Category Archives: causes of income inequality in America

Income Inequality

I would say that one of the most often discussed topics lately is income inequality in America. Dozens of charts and graphs have been generated both by the Conservatives and the Liberals. I was going to include lots of these graphics in my discussion but then I realized they are all available to all of us out there on the web and that they are beside the point. All the charts and graphs show that, indeed, the money is concentrated among a small group of people and that the increase at the top has been in the range of 390-400% while the rest of us have gained little or nothing. (The stock market climbed from 11,000+ in January, 2011 to 13,000+ in March of 2012, yet my monthly pension check decreased by $5 per month.)
On April 16th of 2012 the NYT published an article by Annie Lowrey that summarized the results of a study by Piketty and Saez, 2 French economists who went through all tax and other numerical records for America from the present back to 1913. They conclude that the gap between the rich and everyone else was only this great once before and that was just before the Great Depression. Of course now everyone is arguing about whether the study is accurate or flawed.
The point of this flurry of charts and graphs is to determine how the rich got so rich. The Conservatives say it had nothing to do with skewed tax rates and tax codes and business subsidies and regulations favoring business and the wealthy. They insist that they earned their bucks through their own hard labor, they are not going to feel guilty about it, and they are not planning to pay any more money to deadbeats.
The Liberals believe that it is clear when so much money is concentrated in the pockets of so few that something in the society is out of kilter and we need to find some way to even out the distribution of money in the future. (My chart above is from a liberal media source, Mother Jones and can be found in an article called “It’s the Inequality, Stupid” along with many more charts and graphs.)
What are the chances that in times of such great divisiveness these two groups will even accept each others’ charts and graphs? It doesn’t really matter whose data tells us most about the causes of income inequality.  A society where such inequality exists and continues over a long period of time does not work and cannot survive.
We know what happens when the wealthy don’t prop up the poor. Sewers run down the centers of streets. Vermin take over towns and spread disease. The poor become ever poorer and they no longer attend schools. People live without pride and without hope. The hopelessness at the bottom drags the society down. Whole areas of towns and cities become off limits to people who are more well-off (except for those adventurous rich who like to troll the depths). This is what it used to be like. Even then churches and private groups tried to help the poor. It was not enough then and it will not be enough now.
We have populations that are exponentially larger than they were the last time these conditions pertained. The church is not nearly as powerful as it was then. Since those days we have learned that societies that want to survive and thrive must look after their most vulnerable citizens. We even thought we had found programs that would help us help ourselves in times when we were in a vulnerable position, programs that now seem at risk. It took us centuries to become so enlightened. We know it has given us and other countries that live in a similarly enlightened manner the best quality of life ever enjoyed. We have almost wiped out most contagious diseases (at least the dangerous ones). We live in an almost compulsively hygienic society with excellent plumbing and plenty of hot and cold and clean running water. It is our pride that all America citizens enjoy a lifestyle found only in nations who look after their young, their old, and their less fortunate.
You don’t even need to help support those less fortunate than yourself for reasons of charity. There are more than enough really selfish reasons to contribute a larger percentage of you wealth, whether it came from skewed financials or not, to keep the world livable. Our wealthy Americans are also our most educated Americans. They understand that there are all kinds of repercussions in a society where the wealth is concentrated at the top which make it more than smart to plow some cash back into the society in which they live. Perhaps, however, I am giving them too much credit.
This belief that they are creating a new class of people in our society who see relying on government programs as a viable way to finance an indolent lifestyle probably does have some merit. Ending all government programs and throwing everyone into the deep end of the pool is not what I or anyone else would call a plan. Putting everyone at the mercy of the private sector whose sole goal is profit for the company and the stock holders is not going to work as a plan for providing services. Too many people will not be able to afford it or will opt out. Private sector competition is not helping to keep our costs at reasonable levels, instead corporations compete to see who can profit the most without sending their customers fleeing for the hills.
If we are patient for a little while we can see how a sort of public-private mix will work. Patience is not exactly our strong suit right now. As for the freeloaders who have lost touch with the great American dream that hard work and perseverance and a dash of innovation will produce not only a living but also a sense of pride and a family legacy – wouldn’t praise, encouragement and some programs that require them to “get a life” work better than making everyone suffer for the indolence of this small (but growing) group of people who are gaming the system.