So the New York Times reports today that America’s ultra-wealthy may finally be feeling the pinch. "After 30-Year Run, Rise of the Super-Rich Hits a Sobering Wall," David Leonhardt and Gerladine Fabrikant tell us, profiling the likes of John McAfee, the once-flush founder of the antivirus software company that bears his name, now down to a mere $4 million in net worth.
I suspect not many readers will pity McAfee, nor should they, since until recently the rich – and the super-rich in particular – literally never had it better. The economist Emmanuel Saez recently crunched the numbers and found that, between 1993 and 2006, roughly half of overall income growth in the United States went to the top 1 percent of all families. During the expansion overseen by George W. Bush, "the top 1 percent captured almost three-quarters of income growth." This was great for ordinary Americans, Republicans told us at the time. Except that it wasn’t. According to Saez, real income for Americans in the bottom 99 percent increased by just 1.1 percent per year between 1993 and 2006. During the Bush expansion, it fell below 1 percent per year.
The shrinking fortunes of multi-millionaires such as McAfee will likely make it easy for Barack Obama to boast, in 2012, that he oversaw a decrease in the level of inequality. But the boast will be hollow if the main cause is merely that people who were extremely wealthy in 2006 became slightly less wealthy six years later. It will mean something only if policies are designed to benefit the vast number of Americans whose fortunes did not rise in tandem with the stock-market in recent years. A good place to start would be to quell the growing signs of unrest among the administration’s progressive supporters by passing meaningful health-care reform.