We’re in economic trouble. As the deficit wages on and the country continues to spend billions of dollars on wars that make no sense to average citizens, it’s easy to say that we need austerity and tax relief. That’s what this country voted for in the mid-term elections, as a slew of new Republicans were elected to Congress. Unfortunately, that action is shortsighted and relief will not last.
The elected Republicans are responding to a warranted distrust and unease with our current administration, but this new direction could corrupt our chances of lasting economic recovery. It may sound tragic, but we need greater taxation more than ever. In these economically troubled times, we are digging ourselves deeper by talking about cuts to budgets and public programs.
About 30 years ago, President Reagan began a long series of cuts to federal agencies and public funding — ushering in the first era of big time tax cuts for the wealthiest elite. And this trend only continued. The tax breaks hurt the most disenfranchised first. Cuts to funding generally suck necessary funds from education and welfare — programs that keep clothes on children, employees healthy, and roofs over heads. These are all in high demand.
It’s no accident that as cuts to important budgets continued, income and wealth inequality skyrocketed. We now live in a new Gilded Age. The average CEO gets about 204 times the salary of traditional employees. That’s immoral and outrageous. Are they doing 204 times more work? No. Are they doing 204 times more jobs? No. Some people point to the pressures of being a leader — the taxing life that they lead. To those supporters of income inequality for upper management versus average employees, I urge you to develop some empathy for the person that is on food stamps, working full-time, and dealing with children — all on poverty-inducing wages. Isn’t that stressful, too? I think the impoverished person would gladly take on CEO-level stress to pay their bills each month, reliably feed their children, and possibly (holy crap!) take a vacation from time to time.
Walmart is a perfect, nightmarish example, where CEOs and upper management make it big, and their precious employees wear blue uniforms and need food stamps to make ends meet (even when working full-time). It’s then that those outfits look more like prison uniforms.
Even more alarming is the growing wealth inequality. The Economist recently highlighted new research from two of the leading wealth economists. What they found was shocking. There are 16,000 families — 0.01% of the population — that have an average net worth of $371 million each. Staggering hardly describes this level of “average” wealth. The research suggests that this represents 11.2% of total wealth. To be clear, 0.01% of the population has 11.2% of the total wealth! How do we accept this inequality and disparity? How do we accept this assault on true family values? How do we accept this inequality that causes massive funding gaps?
We’ve reached astonishing levels of wealth inequality — approaching records from 1916. This disparate wealth disrupts middle-class opportunities, wealth generation, and social class mobility. All opportunities are stifled for the masses, as a select few profit. Those who’ve suffered most have the least. I cannot help but reflect on our values as a country. Could this corrupt — post-Citizens United world — truly be what our Founding Fathers set out for America?
Today more than ever, we are one nation, poor, divided, and unequal.
I second every word you say from over here in the UK where things are very much the same. The wealth of the nation has become the wealth of the few and we are all poorer because of that. Capitalism is failing because it did not account for the greed of the rich and democracy is powerless because it didn’t stop things before we got this far. We need fair pay, free education and proper levels of taxation. We need to respect ourselves and our fellow citizens.
Speaking as someone who was a teenager in the ’70’s, I can tell you that perception is everything. People said the same things back then about the giant economic gap. The world literally even looked poorer back then. The air anywhere there were lots of cars was smelly from the leaded gasoline and the factory chimneys billowed with even smellier pollution. There were, what they called back then, street people and bag ladies, lots of them. I’m not sure if things are worse now, economic-gap-wise or if statistics are just skewed for political agendas. I do know that the world smells better and looks cleaner ( there aren’t soda cans and bottles strewn everywhere like they were back then) now. Anyone else around my age (born in ’61) that agrees or disagrees?
As always Sam, I love how thought provoking your articles are. 🙂
Hi Kay,
Thanks so much for your comment! Really appreciate your insight.
One thing I thought about was that the world air is only a bit better. Unfortunately, places like China are in rough shape with poorly regulated chemicals that create massive clouds of pollution.
As for the economic indicators, you’re right. In the 70s there was a gap, as well. The thing that economists such as Saez, Piketty, and Emmanuel have suggested is that the income and wealth inequality gaps have grown since the 70s. In fact, their research suggests that we are near/at record levels.
We may not notice it as much because we utilize debt methods (i.e., credit cards, car loans, mortgages, student loans) more than ever before. This could effectively delay our feeling of inequality, too.
Just a few extra thoughts on this,
Sam
Those are excellent points. I know that whenever I see footage of the pollution in China, I think back to when you could see it in our nearest city. Ugh, it was so hard to breathe, both from the traffic exhaust and from the factory pollution. I agree on the way poverty is better veiled too. Great insights, Sam! Thanks for your time. 🙂
Interesting point about debt methods masking inequality. Credit allows people to “feel” rich, even if those things are really making them poorer.
Sam, this is a very good point: at the moment there are few places around the world where poverty is THE problem (although there are some left). Inequality is becoming a universal problem. And Carri, I’d like to make a very small remark on what you said, if I may. Yes, we are suffering the same decease in the UK; in fact, we are leading on the neo-liberal road to perdition. However, it is not capitalism that is failing because it didn’t account for greed: greed is the engine of capitalism (this is why we developed the notions of markets and the glorification of competition). What failed because it didn’t account for human greed and Marx’s solution to the issue of capitalism and the inevitable polarisation of capital and labour. Marx didn’t describe comunism in any detail but he mentioned that it will be a time when ‘each will contribute according to their ability and all will consume according to their needs’. We are seeing the first part: low skills and entry jobs are gone and more qualified jobs are outsourced. Only educated, creative and driven people will have jobs (work) in near future. We are lagging sadly behind with the ‘to each according to their needs part’.
This is not only sad and wasteful; it is also very dangerous. Inequality breeds social unrest and when there is social unrest no one prospers.
You are so right! We are just getting more and more divided (financially at least) as time goes one. The middle class is beginning to fall out of existance as most middle class families fall further and further behind. Only a select few have been able to pull themselves up to a higher class and I don’t see it getting any easier as time goes on.
Barring a large scale revolt against the elite, I’m talking pitch forks here, what are the masses’ options on leveling things out?
Is there any chance of inheritance being so highly taxed (with no loopholes) that it will make any difference? (Not likely, assuming that the people with wealth have great influence over legistlation like that!)
Regards the world looking better now, this is no doubt in part due to cleaner and more efficient technology, but as you both alluded to above it is also surely because we are outsourcing all of our manufacturing (and therefore polution) to poorer countries. On the other hand, we are all much more wealthy on average, compared to the 70’s, 80’s and even 5-10 years ago, so there is always progress being made.
Wealth inequality is a problem primarily because of relative comparison. If you compare what you have now to what people had 50 years ago (even somewhat wealthy folk) I think most people would be pretty happy with their lot. No point in comparing what the average person has to the top earners, this will always make you feel bad!
One final point is that obviously, there should be a decent amount of wealth redistribution to the very poor. I can take being taxed as much as we do here in the UK and don’t really care all that much that there are CEO’s earning 400 times more than I do. It’s not particularly fair but they will be paying far more tax than I am, and there are definitely more needy people out there than I.
Saying all that, if people campaigned against wealth inequality and politicians actually did something meaningful about it, I’d be all for it, of course 🙂