share of the nation’s wealth owned by the top .01% has quadrupled since the early 1980’s. Today, the top 16,000 households own $6 trillion in assets, more than the bottom two thirds of all Americans combined.
Pointing out these statistics isn’t sour grapes or sinful envy. Neither is it a wholesale indictment of capitalism. Between the 1930’s and the 1970’s the United States enjoyed a robust capitalist dynamism, but those 40 years also marked the highpoint of economic equality in America, resulting in the greatest middle class expansion in world history. (It is worth noting that government programs, including Social Security, the GI Bill, and the Federal National Mortgage Association (Fannie Mae), the Rural Electrification Act, the Tennessee Valley Authority, and the Interstate Highway System, fueled much of that expansion.)
Economic inequality chafes at Americans because many of them have lived long enough or know someone who remembers when things were different: when good jobs were available with protections for workers; when a family could buy a house, a car, and send three or four kids to college on one income; when a single pension or Social Security was good enough for retirement.
Those days are gone, thanks to globalization, the financialization of the economy, automation and regulatory capture, among other factors. It is possible to restrain or even reverse the growth of inequality without doing fundamental harm to the economy itself, but that task belongs to government, which itself is an object of fear for many Americans these days. Still, Catholic Social Teaching uniquely charges government with responsibility for ensuring the common good, and the common good demands that government encourage the best aspects of capitalism, which lead to creativity and growth, while ameliorating its worst aspects, which result in exploitation and injustice, and thereby injure human freedom and dignity.
In Centisimus Annus, Pope St. John Paul II called for a capitalism that operates under a “strong juridical framework which places it at the service of human freedom in its totality and which sees it as a particular aspect of that freedom, the core of which is ethical and religious …” Such a framework would recognize that while a certain degree of inequality is a natural and even desirable feature of the capitalist system, grotesque imbalances between the few haves and the many have-nots must be addressed.
In the absence of such a framework, there is much to fear for all Americans, including, perhaps especially, for the rich themselves.
Mark Gordonis a partner at PathTree, a consulting firm focused on organizational resilience and strategy. He also serves as president of both the Society of St. Vincent de Paul, Diocese of Providence, and a local homeless shelter and soup kitchen. Mark is the author of Forty Days, Forty Graces: Essays By a Grateful Pilgrim. He and his wife Camila have been married for 31 years and they have two adult children.