The divergence of economic performances
The divergence of economic performance between average Americans and the elite over time
There has been great unrest in US society in recent years. We will look at the change of US population, economy and stock market values since 1960 to gauge the cause of this unrest. The follow table is the US proportions of the world in population, economy and market from 1960.
Year | Proportion of US population (in percentage) | Proportion of US GDP | Proportion of US Market Value |
1960 | 6.032 | 0.33 | 0.5 |
1965 | 5.774 | 0.3 | 0.45 |
1970 | 5.645 | 0.28 | 0.4 |
1975 | 5.401 | 0.24 | 0.35 |
1980 | 5.148 | 0.22 | 0.4 |
1985 | 4.991 | 0.23 | 0.42 |
1990 | 4.764 | 0.22 | 0.38 |
1995 | 4.669 | 0.2 | 0.4 |
2000 | 4.626 | 0.21 | 0.45 |
2005 | 4.546 | 0.2 | 0.4 |
2010 | 4.475 | 0.18 | 0.35 |
2015 | 4.409 | 0.16 | 0.38 |
2020 | 4.244 | 0.15 | 0.42 |
In 1960, the proportion of US population is about 6% of the world population. In 2020, the proportion drops to 4.2%. This is about one third decline.
In 1960, the proportion of US GDP is about 33% of the world GDP. In 2020, the proportion drops to 15%. This is more than one half decline.
In 1960, the proportion of US stock market value is about 50% of the world stock market value. In 2020, the proportion drops slightly to 42%.
On per capita level, in 1960, US GDP is about 33/6 = 5.5 times of world average. In 2020, US GDP is 15/4.2 = 3.6 times of world average. Over time, the average income of an American, relative to the rest of the world, declines.
On per capita level, in 1960, US stock market valuation is about 50/6 = 8.3 times of world average. In 2020, US market value is 42/4.2 = 10 times of world average. Over time, the average wealth of an American, relative to the rest of the world, increases.
Wealth in a society, including American society, is highly concentrated in a small minority. The increase of average wealth in American means the wealthy part of American is much better off. The decline of average GDP in America, relative to the rest of the world, means the majority of labor is worse off. This divergence of economic performance between the mass and the elite is the core reason of the increasing polarity in US politics.
The divergence of performances between the labor and the capital is mainly due to the divergence of tax treatments between labor and capital. Warren Buffet once confessed, or bragged that his tax rate is much lower than the tax rate of his secretary. With the increasing political power of the ultra wealthy, the divergence of economic and political treatments of different classes in a society can only widen. The political hostility between different social groups will intensify over time.