For the past four decades, wealth inequality has continued to divide Americans into two categories: the haves and have-nots. Race certainly matters--from 2004 to 2010, whites lost 1 percent of their wealth while Latinos lost 25 percent, and blacks lost 23 percent, for instance.
A new documentary "Inequality for All" explores the fundamental reasons why in the last 40 years a small number of "haves" have managed to capture an ever-growing share of the nation's wealth, creating one of the biggest imbalances in the world. Using former Secretary of Labor and professor Robert Reich as a focal point, the film, which won a special jury prize at the Sundance Film Festival, simplifies and humanizes the concept of the wealth gap. Here, filmmaker Jacob Kornbluth gives his take on why it keeps widening:
Over the past 40 years, the gap in wealth distribution in this country has grown exponentially. Why has the middle-class turned into the working poor and why is the majority of wealth concentrated among the top 1 percent?
The fundamental reasons for why this gap has happened aren't a mystery--globalization and technology. As globalization and technology have grown, we've seen manufacturing going away. Anything that has repetitive tasks in work that used to be the foundation of middle-class jobs has really been hacked by this globalization and technology wave.
From 1945 to 1975, the top one percent took home between 9 to 11 percent of income. In the two peak years in the last century, 1928 and 2007, it was over 20 percent. Both of those years [preceded] the biggest economic crashes of the last century.
Talk about how you illustrate the gap in "Inequality for All."
In the film, we have a millionaire who made between $10 to $30 million last year and he only paid 11 percent in taxes. Then we have a middle class family that makes a five-figure salary who paid over 30 percent in taxes. We show them in the same two-minute stretch of the film. What that shows is that there are supposed to be rules to this free market system, but those rules are stacked in favor of the rich. If you look at history, over time as the rich get richer and the income gets concentrated in the hands of fewer people, the tax rates on those same people decrease. So what we've seen is globalization and technology starting the trend and then we've seen, as that money gets centralized in fewer hands, it has given them the political power to rig the rules in the favor of the people who are winning the globalization and technology battle.
What statistic shocked you the most as you made the film?
The top 400 richest Americans now have the same wealth as the bottom 150 million Americans put together. That is half of the country.
Explain what you call the suspension bridge graphic.
The biggest graph in the film about the widening income gap is called the suspension bridge. It shows income distribution since they started keeping tax records in 1913. It peaks in 1928 [and] a year later the Great Depression occurred. All through the middle there is this sink. It starts climbing again during the mid-1970s until it peaks again in 2007--just before the Great Recession of 2008. When the rich has all this money in their hands, the middle class doesn't have the purchasing power to buy anything. You also see growth in the financial sector. The wealthy have to find a place to put their money. They seem to always chase the same stuff like housing, gold and speculative instruments, and it creates this boom and bust cycle. So what happens is the top 1 percent gets all the money and invests it in one place. At the same time the middle class is getting squeezed and running out of money. This particular formula seems to blow up into a Great Depression or Great Recession. The research just came out for 2012 and the income inequality is worse than those two years. Since the crash, 95 percent of the gains have gone to the top 5 percent. We're seeing this problem getting worse and worse. It is scary for what it means for our economy moving forward.
How does your film show the broad swath of inequality across class lines?
Well, we have representatives from those in the middle class and those aspiring to get into the middle class. We don't focus on the poor necessarily. We talked to one woman who worked at Costco making $21.50 an hour, but she was trying to support her family. When I was driving around with her, she only had $25 in her savings account. We also talked to this couple named Deborah and Moises Frias. They have jobs and a decent income, but they can't save a dime. I think these experiences are things that most people I know can relate to. These are people who are working what we once considered middle class jobs and they're suffering. They have so much economic uncertainty.
We tried to reframe the story so it's not necessarily about the rich or the bad guys. What we have is a real structural problem in the economy. As income inequality widens, you can see we don't have equality of opportunity anymore. The ladders of climbing up the next economic rungs are growing farther apart. In the U.S., 42 percent of children who are born into poverty will stay in poverty. The American dream is becoming harder to reach. The people who I interviewed heard buzz words like 99 percent or 1 percent, but I don't think they fully understood the problem. And I didn't either, until I started making this movie. For the average citizen, it's hard to see how all these dots are connected. People understand the system is messed up, but not sure how we got here. What is great about this movie is we use history to connect the dots and it puts things into perspective.
Visit inequalityforall.com to find out if "Inequality for All" is screening in your area.