President Obama and the Democrats have finally decided, five years after his election, to begin talking about the issue of income inequality, which has been increasing since the early 1970s. But their rhetoric makes it sound like inequality is a weird byproduct of capitalism when, in fact, it is a key feature of an economic system that relies on poverty and exploitation. This is the best system ever conceived?
In the fiscal cliff deal, congressional Republicans and Democrats agreed not to raise taxes on all Americans earning under $400,000 a year – in other words, everyone gets a tax cut except the top 0.5% of income earners. Even if you are an unmarried couple earning $800,000 a year, you qualify for a so-called “middle class tax cut.” In what country could someone earning that kind of money he considered middle-class? Only in the United States in the year 2013. Everybody is middle-class, from the homeless to the middle classy. As for those who earn over $800,000 a year as an unmarried couple or $400,000 as an individual, well, hell, we never see them anyway.
Liberal BS on Income Inequality
Everyone talks about income inequality, but no one does anything about it.
Lately they’ve been talking more than ever.
“The United States is the rich country with the most skewed income distribution, ” Eduardo Porter asserts in his upcoming book “The Price of Everything: Solving the Mystery of Why We Pay What We Do.”
Porter continues: “According to the Organization for Economic Cooperation and Development, the average earnings of the richest 10 percent of Americans are 16 times those for the 10 percent at the bottom of the pile. That compares with a multiple of 8 in Britain and 5 in Sweden. Not coincidentally, Americans are less economically mobile than people in other developed countries. There is a 42 percent chance that the son of an American man in the bottom fifth of the income distribution will be stuck in the same economic slot. The equivalent odds for a British man are 30 percent, and 25 percent for a Swede.”
For students of history and economics, this is shocking stuff. Europeans came to America in search of opportunity, for a better chance at a brighter future. How can it be that it’s easier to get ahead in Britain—famously ossified, rigidly class-defined Britain?
Yet it’s true. David Leonhardt of The New York Times writes: “Income inequality, by many measures, is now greater than it has been since the 1920s.”
According to Nicholas Kristof, also at the suddenly class-conscious Times, we live in a time of “polarizing inequality” during which “the wealthiest 1 percent of Americans possess a greater collective net worth than the bottom 90 percent.”
This, we are informed, is bad. Not just for us. Income inequality hurts everybody—including the rich.
Cornell economics professor Robert Frank notes the correlation between financial stress and social dislocation. “The counties with the biggest increases in inequality also reported the largest increases in divorce rates,” reports Frank. Children of divorce are more likely to become a societal burden, committing crimes against everyone, including the wealthy.
Frank argues that our quality of life is suffering across the board due to income inequality. For example, traffic jams are getting worse: “Families who are short on cash often try to make ends meet by moving to where housing is cheaper—in many cases, farther from work. The [U.S.] counties where long commute times had grown the most were again those with the largest increases in inequality.” Everyone sits in traffic, even millionaires.
The “middle-class squeeze,” Frank explains, pressures voters to vote against higher taxes that would support improvements in public infrastructure. We all pay: “Rich and poor alike endure crumbling roads, weak bridges, an unreliable rail system, and cargo containers that enter our ports without scrutiny. And many Americans live in the shadow of poorly maintained dams that could collapse at any moment.”
Is it wrong to giggle at the thought of selfish millionaires being washed away by a flood?
Citing the work of the British epidemiologists Richard Wilkinson and Kate Pickett, Kristof blames just about every societal ill on income inequality. Among the highlights: infant mortality, drug abuse, teen pregnancies, heart disease, even higher obesity among people who don’t eat more than others. This may be why high-unemployment Michigan has some of the nation’s fattest people. (The hormone cortisol, released when humans are stressed, increases fat retention.)
Porter notes that the income gap is increasing across the spectrum—including among high earners. One study shows that in the 1970s the top ten percent of corporate executives earned twice as much as the average exec. Now they get four times more. “This has separated the megarich from the merely very rich,” he says.
Rising income inequality means trouble. Not just for our waistlines, but for the system that has created the problem: corporate capitalism.
“If only a very lucky few can aspire to a big reward,” Porter warns, “most workers are likely to conclude that it is not worth the effort to try.” That would lead to less legitimate innovation, fewer new businesses. The best and the brightest will conclude, as they have in post-Soviet Russia, that crime is the only economic activity that pays.
So what is to be done?
Here the income-inequality-is-bad crew falls flat on its collective face.
Kristof’s prescription: “As we debate national policy in 2011—from the estate tax to unemployment insurance to early childhood education—let’s push to reduce the stunning levels of inequality in America today.”
Porter’s solution: “Bankers’ pay could be structured to discourage wanton risk taking.” But bankers aren’t the only culprits. How would this restructuring take place? Who would force bankers to accept it?
Frank’s answer: “We should just agree that it’s a bad thing—and try to do something about it.”
Workers of the world, try to do something about uniting!
I’m going to climb out on a limb here: The guys I’ve quoted are all smart. They know exactly what is causing this relentless increase in income inequality. Ruling elites have exploited globalization and technological advances to increase corporate profits through deregulation, union busting, and lobbying for federal subsidies and tax benefits. We’re witnessing exactly what Karl Marx predicted at the dawn of industrialization: capitalism’s natural tendency to aggregate wealth and power in the hands of fewer people and entities, culminating in monopolization so complete that the system finally collapses due to lack of consumer spending.
The pundits are also smart enough to know that there’s only one way to equalize income: revolution.
Increasing riches leads to increasing influence. No matter how nicely we ask, why would the rich and powerful give up their wealth or their power? They won’t—unless it’s at gunpoint.
Nothing short of revolution stands a chance of building a fair society. Not “pushing.” Not “restructuring.” If working within the Democratic Party and the election of Obama prove anything, it’s that reform within the system is no longer a viable strategy for progressives.
We’re way past “trying to do something about it.”
The sooner we start talking about revolution, the closer we’ll be to a non-BS solution to the social and political ills caused by inequality of income.
(Ted Rall is the author of “The Anti-American Manifesto.” His website is tedrall.com.)
COPYRIGHT 2011 TED RALL