Inequality and Its Perils - NationalJournal.com: According to a recent Congressional Budget Office report, those in the top 1 percent of households doubled their share of pretax income from 1979 to 2007; the bottom 80 percent saw their share fall. Worse, while the average income for the top 1 percent more than tripled (after inflation), the bottom 80 percent saw only feeble income growth, on the order of just 20 percent over nearly 30 years. The rising tide was raising a few boats hugely and most other boats not very much.
It thus began to seem that the old bargain, in which inequality bought rising incomes for all, had failed—much as the Keynesian bargain (bigger government, faster growth) had failed two generations earlier. “The majority of Americans have simply not been benefiting from the country’s growth,” Stiglitz wrote, overstating things—but not by a lot.