With the premiere of Iron Lady approaching at the end of December, we are certain to be treated to a heavy dose of Margaret Thatcher‘s greatest hits. None will be more pertinent to the issues of this moment that the point she made in her final Question session as prime minister in 1990, shown in this clip:

In the merry, feisty exchange, a Labor MP respectfully asks her if she regrets that disparity between rich and poor widened during her tenure. Thatcher denied the relevance of such statistics, and instead argued that people of all classes had benefited during under her administration. And that, she said, was the difference between her and her opponents in a nutshell: “He would rather the poor were poorer as long as the rich were less rich.”

Well of course this is a false choice: the poor could certainly be less poor without the rich becoming richer, but that is neither here nor there. Thatcher came up with a phrase that has served as the underpinning for at least fifty years of American policy. Ever since that old sailor John F. Kennedy pointed out that a rising tide floats all boats, it has been widely accepted by nearly all Americans that as long as everyone is improving, we can accept wide discrepancies in wealth. As even the great American mafioso Barzini acknowledged in The Godfather, “After all, we are not communists.” Our social contract accepts the reality of the rich, as long as things overall are improving for everyone.

But as Paul Krugman once again points out today in the Times, things really aren’t improving for anyone. He cites a Congressional Budget Office report that showed that between 1979 and 2005, “the inflation-adjusted, after-tax income of Americans in the middle of the income distribution rose 21 percent. The equivalent number for the richest 0.1 percent rose 400 percent. For the most part, these huge gains reflected a dramatic rise in the super-elite’s share of pretax income. But there were also large tax cuts favoring the wealthy. In particular, taxes on capital gains are much lower than they were in 1979 — and the richest one-thousandth of Americans account for half of all income from capital gains.”

In other words, the rising tide has been channeled into the Yacht Club’s marina. The super rich have been getting richer, while almost no one else has enjoyed very much of a gain at all. And much of what the super rich have gained has come through government tax-cutting, which has exacerbated the deficit, which hurts everyone. Far from Thatcher’s trade-off, the rich have grown richer precisely at the expense of the poor and middle classes.

I wonder what the Iron Lady would say about that?

[Cross-posted at JamieMalanowski.com]

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Jamie Malanowski is a writer and editor. He has been an editor at Time, Esquire and most recently Playboy, where he was Managing Editor.