In September, 2011, New York City’s Zuccotti Park was flooded with tents and protesters. Sparked from an Adbusters article, the Occupy Wall Street protests began. The movement championed a variety of ideals that included wealth equality, removing money from politics, and reducing corporate influence in our political system. Diverse groups flocked to the streets to argue for a better future; potentially, one without massive corruption and greed. But the idyllic dreams faded as the campers were kicked out of the park and cities used police powers to destroy the collected masses across the country.
If you’re here, you’re probably part of the 99%
If you’ve ventured onto Frugaling.org, you’re likely interested in saving money and becoming more frugal. Moreover, you’re probably a proud member of the 99%… of incomes. The Occupy Wall Street movement embodied a siren call that said, “We are the 99%.” They owned their place in society and called for greater income equality.
The anger and resentment are building, as people think about the exorbitant bonuses that Wall Street marketmakers are taking home. Most of the recovery in Obama’s economy are limited to the richest/highest earning populations. In fact, the income inequality is reaching record proportions.
In 2012, the top 10 percent of earners took home more than half of the country’s total income.
…The 1 percent has captured about 95 percent of the income gains since the recession ended. (NYT)
The New York Times’ Op-Ed Columnist, Paul Krugman, says it best:
In practice, inherited wealth and connections matter enormously; those not born into the upper tier are, and know themselves to be, at a huge disadvantage. (NYT)
In India, they’ve long had a caste system that stratifies the demographic groups. You are frequently born into a group and the income pressure force you to stay planted in this domain. What Krugman is alluding to is a caste system in the frame of India’s horrific class structure that limits income mobility and opportunities in life – right here in America.
The consequences of mass income inequality
Poverty and income inequality both distract and debilitate people from being able to think critically. The tragic irony is that financial decisions, debt, savings, and everything that Frugaling stands for may be unattainable in this environment. Basically, there’s an unmet basic need in those suffering from poverty.
In 1943, a psychology professor and researcher introduced a basic hierarchy, construct for understanding how everyone has basic needs. This pyramid included Physiological, Safety, Love/Belonging, Esteem, and Self-Actualization. An individual would be working up to a self-actualized state, but certain needs must be met first. This is called Maslow’s Hierarchy of Needs.
Poverty and income inequality test the limits for critical thinking because people are fundamentally fighting for more basic needs such as Safety. Without a universal, socialized, single-payer health care option, those most in need are forced to find basic health needs before thinking critically about a budget. When resources, property, employment, and/or health are questioned, the more advanced needs are pushed back. These requirements are particularly important when the most vulnerable populations are fighting to survive – much less to to protest, share, and become active members of societal decisions.
Protesting defamation and destruction in the impoverished
I want to take you through a little real-life experience. As a graduate student at a solid state school, I’m quite privileged with my opportunities and future employment. But graduate students like me are often short on time and money. Many are raising families at the same time. The lifestyle can be brutal.
Over the last decade, my home university has been proposing a reconstruction project and new buildings to university-owned apartments. Year after year passed without resolution, and the older buildings aged terribly. Something needed to happen, as the most vulnerable school populations were living in evermore dilapidated housing.
Colloquially, these were referred to as a project and ghetto. The most diverse students and families occupied these buildings. Housing was exceptionally affordable – cheapest in the city – with many basics covered (e.g., water, cable, internet). Despite the horrid, storied exteriors, these were an exceptional choice for those studying at the highest level of academia and the smallest wallets.
Then a resolution quickly swept over the university apartment system. New buildings and contractors were being brought in to discuss all the financial complexities. At the end of this dialogue, the university decided to do something morally aberrant. Instead of keeping the university-owned land and property, they decided to lease the land to a private property management company. Now, this property company would finally revitalize the campus housing, but the consequences to the most in need would be terrible – a trade-off that was easily overlooked by school administrators and a company that stood to benefit from serious rent increases.
As the private company builds their own property on the campus, I’ve spoken to many vulnerable student populations. My frequent question is: Will you be staying? The answer is often “no,” because they can’t afford the nearly 100% increase in rent. They’ll be forced to move out of their apartments and a diaspora of diverse students will look elsewhere in the city. Families of four, recent immigrants, those on student visas, and many other groups are now being pushed out of their homes – forced to pay up or get out.
Something seemed evil about the process, and I began to ask people if there were ever protests on campus. Nobody ever heard, was aware, or participated in any. Because these students were in a rough financial spot and short on time, gathering a mass of protesters was a near impossibility. It never came to fruition. And now, the huddled masses must move on.
Should we defend the rich because they pay the most taxes?
