• The decline of labor unions. The Reagan administration was hostile to organized labor right from the start, firing thousands of federal airline traffic controllers who had gone on strike in 1981. This sent a clear signal to management everywhere that the administration would do everything in its power to weaken labor's ability to demand higher wages. The resulting low labor costs increased profits, enabling owners to award the "super CEO salaries" for which the 80s became notorious.
• Freezing the minimum wage, which allows inflation to effect a wage cut over time.
• The deregulation of business. Without the costs of complying with safety and pollution laws, deregulated businesses increased their profits, which allowed greater executive salaries. Deregulation not only funneled wealth upward, but also put the consumer and the worker in harm's way.
• Corporate mergers and takeovers. The Reagan Administration tried to deregulate as many anti-trust laws as possible, and did not enforce the ones it had. As a result, the 80s saw a record flurry of corporate mergers and takeovers, both friendly and hostile, which concentrated wealth in the hands of fewer and fewer owners.
• An orgy of debt. The banking community -- one of the richest segments of our society -- collects interest on private, corporate and national debt, all of which reached record levels during the 80s. U.S. bankers will collect the interest on three-fourths of the $5 billion national debt.¹ Combined home mortgage and consumer debt rose from $1.3 trillion in late 1980 to $3.4 trillion at the end of 1990, about 50 percent faster than the consumer's income grew.²
• Shifts in government spending. Between 1980 and 1987, federal spending on human resources was reduced from 28 to 22 percent of all outlays, while defense spending rose from 23 to 28 percent.³ This redistributes income because human resources tend to go to the poor, whereas defense spending goes mostly to educated professionals in the military/industrial complex. (This may surprise those who assume that defense spending mostly goes to the paychecks of military personnel. In 1985, this accounted for only 28 percent of all defense spending.⁴)

Taken together, these many mechanisms represented a full-scale effort to redistribute wealth to the rich. When liberals point this out, conservatives often accuse them of engaging in "class warfare." However, it should be obvious which class is successfully lobbying at the other's expense.

Return to Overview
___________________
¹ That roughly a fourth to a fifth of our growing debt is owed to foreigners can be found in Benjamin Friedman, Day of Reckoning (New York: Random House, 1988), p. 38.
² Federal Reserve Board figures cited in "85% of All Households in Hock," Investor's Daily, April 22, 1991.
³ Center on Budget and Policy Priorities.
⁴ U.S. Office of Management and Budget, Historical Tables, 1985.