"After median wages stagnated throughout the Bush years while top earners benefited most, those feeling the pinch will go to the ballot box in a disgruntled mood" - Financial Times, London

• In the closing stages of the US presidential campaign, John McCain has been pushing hard on the idea that Barack Obama would "spread the wealth around" - as the Democratic candidate this month reportedly told the voter who came to be known as Joe the Plumber. "That is what change means for Barack the Redistributor," said Mr McCain on Monday. "It means taking your money and giving it to someone else." The Republican nominee's sounding of the alarm resonates with portions of the US electorate, although it has probably come too late to be a game changer. But much larger sections of voters - those living in the bottom 80 per cent - have been experiencing a means of wealth redistribution in the past few years that has led many of them to different conclusions.
• This kind of redistribution is of a different complexion to the progressive taxation that Mr Obama supports and which Mr McCain apparently no longer does. It has come via the mechanism of the market and has shifted wealth in the opposite direction - from the middle classes to the wealthy. It long predates the collapse of the subprime mortgage market last year that lit the fuse for today's global financial crisis.
• Economists call it median wage stagnation. Others dub it the "silent recession". Mr Obama, who has struggled since the start of his campaign to speak in an economic language that strikes a chord with blue-collar voters, recently put it this way: "We are now being battered by a very serious economic storm and for many Americans it has only deepened the quiet storms they have been struggling through for years."
• At this stage, the impact of the financial meltdown on the longer-term structural problem of income stagnation can only be guessed at - although it is highly unlikely to improve the situation for most American households. But the political effect has been apparent for some time.
• In spite of the prominent role played by the unpopular Iraq war in the outcome of the 2006 midterm elections, anxieties about the economy had a greater influence on the result. According to exit polls, more voters listed concerns related to the economy than listed Iraq in an election that restored Democratic control of both houses of Congress for the first time in 12 years. Since then, voter anxiety has only increased.
• In 2006, almost 70 per cent of American voters said their country was on the wrong track. Now, more than 90 per cent do. Then, a narrow majority believed their children would be worse off than they are - an astoundingly bleak sentiment for a country built on optimism. Now, a clear majority say so. For most Americans, the financial meltdown is only the cherry on a very familiar cake.
• "You have to question whether conventional measures of economic growth mean anything when most people's incomes have either been stagnating or declining for many years," says Jared Bernstein, an economist at the liberal Economic Policy Institute and an adviser to Mr Obama. "The fact that wage earners are no longer getting the benefits of their improving productivity in the workplace is something we have never experienced [before] in modern America."
• The data are stark and go some way towards explaining why so many Americans felt so disaffected even during the most robust years of economic growth under the Bush administration. Between 2000 and 2006, the US economy expanded by 18 per cent, whereas real income for the median working household dropped by 1.1 per cent in real terms, or about $2,000 (£1,280, Eu1,600). Meanwhile, the top tenth saw an improvement of 32 per cent in their incomes, the top 1 per cent a rise of 203 per cent and the top 0.1 per cent a gain of 425 per cent.
• Part of this was because the latest period of economic growth failed to create jobs at nearly the same rate as in previous business cycles and even led to a decline in the number of hours worked for most employees. Unusually for a time of expansion, the number of participants in the labour force also fell. But mostly it was because the fruits of economic growth and soaring productivity rates went to the highest income earners.
• Economists such as Lawrence Summers, who was President Bill Clinton's last Treasury secretary and is tipped by some to return to that role in an Obama administration, say the income stagnation crisis is America's most troubling long-term economic problem.
• In contrast to the Clinton years - when there was some growth in median income, although still at lower rates than productivity growth - people such as Mr Summers and Robert Rubin, his predecessor, are now openly sceptical of the market economy's ability to distribute socially desirable rewards.
• "It is critically important that the next administration makes it a priority to focus on the structural causes that hold back growth in workers' wages," says Mr Summers. "That means reversing the perverse Bush tax cuts, empowering labour in strategic ways, as well as investing in healthcare, education and infrastructure."
• But Mr Summers, along with many of his peers, concedes that finding the right policies will prove difficult for such a complex and deep-seated problem. Many reach for parallels with the "gilded age" of the 1920s that gave rise to unprecedented Great Gatsby- style incomes at the top and was brought to a close by the 1929 stock market crash and the ensuing Great Depression.
• Today's numbers also closely track that period. According to Emmanuel Saez at the University of California, Berkeley, the distribution of income today almost exactly matches that of 1928 on the eve of the Wall Street crash. In 1928, the top 1 per cent of Americans took in 24 per cent of national income, compared with 23 per cent today. Between 1940 and 1984 their share never exceeded 15 per cent and it was in single digits for most of the 1960s and 1970s.
• At the close of the gilded age, voters were also in a restless mood. Then, as now, policymakers are torn between balancing the budget and investing in public works through deficit-funded stimulus spending. The Obama campaign informally estimates that next year's budget deficit could go as high as $900bn - twice this year's fiscal gap.
• Some in the Obama camp believe in returning in the short-term to fiscal discipline. Others are embracing the countercyclical spending recommendations of John Maynard Keynes. That debate appears yet to be settled.
• "Franklin Roosevelt actually tried to balance the budget in the mid-1930s and it is safe to say it was not his finest hour," says Douglas Elmendorf, head of the Hamilton Project, a non-partisan think-tank that addresses median wage stagnation. "I would say this is the worst economic problem America has faced since at least the recession of the early 1980s but, in retrospect, median wage stagnation is a far more difficult and complex problem to address."
• That is one reason why the term "median wage stagnation" has not cropped up on the campaign trail: it does not fit on a bumper sticker. Nevertheless, the economic squeeze that has fuelled so much anguish among voters is creating all sorts of difficulties for Republican candidates in the least expected of states. Republican senators seeking re-election in Georgia (see below), North Carolina and Virginia, for example, are vulnerable to being unseated next week.
• But perhaps the biggest change is in intellectual fashion, which is still in the early stages of a big change. Last week, Alan Greenspan, once the toast of the economic world, admitted that he was mistaken about the benign effects of financial deregulation. Yet for years the former Federal Reserve chairman has been warning of the unsavoury impact the combination of widening income inequality and income stagnation could have on a democratic society.
• Mr Bernstein, who has been focusing on income stagnation for more than 20 years, says that alarm about the problem has finally gone mainstream. "I remember giving a presentation to Bob Rubin in the early 1990s and he was concerned about it but nothing more," he says. "Now he pays very, very close attention to the problem. It can no longer be ignored."

The Financial Times Limited 2008, London