Income inequality

Kevin Drum points us to income inequality since 1982 with charts from Business Insider. One of the charts is savings by household. Household savings dropped dramatically with the Reagan debt machine. Why is that? Mainly because the wealthy collect interest by loaning to Congress. Productivity growth stops as government debt crowds out the private sector. Over the same period we would see financial (interest) income grows for the large firms and corporation.

Total state, local and federal, spending as a share of national production

From Chris Chantrill's web site.

Notice that the total government share started rising under Reagan. Clinton brought the share back down using the progressive income tax. Lil Bush sent it straight up again, as is Obama.

So the poor get stuck in the Dead Zone, there is not enough private sector investment to pull the worker out of the dead zone. Government welfare support is a very inefficient substitute for real wages. The debt that Obama is building up will make this problem worse.

As government takes up more of the private sector, it is the poor and middle class who lose wealth.