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1. Income Inequality in the United States Today

In the first chapter, I analyze the evolution of income inequality in the United States from the 1950s to present. I show that the share of national income going to those in the upper reaches of the income ladder has increased considerably over the last three and a half decades, and that explaining the change in top wage incomes, which predominately include non-financial sector CEO remuneration, is central to understanding these changes. I also explore SBTC—the theory for the increase in wage income inequality which, at least until recently, has the most support from economists and politicians. Finding SBTC lacking, I end the chapter in suspense.

2. Changing the Rules of the Game

In Chapter 2, I show that employer—employee relations changed over the last three and a half decades to the detriment of unions and labor in general. As a result, the counter balances to employers wage setting power decreased enabling business to drive a larger and larger wedge between the wage and marginal product of the average worker. The consequent increase in profits and the destruction of groups that would object to higher remuneration for those at the top made possible and probably explain the increase in CEO vis-à-vis workers’ compensation in the non-financial sector. Income inequality that exists from this dynamic is not only the result of different social worth but also the result of intra-firm power dynamics.

3. The Gilded Age, the Progressive Era, and the New Era

In Chapter 3, I show that the period spanning from the Gilded Age through the New Era in the United States was remarkably similar to the present. During both periods, laws and institutions were oriented to embrace inequality by empowering minority groups in the economic realm at the expense of the majority. At the same time, the income share of the top 1 percent was rising, and, at the end of both of these periods or the farthest point reached during the current period, the income share of the top 1 percent reached a high in US history. Nondemocratic elements of our political system played a central during both periods.

4. Mixed Results

In Chapter 4, I examine the general trend in the orientation of laws and institutions and income inequality in the United States from the mid-1930s through the 1970s. I show that laws were made more inclusive and the income share of the top 1 percent decreased. I then explore some explanations for why we have such a mixed record of ameliorating income inequality in the United States when our political system is based on equality. Finding these explanations lacking, the chapter ends in suspense.

5. Cycles of Policy Control

In Chapter 5, I put forward another explanation for the mixed performance of our political system in addressing income inequality. This explanation integrates ideas from game theory and behavioral economics and can better explain the long-term trends of the income share of the top 1 percent and the orientation of laws and institutions in the United States since the 1870s.

6. How Do We Fix It?

In Chapter 6, I use the understanding of the history of laws and institutions, inequality, and our political system to explore some ways to confront inequality at the present.


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