Why is the American Dream something that fewer and fewer of us can actually achieve? Hint: It's got something to do with being born this way...
Ezra Klein: We hold these truths to be self-evident: that all men and women are created equal. [Laughter]. Just kidding. Sorry, no, we're not all equal. Inequality, in fact, gets a ton of attention these days. President Obama called it "the defining challenge of our time." But usually when people are talking about inequality, they're talking about income inequality, and income inequality is at it's highest level since the Great Depression.
Before taxes, the top 1% take home about 22.5% of the national income. Really think about that for a second. For every dollar paid in income in the U.S., almost a quarter of it goes to the top 1%. A quarter. But income inequality is actually less dangerous than it's cousin, wealth inequality. The top 1% hold closer to 40% of the national wealth. So for every dollar in American assets - that's homes, stocks, savings, all of that - 40 cents of it belongs to the top 1%. The top 1% holds more wealth in America than the bottom 90% combined. And all of that money gets passed on to their children, or their children's children. Take the heirs of Sam Walton, founder of Walmart, none of them have founded Walmart and none of them were created equal either, but 6 of them have more than $140 billion in wealth.
That makes those 6 people wealthier than the bottom 40% of Americans combined. Now, there's an upside to income inequality: that income is a reward for people who start good businesses and do great things. You can like income inequality or you can hate it, but at least it is money they earn in this lifetime, usually through talent or risk or hard work, with a little bit of luck. But wealth inequality isn't like that. That money is often a reward for people who are just born into the right family, and it's money that keeps growing.
That's a big point economist Thomas Piketty makes in his new book "Capital." The regular return on capital, or wealth, is higher than the growth rate of the overall economy. So people who have a lot of wealth, they tend to get wealthier and wealthier and wealthier, unless something like a war or a tax intervenes. One way to get wealthier, by the way, is politics. A lot of money can buy you a lot of political speech, particularly now that the Supreme Court is systematically dismantling the limits on buying political speech. This is a doom loop of oligarchy: wealth buys power, power buys more wealth, more wealth means more power, more power means more wealth, and on and on and on we go until a very small fraction of the population has a whole lot of the power and a whole lot of the money. So no, all men and women aren't born equal. Some are born really, really wealthy.