The rich are definitely getting richer – this is an economic fact. But more importantly, the rich are collecting most of the income growth, too. A growing debate is being waged between world leaders regarding income inequality. Surprising participants are chiming in for a powerful, heated argument.
A couple of the top mayors have chimed in to support the wealthiest populations – even going so far to argue that we should thank rich people. The former mayor of New York City, Michael Bloomberg, has stated that the rich are a blessing for the city of New York. Because millionaires and billionaires pay lots of tax revenue back to the city and state, Bloomberg believes that we should honor and respect their riches. Over his tenure, he hesitated and prevented income tax increases on the wealthiest populations. Former Mayor Bloomberg even suggested that the wealthy may leave in droves if taxation increases, but this hasn’t been proven. Moreover, the current Mayor, Bill DeBlasio, has refuted this claim:
@danarubinstein “I’ve never heard one person say I’m going to move out of the city because of the taxes. Not one.” http://t.co/EELOZF8U
— Bill de Blasio (@deBlasioNYC) October 4, 2012
Bloomberg isn’t alone in his defense of the rich. Mayor Boris Johnson of London, England also wrote about the need to thank the rich for their support of the city’s economy. These “tax heroes” (the 0.1%) pay for about 14.1% of tax revenue for the city. The mayor suggests that this is a positive thing and speaks to the contribution that the rich have on the economy. The oligarchic mayor even proposed giving knighthoods to the largest tax payers:
In fact, we should stop publishing rich lists in favour of an annual list of the top 100 Tax Heroes, with automatic knighthoods for the top 10. (The Telegraph)
After reading these two mayors defend the rich, you’d think the wealthy lifestyle was under attack – a war was being waged. But frankly, the lobbying power of the rich has stifled accurate, fair debate. And the masses – the 99% – are mostly silent again.
Thankfully, a growing number of leaders are speaking out about this economic problem that is sure to doom the masses without serious changes. Pope Francis has been an outspoken critic of trickle-down economics and supported reforms to the current capitalistic culture.
How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?
Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion… has never been confirmed by the facts.
While the Catholic church has often held that the impoverished are the most needed groups for their mission work, the analysis and critique of powerful, governmental economic systems has been overlooked. Pope Francis is bringing a sweeping message of hope to those who’ve suffered amidst these deleterious economic practices.
The President of Uruguay, José Mujica, has also been a firm supporter of those most in need financially.
Quoting the Roman court-philosopher Seneca, Mr. Mujica said, “It is not the man who has too little, but the man who craves more, who is poor.”
Mujica also upset some in Uruguay’s political establishment by selling off a presidential residence in a seaside resort city, calling the property “useless.”
His donations leave him with roughly $800 a month of his salary. He said he and his wife, Lucía Topolansky, a former guerrilla who was also imprisoned and is now a senator, do not need much to live on.
INDEED, if there is any country in South America where a president can drive a Beetle and get by without a large entourage of bodyguards, it might be Uruguay, which consistently ranks among the region’s least corrupt and least unequal nations. (NYT)
President Mujica is shirking the glam and pomp of the presidency’s opulence. Taking home around $800 a month is a ridiculous sum for a president, but the consequences have been incredibly positive. Uruguay is one of the most progressive nations in the region and widely considered to be the least corrupt. By shedding the affluent lifestyle of his predecessors, he has stripped the hierarchy and social class that may remove him from his people. He is a role model and advocate for moderation among a cultural malaise that argues for more and more growth.
When you’re too poor to protest a culture collapses
The biggest threat to our long-term economy is income inequality and social stratification. Without some sort of correction, we will be doomed to relive the mistakes that aristocracy found in generations prior to this. It’s scary to think that I may ever be too poor to protest the conditions and treatment I receive, but the risk is growing. The richest are getting even richer than the rest – the power, influence, and control of government is terrifying.
What control do we, the 99%, have when politicians can be lobbied and motivated to support the wealthiest? Who will protect the most needy?
Michelle @fitisthenewpoor says
Beautifully written post. I am certainly of the same beliefs as you. I cannot believe that we defend the rich as if they need standing up for. Same with treating corporations as if they are small businesses that need protection and bending of rules.
I wish more PF bloggers thought like you. I’ve been dying to write a post like this.
Sam Lustgarten says
Thanks for your kind comment. Put a lot of effort into this article and I’m a big fan of going beyond simple “personal finance” to talk about the systemic reasons that poverty and debt come about.
Thanks for reading. Now go write your version! 🙂
Jmes faehr says
I worked for areal Mom and Pop hardware store for fifteen years and watch how old fashion American Capitalism vanish. Manufacturing wholesale and small retail stores all where gone by 2008!
