The myth is based on the US gini coefficient increasing by about 10% since WWII. However people fail to realize that capitalism has actually created the middle class in the first place, so it is absurd to criticize capitalism for any gini coefficient increases. Without capitalism it invariably becomes close to 1, like in historically feudal or contemporary communist states, with rich government elite and the rest dismally poor.
But if capitalism is not to blame, then what is? What has been happening since WWII in the US which could explain the rich getting richer and the poor getting poorer? Let's see:
http://www.usgovernmentspending.com/us_20th_century_chart.html
Wow, US government spending as percentage of GDP also increased by 10%... And that little only by ignoring the most recent war spending surge... Hmmm, why, isn't government spending supposed to be a boon for the poorest?
The increased spending must have been supported by some popular ideology. You must have surely heard about Keynes' widespread popularity among economists, politicians and intellectuals in the second half of 20th century. And how Keynesians want to help the poorest? By printing new money of course. Sometimes in a very roundabout ways, via government deficit spending (oh yeah, government spending) and increasing government debt, which, sooner or later, has to paid off somehow. How? No problem. Government does not even need to collect taxes. And they are right, government can always simply print money.
Now let's see how the system works in practice. Is the new money really helping the poor? New money usually gets created out of thin air by private financial institutions in our system of fractional reserve banking. A central bank needs only to make its interest rate low enough and boom, expansion of cheap credit begins. Nowadays interest rates are even lower than inflation rate, so you make money just by borrowing. But can anyone do that? Like the poorest? No, the privilege happens to be reserved only to the richest. Well, otherwise the whole system would break down in a matter of months... And it actually does, like in the most recent crisis when also the poorest were invited to get tons of cheap money via NINJA loans.
But the most recent Keynesian craziness apart, among your friends, who's got the biggest mortgage? The poorest one? No, the wealthier an individual, the bigger their mortgage, as simple as that. Same with companies, owned in turn by wealthy individuals. The bigger a company, the higher leverage it can obtain from financial markets. The wealthiest individuals and the biggest corporations are the biggest debtors out there.
And why are they so much in debt? Because it pays. Because loans are subsidized by ultra low rates thanks to new money, ie by inflation tax, ie by the poorest, as they are the biggest cash holders and on salaries fixed in nominal terms. How often do you get raises? Once a year, to offset previous year's inflation, if you are lucky. However, there is inflation every single month of that year before your get your raise.
Sure, truly wealthy people may not have to take mortgages but they take them anyway because they make money that way by investing their cash. Every financial advisor will keep badgering you into that. Similarily, why pay off your mortgage earlier if you can invest that cash with higher interest than your mortgage?
Then again if you buy a $1 million dollar house, are you wealthy? Not necessarily, usually you are just well paid and can afford a big mortgage. Still leftists often call such guys wealthy. And indeed higher middle class is wealthier than the poorest who subsidize their big mortgage ultra low rates via inflation tax. The system benefits most the richest, but you have to give some benefits to the higher middle class too. After all, they are the intellectuals who can make or brake the masquerade. And the poorest who actually pay? Don't worry, too ignorant, just give them some socialist pep talk and they will happily treat inflation as a moral obligation to help the country ;)
Now as for those corporations that are indeed creditors. You probably think of financial institutions like banks and that is correct, except they lend money they have created out of thin air in the first place. Every time you deposit a $100 bill in your bank, the bank is licensed to create exactly same amount (minus small reserve requirement of a couple percent) of new money and lend it. Yes, financial institutions are creditors but of a money they have stolen, via inflation tax, from the poorest in the first place. That is how the fractional reserve banking, best in tandem with Keynesian policies, works....
There is no better scheme to make money on the back of the poorest.. but then nothing has changed really, even before Keynes, when someone was calling himself a benefactor of the poor, the poor had better run and fast. However that does not really matter. Keynesianism, together with fractional reserve banking, has kept financial sector average profits consistently and considerably above economy average since WWII. Politicians powerful as ever. Legions of economists hired (private institutions like banks) trying to forecast what in turn another legions of economists will do with inflation tax (public institutions like central bank etc). Keynesianism will always be popular with government, financiers and economists as there are simply no better sinecures out there than economy tsars.
