If we take on our rich, we can recreate that success.
Amazing things can happen when societies realize they don’t need an awesomely affluent.
What sort of amazing things? Take what happened in the United States between 1940 and 1960, as economists William Collins and Gregory Niemesh do in a just-published research paper on America’s mid-century home ownership boom.
Over a mere 20-year span, the United States essentially birthed a “new middle class.” The share of U.S. households owning their own homes, Collins and Niemesh note, jumped an “unprecedented” 20 percentage points. By 1960, most American families resided in housing they owned “for the first time since at least 1870” — for the first time, in effect, since before the Industrial Revolution.
This home ownership surge, the two economists posit, rested in large part on an equally unprecedented surge in worker earnings. Median annual incomes in the mid-20th century “nearly doubled” as Americans realized wage gains “both large on average and widely spread across workers.”
What brought about that “widespread and sustained” income increase? That question lies beyond the scope of the new Collins-Niemesh paper. But not much mystery surrounds the answer. The years of the mid-20th century saw a vast expansion of America’s trade union movement. The struggles of new unions — in major basic industries ranging from auto to steel — essentially forced the rich to begin sharing the wealth workers were creating.
This massive mid-century labor surge also changed the face of the American political landscape. Union-backed lawmakers put in place programs that helped average families on a wide variety of fronts, everything from making mortgages affordable to expanding access to higher education.
And those union-backed lawmakers helped pay for those new programs by raising taxes on America’s wealthiest. Between 1940 and 1960, the federal tax rate on income in the nation’s top tax bracket consistently hovered around 90 percent.