Share of Income Gains by Quintile - Great Depression til Now

Salary does not factor into the computation. The pure definition is GDP / Hours worked, though as with all statistics, there may be proxy variables and other subtleties involved.

So by extension the current economic downturn is entirely Obama's fault then? Also, take a close look at the graph. Looks like things had stagnated in the early 70s, but the graph does it's best to hide that. Now off we go to partisan bickering about who was in control of congress blah blah... it's all BS.

It's silly for presidents to talk about the economy at all. It's just another way for politicians to take credit for something they aren't responsible for. Do you think Jobs and Woz started Apple because of Carter's economic policy? Do you think Microsoft succeeded because of Reagan?

Of course some companies rise and fall along with the political tides. I suspect that a close examination of these will show you bribes and favoritism. Companies that depend on a favorible political climate probably aren't adding to the economy at all.

Short story of American inequality:

The economic growth since 1978 was, for the most part, produced by the efforts of 10% of the population. It's true. I'm a leftist and I must admit that. That's not to say that the other 90% aren't working hard and don't deserve to share in the gains-- they obviously do-- but those gains are coming from a small percentage of people. Many, many people work hard and deserve to have good lives for their contributions, but only a small percentage (about 10%) have the vision and creativity to push increases in productivity; most are adders, few are multipliers. (Many politicians are dividers, but that's another story.)

The gains since 1978 have also gone to about 10% of the population. Maybe less than 10%. Income gains are often offset by increased prices in the Unholy Trinity (housing, healthcare, education costs). Quality-of-life is also going down in most of the country, and where it is increasing, housing prices are absurd even now. Even people whose incomes appear to be growing may be back-sliding. 10% is generous, but let's go with that.

These 10%'s are not the same people. (Sorry Randists). There's an intersection, but it's only about 2-3%, or 20-30% of each. The first set are the creators of wealth; the second set are capturing it. Startup entrepreneurs are in the first set (and if lucky, can enter the second). Well-connected rich kids who get staffed in private equity firms at 24 and get to draw fees from economic activity regardless of success or failure (because they'll get promoted anyway) are in the second set.

Speaking as a member of first set, and merely on the outer fringe of the second, I'll just say this: no, the economic inequality in the U.S. is not desirable. Hard-line egalitarianism is ridiculous and impractical, but inequality has gone too far. We know this. The only reason the absurdity is tolerated is that 10-30% of the American population has insane social and religious views that impel them toward degenerate politics.

Anyone who has traveled within Latin American societies at all can see where we're heading, and it's not pretty: massive economic inequality, desperate rural poverty, and intractably corrupt, plutocratic governments.

I'll admit that what bothers me most about American equality is what drives the inequality. If it were reflective of differences in intelligence, the correlation (slight, but positive) between intelligence and empathy would be enough to impel this smart-and-rich elite to give back to the rest. At least, I hope that is the case. But that's not what we have. Increasingly, the inequality comes from inherited social connections (social capital, mostly implicitly generational) and, as it increases, the decision-making elite becomes more insular. That's what most elites become (generational social networks, not meritocracies) and that is how societies rot.

You're right that it's gotten harder for blue-collar people in the US. However, those jobs now belong to former subsistence farmers in developing nations, so it's quite different when you look at it from a global perspective.

There's an assumption here that being richer just lets you buy more stuff and services.

Wealth, however, is power. While Bill Gates may be no more capable than me at driving faster on the 101, I definitely can't pay a lobbying firm 10 million dollars a year to make sure government policy serves my interests, or secretly pay to have lies told in support of my cause by dozens of seemingly credible people.

Some proportion of people are going to be unethical, and there are > 400 billionaires in the U.S.

The conveniently ignored problem with rising wealth inequality is the power imbalances it creates, and the strong reinforcing feedback loops it enables.

[edited to fix typo]