BOOK REVIEW: Revisiting Income Inequality in American Economy

BOOK REVIEW: Revisiting Income Inequality in American Economy
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Reviewed by: Gowhar Quadir Wani

The book under review, concerned with the examination of economic evolution of the US, nicely portrays the trajectory of uneven economic progress of America from the colonial to present times. Contrary to other economic historians who focus on ‘wealth’, the authors of Unequal Gains (Peter H. Lindert and Jeffrey G. Williamson) have concerned themselves with ‘income’ and, through their immense efforts, produced a radically new evaluation of American economic experience. Justifying their choice of focusing on income instead of wealth, the authors argue that “wealth is an incomplete measure of one’s lifetime resources. It only includes nonhuman assets, missing the investments people make to augment their earnings capacity—formal education, on-the-job training, health, and migration.”
The book is based on the reconstruction of social tables. It estimates class-wise average incomes and population of the American society thereby attempting to reconstruct GDP and inequality spanning the colonial era through the early twenty-first century. The inequality that concerns the authors is the “distribution of lifetime resources, as shared within a household.” It can be measured as an inflow or an outflow, the former by “lifetime earnings plus inheritance” and the latter by “lifetime consumption plus bequest.”
The authors seek to establish that America had achieved world economic leadership by the late seventeenth century, not just in the twentieth century as is generally believed. However, they maintain that America lost its economic lead in the Revolutionary War and the Articles of Confederation years, gained it back by 1860, losing it again in the Civil War decade, again gaining by 1900, and briefly lost it again in the Great Depression of the 1930s.
Since the mid-seventeenth century, over a span of over 360 years, the income advantage of America over Britain, according to the authors, has not increased. So far as average income is concerned, it was only at the end of World War II that the United States rose far ahead of the rest of the world. Since then, according to Lindert and Williamson, Western Europe and Japan have been growing faster than the United States in terms of incomes per person.
One of the new findings of the authors is the role of demography in terms of income inequality. Arguing in a logically consistent manner on the basis of comparison of fertility rates and survival rates, the authors conclude that “America’s early lead in income per capita was exceeded by its early lead income per house or per worker.” Other findings include little per capita growth in the colonial era, early decline of South’s relative income per capita between 1670 and 1870, the costs of Independence, the faster growth of America’s per capita income than western Europe between 1800 and 1860, long steep rise in American inequality during this period being as big as the rise since 1970, the maintenance of inequality despite the Civil War owing to the widening within the North and the widening between the North and the South that spoiled the effects of egalitarian distribution within the South thereby preventing the drop of income inequality at the national level.
The authors have based their findings on strong historical evidence, rich data, penetrating analysis and convincing arguments. At the same time, they have displayed ample academic humility by keeping their new findings open to be challenged. In sum, the book is an excellent demonstration of how every social group, from the richest to the poorest, has been affected by widening income gaps. It is a remarkable addition to the literature on American economic history highlighting the beneficiaries of American economic growth. The book is worth-recommending to the students/researchers of American economy, in general, and those of economic inequality, in particular.

—The author is a Senior Research Fellow, Department of Islamic Studies, AMU, Aligarh. He can be reached at: