Wednesday, October 26, 2011

Income Inequality: Why We Should Care


Some of my colleagues on the faculty think that my emphasis on income inequality as one of the biggest problems in the country today is misguided. One of my thoughtful friends from the Business Department, for example, while acknowledging that income inequality is "a problem and an issue," disputes the idea that this inequality is "the key driver of what ails the US economy."

I also heard supporters of Wall Street argue that the fact that the top 10% of the population is doing so well is a sign that they are doing what they are supposed to be doing as good capitalists--generating wealth. And that wealth, they argue, will eventually be put to good use, expanding business and creating jobs once there is a climate of greater economic certainty in the country (i.e., once Obama is driven out of office).

I've argued that the very inability of business people to understand the anxieties that Americans are experiencing is what is fueling the kinds of protests that we are seeing going on all around the country. And since (as the above graph clearly indicates) the richest Americans are getting richer at the expense of the average worker, these protests are only likely to get more extreme in the future as the middle class is forced to suffer with years of potential stagnation.

What we are experiencing, in fact, is a new Gilded Age--one in which the wealthiest Americans control more wealth, power, and political influence than they have almost at any other point in American history. Recent data clearly indicates that the wealthiest Americans now control almost exactly the same percentage of the nation's total income as they did at the beginning of the Great Depression. Income inequality in itself is not necessarily a problem. But the kind of radical inequality that we have now means that those with excessive wealth are able to buy elected officials of their own liking and lobby to weaken financial regulations and environmental protections (as they are currently doing). It means that we no longer have a government "by the people, for the people, and of the people"--a true democracy in other words--but a corporatocracy--rule by corporate interests for their own benefit.

This is not simply a "problem and an issue." It's a catastrophe for our democratic institutions.

During the Great Depression, it took someone like Franklin Roosevelt to save American capitalism from it's own excesses, greed, and shortsightedness. The rich didn't appreciate him for the financial regulations he put in place as part of the New Deal, but, in fact, Roosevelt was probably the greatest friend American capitalism had at the time. By moderating the excesses of capitalism, one could argue, Roosevelt gave us 40 years of economic growth that benefited business owners and workers alike.

Unfortunately, we have no Franklin Roosevelt on the public stage today. Republicans want to roll back all economic regulations and destroy the few government programs that still exist to protect the average American, and Democrats are too timid and corrupt to ever propose truly progressive legislation like we had during the New Deal or Johnson's Great Society.

So until the next FDR comes along, we probably have to resign ourselves to years of economic instability and hardship for the poor and middle class. But we certainly shouldn't expect those who are suffering most simply to disappear. There will be many more protests ahead of us, and these protests may in fact turn violent, as they already have in Europe.

That, unfortunately, is simply the price we will have to pay for our moral, political, and economic blindness. Consider it karma worked out on a societal level. In the end, we will most certainly reap what we have sown economically.

...and I'd hate to be working on Wall Street when that happens!

30 comments:

  1. I agree that income inequality is the great problem in American politics today, but I disagree with your idea that American capitalism can be reformed or moderated. Capitalism is an intrinsically corrupt economic system that has always and will always benefit the few at the expense of the many. What we need is a completely new economic model for the United States, one that distributes wealth more justly and evenly. That is certainly NOT corporate capitalism.

    I know you mean well, but you are basically selling out by your desire to save this hideous system.

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  2. You are, of course, absolutely correct in this argument. Whatever the ontological reality of those business folks’ perceptions of earned wealth and its social distribution, the functional (and political) reality is that people (not just Americans – people all over the developed world seem to be pissed off about this) are unhappy as they see wages stagnate or fall back to 1970s levels, their homes lose value, and their jobs moved to Asia. Today’s New York Times poll gives some support to this functional reality: http://www.nytimes.com/2011/10/26/us/politics/poll-finds-anxiety-on-the-economy-fuels-volatility-in-the-2012-race.html?_r=1&ref=todayspaper

    The 1970s saw many plans for development debated, especially in the United Nations, where most of the plans faced great resistance, particularly from the US. The blueprint for development that eventually arose and is in place now (“global free markets”), administered without any governmental oversight, and in violation of all nations’ sovereignty, by the WTO, IMF, and World Bank, doesn’t work. But America is not ready to talk about that piece of the puzzle yet.

