Abstract

The Death of Horatio Alger

The author argues that current public policy in the U.S. has helped to widen the gap between the rich and the poor. America looks more and more like a class-ridden society. And guess what? Our political leaders are doing everything they can to fortify class inequality, while denouncing anyone who complains-or even points out what is happening--as a practitioner of "class warfare." Thirty years ago we were a relatively middle-class nation. It had not always been thus: Gilded Age America was a highly unequal society, and it stayed that way through the 1920s. During the 1930s and '40s, however, America experienced a drastic narrowing of income gaps, probably as a result of New Deal policies. The economy was hardly egalitarian, but a generation ago the gross inequalities of the 1920s seemed very distant. Now they're back. Over the past generation upward mobility has fallen drastically. Very few children of the lower class are making their way to even moderate affluence. Suppose that you actually liked a caste society, and you were seeking ways to use your control of the government to further entrench the advantages of the haves against the have-nots. What would you do? One thing you would definitely do is get rid of the estate tax, so that large fortunes can be passed on to the next generation. More broadly, you would seek to reduce tax rates both on corporate profits and on unearned income such as dividends and capital gains, so that those with large accumulated or inherited wealth could more easily accumulate even more.