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Fareed Zakaria speaks with David Leonhardt, editor of the New York Times’ ‘The Upshot,’ about his latest research – and why the American middle class may no longer be the richest in the world. Watch the video for the full interview.
The most startling piece of data was this shift that has taken place in the American middle class. One way of looking at it, which you presented, was if you look at the median income...
…of an American – and that's not the richest person, not the poorest person, it’s the person smack in the middle. And I think the Census Bureau defines it at about $50,000 a year, someone earning $50,000 a year. Look at this chart. Since 1981, that's what's happened.
It's not a good story, is it? In 1981, we had, by far, the richest middle class in the world. And what has happened since then is that income growth in these other countries has been substantially faster for the middle class and the poor.
Now, this is after tax income. That's a question a lot of people have. It's after-tax income. It includes direct government benefits, things like Social Security. So this is really what people have to spend. And it's really worrisome. And it's not just a 30-year trend. You also see it if you look since 2000. In some ways, it's more pronounced in the last 15 years.
This is the stunning one. You see all these other countries had much stronger income growth at the median level. But then since 2000, I mean the United States barely grew at all.
Zero. And so the obvious question is what's going on here? And there are a few things going on here. One, we have had economic growth that is quite similar to many of these other countries. Obviously, we've had faster growth...
Overall economic growth.
Yes. Faster growth than Spain, particularly recently. But it's not as if the U.S. is growing a lot faster than Sweden or than Canada. It's quite similar. But more of the bounty of our growth goes to a smaller group of people. So our economy gives more money to the executives at the top. And since the bounty as a whole, the pie as a whole, is growing similarly, if you give more of that to fewer people, there's less left over for everybody else. Not only do we have more pre-tax inequality, but those other countries, do more to – and it's a dirty word here, right – redistribute income…