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THREE WAYS INEQUALITY UNDERMINES DEMOCRACY, 1970 TO TRUMP  
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Nathan Meyers
July 11, 2025
The Conversation
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_ Democratic decline and inequality are not inevitable. But if
restoring broad prosperity and social stability are the goals, they
may require revisiting the New Deal-style policies. _

Washington, D.C. demonstration, June 2024, photo: Thomas Reed |
People's World / Mundo Popular

 

America has never been richer
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But the gains are so lopsided
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that the top 10% controls 69% of all wealth in the country, while the
bottom half controls just 3%. Meanwhile, surging corporate profits
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have mostly benefited investors, not the broader public.

This divide is expected to widen after President Donald Trump’s
sweeping new spending bill
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drastically cuts Medicaid and food aid
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programs that stabilize
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economy and subsidize low-wage employers
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Moreover, the tax cuts
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at the heart of the bill will deliver tens of billions of dollars in
benefits to the wealthiest households while disproportionately
burdening
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low-income households
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according to analyses by the nonpartisan Congressional Budget Office
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and Joint Committee on Taxation
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bottom 20% will pay more in taxes while the top 0.1% receive $43
billion in cuts.

I am a sociologist
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studies economic inequality
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research demonstrates that the class-based inequalities
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not new. Rather, they are part of a 50-year trend
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linked to social cleavages, political corruption and a declining
belief in the common good.

The roots of class-based inequality

The decades following World War II were broadly prosperous, but
conditions began changing in the 1970s. Class inequality has increased
enormously since then, according to government data
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expense of workers [[link removed]].

Economists usually gauge a country’s economic health by looking at
its gross domestic product as measured
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through total spending
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on everything from groceries to patents.

But another way to view GDP is by looking at whether the money goes to
workers or business owners. This second method – the income approach
[[link removed]*1xwq9qm*_ga*NDc1ODUyMzA0LjE3NDk2MDczNTM.*_ga_J4698JNNFT*czE3NDk2MDczNTMkbzEkZzEkdDE3NDk2MDkxMTkkajUwJGwwJGgw#eyJhcHBpZCI6MTUwLCJzdGVwcyI6WzEsMiwzXSwiZGF0YSI6W1siY2F0ZWdvcmllcyIsIkdkcHhJbmQiXSxbIlRhYmxlX0xpc3QiLCI2Il1dfQ==]
– offers a clearer picture of who really benefits from economic
growth.

The money that goes to labor’s share of GDP, or workers, is
represented by employee compensation
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including wages, salaries and benefits. The money left over for
businesses after paying for work and materials is called gross
operating surplus
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business surplus.

The share of GDP going to workers rose 12% from 1947 to 1970, then
fell 14% between 1970 and 2023. The opposite happened with the
business surplus, falling 18% in the early postwar decades before
jumping 34% from 1970 to today.

Meanwhile, corporate profits have outpaced economic growth by 193%
since 1970. Within profits, shareholder dividends as a share of GDP
grew 274%.

As of 2023, labor had lost all of the economic gains made since 1947.
Had workers kept their 1970 share of GDP, they would have earned $1.7
trillion more in 2023 alone. And no legislation or federal action
since 1970 has reversed this half-century trend.

When more of the economy goes to businesses instead of workers, that
poses serious social problems. My research focuses on three that
threaten democracy.

1. Fraying social bonds and livelihoods

Not just an issue of income and assets, growing class inequality
represents the fraying of American society.

For instance, inequality and the resulting hardship are linked
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outcomes [[link removed]]. Americans die
younger than their peers
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in other rich countries, and U.S. life expectancy has decreased,
especially among the poor
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Moreover, economic struggles contribute to mental health
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despair and profound problems such as addiction
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including tobacco, alcohol
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Inequality can disrupt families. Kids who experience the stresses of
poverty [[link removed]] can develop
neurological and emotional problems, putting them at risk for drug use
as adults. On the other hand, when minimum wages increase
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begin saving wealth [[link removed]],
divorce risk falls.

Research shows inequality has many other negative consequences, from
reduced social mobility
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to lower social trust and even higher homicide rates
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Together, these broad social consequences are linked to misery,
political discontent and normlessness
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2. Increasing corruption in politics

Inequality is rising in the U.S. largely because business elites are
exercising more influence over policy outcomes, research shows
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privatization
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explains how 50 years of outsourcing public functions – through
contracting, disinvestment and job cuts – threatens democratic
accountability.

Research across different countries has repeatedly found that higher
income inequality increases
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corruption [[link removed]]. It does so by
undermining trust in government and institutions, and enabling elites
to dominate [[link removed]] policymaking
while weakening public oversight.

Since 2010, weakened campaign finance laws driven by monied interests
have sharply increased corruption risks. The Supreme Court ruled then
in Citizens United
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to lift campaign finance restrictions
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enabling unlimited political spending. It reached an apex in 2024,
when Elon Musk spent $200 million
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to elect Trump before later installing
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his Starlink equipment onto Federal Aviation Administration systems in
a reported
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takeover of a $2.4 billion contract with Verizon.

Research shows that a large majority
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of Americans believe that the economy is rigged
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suggesting everyday people sense the link between inequality and
corruption.

3. Undermining belief in the common good

National aspirations have emphasized the common good since America’s
founding. The Declaration of Independence lists the king’s first
offense
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undermining the “public good” by subverting the rule of law. The
Constitution’s preamble
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commits the government to promoting the general welfare and shared
well-being.

But higher inequality historically means
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research. Meanwhile, work has become more precarious
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geographically stable [[link removed]].
Artificial intelligence may worsen
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these trends.

This tends to coincide with a drop in voting and other forms of civic
engagement
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The government has fewer mechanisms for protecting community when
rising inequality is paired with lower taxes for the wealthy
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public resources
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finds that public sector unions [[link removed]]
especially bolster civic engagement in this environment.

Given increasing workplace and social isolation, America’s
loneliness epidemic
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is unsurprising, especially for low earners.

All of these factors and their contribution to alienation can foster
authoritarian beliefs [[link removed]]
and individualism
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When people become cold and distrustful of one another, the notion of
the common good collapses.

Inequality as a policy outcome

News coverage of the Trump bill and policy debate have largely
centered on immediate gains and losses. But zoomed out, a clearer
picture emerges of the long-term dismantling of foundations that once
supported broad economic security. That, in turn, has enabled
democratic decline
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As labor’s share of the economy declined, so too did the
institutional trust
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and shared social values [[link removed]] that
underpin democratic life. Among the many consequences are the
political discontent and disillusionment
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shaping our current moment.

Republicans hold both chambers of Congress through 2026, making
significant policy changes unlikely in the short term. Democrats
opposed
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the bill but are out of power. And their coalition is divided between
a centrist establishment
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insurgent progressive
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wing with diverging priorities in addressing inequality.

Yet democratic decline and inequality are not inevitable. If restoring
broad prosperity and social stability are the goals, they may require
revisiting the New Deal-style policies that produced labor’s peak
economic share of 59% of GDP in 1970.[The Conversation]

Nathan Meyers
[[link removed]], Ph.D.
candidate in sociology (September 2025 degree conferral), _UMass
Amherst [[link removed]]_

This article is republished from The Conversation
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the original article
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* economic inequality
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* New Deal
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* Money in Politics
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