    So keep banging your head against that brick wall, Michael. Remember that, while you may still be in a minority (especially in Nassau County), you are not alone. Here’s my first video form Occupy Chicago from a couple of weeks ago (I’m working on a second one, if I can just get these midterms graded…): http://rujournalism.blogspot.com/2011/10/cantor-occupy-movement-is-mob.html

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  3. Good read...I have a few thoughts to add:

    1: In the years after FDR, when we experienced economic prosperity, the American Businessman recognized a new way to make a ton of money: make things. The biggest economic problems stem from what you speak of above, but a close second is the lack of production of goods in this country. When the country's biggest export and largest source of private sector jobs and revenue are "Financial Services," there is something horribly wrong.

    2: The only way to be a successful capitalist is to have copious amounts of capital. The only way to be a successful politician is to have copious amounts of capital. Both of these are major hurdles for the "regular people." We cannot represent our interests if we cannot get into office. We cannot make the money from business that we need to support our campaigns if no one will help us get into business. You used to be able to have a good idea in this country and people would invest in it. Now, someone either steals your idea or buys it from you. Banks won't lend money and these great capitalists at the top would rather swipe your ideas than pay you for them.

    Hopefully I didn't ramble too much. Lets all keep banging our heads against the wall til something happens!

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  4. Christine DoughertyOctober 30, 2011 at 12:59 PM

    I agree completely with your argument. I believe that the major problem preventing us from stabilizing this balance of wealth is that there is very little that anybody in this country actually makes. We don't make enough clothing, food, cars, or anything else. People could begin taking small steps to feed their families. Grow a garden. Demand municipal space for a community garden. Call it a victory garden - Victory over Wall Street. Buy food you can't grow from farmer's markets or those in the supermarket that are domestically grown. Buy clothing, cars, computers and anything else you can from American companies, and from companies who don't outsource to China or India. Though you may not be able to get it as cheap, you will be boosting our economy. If we can help small businesses to survive, we won't keep giving all our money to that 1%.

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  6. "So until the next FDR comes along, we probably have to resign ourselves to years of economic instability and hardship for the poor and middle class"
    -Way to be optimistic, and i was looking foward to becoming an adult.

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  7. I agree with what the supporters of Wall Street argue that obviously the top 10% are doing what they are supposed to. Their job is to make money as capitalists if they weren't making money im sure people would complain about them not making money. Why should they be punished for working hard and making money?
    I agree that the government definitely needs to do something to change what is going on but I hope that it doesnt lead to violence like you say. I don't thinnk that would accomplish anything it would just leave the country more of a mess then it already is...

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  8. Your views reflect the kind of communist ideology that is long dead. You obviously hate the United States and everything it stands for. Have you ever thought seriously about returning to Europe for good? Income inequality will always exist in the United States and that means that the poor just have to get off their asses and make something of their lives. If people are not part of the 1% that you so loathe, the fault is entirely their own

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  9. I agree with your standpoints made in this article. I enjoyed the part that the "rich are getting richer at the expense of the average worker". It is sad, because it is true and a lot of Americans do not pay attention to that or in turn do something about it. If we are supposed t be living in a democracy where everyone has a say then how are the rich being taxed so little and the average American being taxed so much? Wealth has the power in America not the people. The richer you are the more power you have. Of course politicians do not want to get the rich on their bad side because the rich are the ones supporting their campaigns and giving money towards it. So of course the rich are going to support the politicians that support the rich and allow them to keep getting wealthier even if it is at everyone else's expense. Truthfully it is a very smart business plan they have going on but yet this smart business plan only benefits a small population of america. So because of this "business" plan they have going there are the middle and lower class are struggling. So while the rich have to worry who to support and where they should put their money into, the middle class and lower class are trying to figure out how they are going to pay their bills anymore, support their families or even put food on the table. I do not see this changing without protests going on and i do believe they are going to occur more and more. The rich will continue to get richer because they are basically the ones electing the politicians. As we know the rich are going to go for a politician that is lobbying for the riches needs not the middle class or lower class so it seems to be a never ending cycle. The middle and lower class can not be represented properly and efficiently if they are not being valued and never have a chance to get into office.
    I also agree that America needs to be better represented when it comes to buying goods. Everything you look at these days is made from other countries and brought here. It is time to stop buying from other countries and supporting their economy when are economy is tanking. It is time to spend our money within America to assist in our own economy.

