The Melting Pot and Income Disparity

I read an item recently (didn't note the source unfortunately) suggesting that income inequality correlates with the homogeneity of a countries population.  The more homogeneous, the less income inequality, the more diverse the greater the income inequality.  It is an interesting notion.  When we feel like our countrymen are like us we are more inclined to insure that everyone gets a piece of the pie.  When we start dividing ourselves in different "tribes"  on political and ethnic lines we become less concerned about other American "tribes" and more of a winner take all society.

Looking back over more recent American history certainly doesn't contradict this theory.  The last time income disparity became so glaring was in the 1920's leading up to the great depression.  The decades before 1920 had been marked by a huge wave of immigration that filled our cities with ethnic enclaves and politically often faced off city dwellers against the largely home grown rural and small town folk.

Then the income disparity shrunk greatly after WW II.  Perhaps the war effort made people become American's first and all the political and ethnic divisions faded in significance?  Guys from all parts of the country, all ethnic and political views bunking next to each other in the barracks, or sharing a foxhole, can certainly break town tribal instincts.

The high levels of income disparity disappeared in the years after WW II.  Clearly there was a different attitude then as the tax code imposed marginal rates of up to 90% on the most wealthy Americans as part of the effort to pay off the deficit from WW II and the great depression.   The capstone of this tax effort occurred with the 1954 tax code passed by Congress which was, amazingly, passed during the only session between 1932 and 2000 where the Republicans controlled both houses of Congress and the Presidency. (Clearly the Republican party of 1954 was not the Republican party of 2011).  Income disparity was then relatively low for the next couple decades - it began to grow again in the late 1970's, and accelerated greatly in the 1990's and 2000's, a time when immigration has become a hugely controversial issue and politics is bitterly partisan.

Why don't we maintain institutional memory - why do we have such different attitudes today than we did in after WW II?  Probably because each new generation starts from our brains tendency to break the world in groups of us and them.  Until each new generation has some learning experience to teach them the value of inclusiveness they see others outside their immediate group as less human and threatening.

I hope we don't need WW III to pull us back together as a country.  Might not work anyway, since we abolished the draft after the Vietnam War.  In WW II everyone served.  In modern US warfare generally only the folks at the bottom of the income spectrum serve in the military, the kids of the well to do go to college and on to careers, seldom interacting with people who are not similarly blessed.