Dave @ The New York Budget says
Wow. This is the post I always wanted to write, but never felt qualified to. Great job.
I feel lucky as I have been able to escape the income inequality issue on a personal level by spending much less than I make (as have many of your readers). However, not everyone has this ability. In order to do this you:
1) Have to make enough income where this is feasible.
2) Be exposed to the idea that this frugal change in lifestyle is actually a possibility.
3) Understand WHY saving more than you earn is beneficial. Be able to see the long term implications.
Most PF bloggers I have seen brush off 2 and 3 – saying that people are responsible for their own situations. 100% of these bloggers come from a place of privilege (privilege of information and/or upbringing as opposed to being born into money) and are content to brush the people who are struggling off to the side.
This is one of the reasons I started my blog and tried to gear it not just towards those interested in personal finance, but hopefully in New Yorkers in general – to try to get the information needed out to a different group of people and help a few out with #2 and #3. Pretty idealistic, I know, but I feel as though it is worthwhile.
Again, thanks for this post.
Sam Lustgarten says
Thanks for reading and replying to my article. I appreciate that this one resonated with you.
Recognizing this privilege and being humbled by the fortune that you’ve found seems to be an important part of the process for understanding more about income equality. Income doesn’t have to do with financial savvy – what you do with what’s left is important, though. Incomes have been changing drastically in recent years; often, for the wealthiest.
Thanks for recognizing why I wrote this.
Great article Sam. The examples of leaders on both sides you use is an enlightening juxtaposition. I’m glad to see awareness of income inequality is growing.
If you are interested in organizing, there is a growing subreddit, http://www.reddit.com/r/incomeinequality, dedicated to providing a forum for voices speaking out against income inequality. I have posted your article there.
There’s one item I want to correct you on, and that’s your last sentence, “Who will protect the most needy?” The most needy, the bottom 10% of society, are not who is harmed most by income inequality. It’s the middle-class, those 89% who occupy the 10th-99th percentile of incomes, who are being eroded and oppressed in order to pay for both the extreme excesses of the 1% and the basic needs of the lowest 10%. The ordinary middle class person can no longer afford basic needs without going deeply into debt. We’re essentially enslaving the majority of our population in order to pay for the lives of those at the extremes.
Stefanie @ The Broke and Beautiful Life says
The income inequality is clearly becoming more pronounced and more alarming. I don’t like to villainize the rich, but some ( the Koch brothers, cough cough), are disgusting in how they use their money to sway politics to benefit themselves. I don’t know what the answer is, but I know DeBlasio has it on his agenda to tackle the issue head on.
Sam Lustgarten says
DeBlasio really does seem to care about this issue. Seemingly, it’s his biggest challenge he wants to tackle. I hope he can do it! 🙂
Justin @ Root of Good says
I’m a little torn between living like a part of the 99% but having wealth closer to the 1%. It’s hard not to feel a little conflicted when you amass enough wealth to retire by 33.
What can we do? As a blogger, we can talk about ways for the common person to rise up above the normal debt-laden consumer lifestyles that are so prevalent. Save your money, invest your wealth, and become more financially prosperous tomorrow. In the meantime, focus on living a more genuine life today.
I think that even more than trying to emphasize ideals of personal frugality is to recognize the larger political-economic systems that reinforce and reproduce economic inequality and socio-political repression. Its not an accident or a result of some kind of “moral failure” that poor graduate students are being displaced due to private housing development–its arguably an inevitable, systemic tendency of capitalism, as part of the inexorable drive to accumulate and concentrate capital.
I appreciate the intention and purpose of this article. I think more people should think and act on issues of economic inequality, and the structural violence of capitalism (or at least, the violence that stems from concentrated economic power).
However, if I may make a friendly critique: I don’t think it really makes sense to take one anecdote about poor graduate students not protesting, and then declare that it is poverty itself that makes people unable to protest. I feel like there are larger factors at play that made the poor graduate students not protest: 1) the fact that they are students, and thus short on time and energy outside of their strenuous academic work schedules, 2) a probable lack of a culture of political engagement, or any kind of “protest infrastructure” that could have been used by the people to stage actions, and 3) the danger of repression, since they would be protesting against people who control their livelihoods (by virtue of being employed by the University).
I think this analysis is better, because these are factors that can be changed. On the other hand, if poor people indeed do not protest, than can we say there was ever any hope?
Historically, it has always been the masses who brought about radical change to society. It is only a question of how to turn despair and resentment into rebellious anger, and how to turn rebellion into positive, revolutionary change.