Every economic system has a degree of inequality built into it. For example, in a capitalist system, some members of society are private owners of capital, and others are not. We cannot deny that this leads to inequality, but capitalism is the best economic system this world has ever known. Thus, this type of structural inequality is of little concern. Yet inequality is not something to completely disregard.

Between 1945 to about 1973, the United States experienced a golden age of capitalism, during which the middle class swelled and economic growth was distributed fairly evenly across economic classes. During this time, economic inequality was markedly low. Wages as a percentage of the economy remained steady at about 50 percent, the top 1 percent of wage earners took home only 10 percent of the national income, and the top income tax bracket rate ranged from 70 to 90 percent.

But when you look at those same statistics today, you see a completely different picture. The middle class is shrinking at an alarming rate and economic growth distribution has been massively unequal with the top 1 percent capturing half of the overall growth between 1993 and 2007. Wages as a percent of the economy are at an all time low of 44 percent, the top 1 percent of wage earners take home about 24 percent of the national income, and the top income tax bracket rate is a mere 35 percent. In fact, our country is currently experiencing higher levels of income inequality than during the Great Depression according to economist Emmanuel Saez of the University of California, Berkeley.

These statistics are a part of a more long-term trend beginning around 1980. In the 1980s, supply-side economics came to the forefront, arguing that low taxes for the rich and deregulation would spur job creation and growth. But we have yet to see any empirical evidence in support of supply-side arguments. On the contrary, we have seen more substantial growth and higher employment when taxes were more progressive. This is evident in the 1945 to 1973 era as well as during the Clinton era. Rather than high growth and employment, the legacy of supply-side economics has been a steady rise in income inequality since 1979, according to the Center on Budget and Policy Priorities.

This massive growth in inequality is not inconsequential and may in fact be a threat to the stable functioning of capitalism. According to David Moss of Harvard Business School, income inequality may directly contribute to the creation of financial crises. He states that “inequality may … push people at the bottom of the ladder toward choices that put the financial system at risk” and may put “too much power in the hands of Wall Street titans, [which] enables them to promote policies that benefit them – like deregulation – that could put the system in jeopardy.” In 1928, the top 1 percent received 23.94 percent of national income, while in 2007, those earners received 23.5 percent. Both eras had the greatest income disparities in approximately 100 years, both experienced massive financial crises. Coincidence? Doubtful.

Similarly, economist James K. Galbraith of the University of Texas argues that finance is the driver converting inequality into instability. “Those without money, made more numerous by inequality, find little recourse but to take out a loan. Their urges and needs, for bad and for good, are abetted by the aggressive desire of those with money to lend. But if the balloon of debt explodes, as it did in 2008, it disrupts an entire economy built upon a financial house of cards. And not merely in the United States: debt crises and economic instability can be linked to inequality all around the world.”

Contrary to the shameful rhetoric of certain media outlets and politicians, the desire for a more progressive tax code is not “class warfare” or bleeding heart liberalism. It is derived from legitimate concerns about inequality with foundations in both history and economics. The roots of this problem lie in misguided economic policy, and the solution lies in a shift away from the orthodoxy of supply-side economics that continues to hold influence to this day.

Steven Monacelli is a Communication junior.

He can be reached at [email protected]