Trickle-Up Economics : Our Growing Inequality Problems

If you're in Asheville, N.C., stop by the Biltmore, the vast estate that George Vanderbilt III -- heir to a railroad fortune -- constructed between 1889 and 1895. You can tour most of its 250 rooms, including 43 bathrooms and an indoor swimming pool. When few Americans used electricity, the Biltmore had its own generators. To take the tour is to grasp one of the great advances of the 20th century: The gap between the superrich and most Americans has narrowed enormously. In Vanderbilt's time, most Americans lived in filthy slums or on modest farms. Now even the wealthiest among us live more like ordinary people than Vanderbilt ever did.

We like it that way. Although Americans are not hugely envious of the rich -- especially if their wealth seems honestly earned -- we also think that prosperity should be broad-based. Trickle-up economics, with most gains flowing to the top, seems un-American. But is that what we now have? Good question. Just last week Forbes magazine reported that the 400 richest Americans are now all billionaires. And the government's recent release of household income and poverty figures for 2005 has sharpened the debate.