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  10. I agree with what you are saying, the rich are ruling America right now. I also agree that there does need to be some income inequality but where does that end? American does need someone like FDR to change the system. With the type of people that the rich are electing to become President it will be hard for this trend to change and for the middle class to be able to afford to live the way that they have always been living. The rich will continue to get richer which will further extend the gap between classes like you have said unless some much needed change is made.

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  11. I agree with your points made in this article. I truly believe that no one in office right now is concerned with the fact that the rich keep getting richer and the poor are worse off then ever before. I don't know what can be done to fix these problems, but I don't think we will be seeing a change anytime soon.

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  12. Although I agree that there is certainly a problem plaguing the middle and lower class Americans, I don’t believe anyone has the answer. One point that stuck out while reading this is when you stated that we “no longer” have a government that is "by the people, for the people, and of the people". In my opinion, we never really had one to begin with. The foundation of our government was one that favored wealthy white men, who had power. And it does not seem like much has changed, so why would anything change now, centuries later? There has always been inequality in America Maybe not as severe, but it has always been there. If there is no incentive to “be at the top” why would anyone strive for it? I do believe that some inequality is needed to make government work, maybe not to this degree, but some. I don’t think anyone has the answer to fix today’s problem. I know I certainly do not and I think half of the politicians do either. However, I do not think protests such as the ones down on Wall Street are effective. Although that is another issue.

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  13. Unfortunately we are being led down a path we should have learned from already. Although the idea of protest almost seems necessary, lets hope we don't resort to violence as well. Wall street is not the creator of jobs, it is the expansion of businesses; therefore money should not be put into wall street, but simply, to businesses. Our lack of production, and dependance on others for food/clothing/goods is what is ultimatley hurting us.
    We seem to be in a bad position now, but throwing in the towel is not an option. Obama is in fact addressing the issues. The wealthy should be taxed higher then the lower and middle class. We are no longer the United States of America; seems to be the Divided States of America. Do we need another 'savior' like FDR to sweep us off our feet? Or will changes be made as promised?

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  14. "So until the next FDR comes along, we probably have to resign ourselves to years of economic instability and hardship for the poor and middle class" was a quote in the article that pretty much concluded what people nowadays feel about the economic status of our country. When Roosevelt was around, the country was in good shape, and people all around were able to hold small businesses and make money. There was always a job available for a person in need of work and money to be able to provide for themselves and their family. However, what else can you expect from the president today to do when the economy was already in bad shape before he took office? If there is anything that has to be said about this economy, is that it has been improved and you can only do so much to keep improving it at a pace that seem reasonable. According to the article, we can expect more arguments against the idea that this top 10% wealthier population are getting wealthier by the day. It was once said that “the rich are getting richer and the poor are getting poorer.” Unfortunately, as shown in the graphs, this quote is true. These supporters believe that their wealth will only benefit the economy by creating more employment and opportunities for the people, but will not realize that it will make lower and middle class population suffer more. Income inequality isn't just "misguided", it is also being misconceived with the real truth for the people who live in this country.

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  15. I would have to agree with you on one thing in your article and that would be when you explained about the graph. I could believe that the rich Americans would be getting a lot more richer then the middle class. Hopefully there could be a change in the future and that both classes could be equal.

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  16. I definitly agree that income inequality is the most signifigant problem in the U.S. It affects so many people and by fixing the inequality problem, many other issues associated with poverty will start to fade away. It is also the most diffucult to solve problem as well. Raising taxes on the rich and using that money to create programs that will give back to the lower and middle class would seem to be effective. However, as a politician in a system run by corporate interests, corporate funding and biased news corporations, proposing such an idea would be political suicide. It is sad that our country works that way, but unless something drastic happens, there is no way the rich would allow the government to take any moeny out of their overstuffed pockets.

    With unemployment so high, many Americans are willing to take any job they could find and the employer can give them minimum wage. If the employee has a problem with this the company could easily find someone else to replace them. People are not only accepting this low standard of living, they're lining up at the door for an oppurtunity to make minimum wage. If the companies have people willing to take this, they have no reason to pay higher. The only thing that makes sense to me is to raise minimum wage signifigantly. This would force companies to pay decent wages. The only drawback is that many firms will outsource their labor to other countries, leading to more unemployment. It's not perfect but perhaps if we make more laws limiting the use of labor from other countries this could be the best way to handle the inequality problem.

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  17. I strongly agree with most of what you are saying here. I believe that the middle class is beginning to suffer more than they already were, and the wealthy continue to become even wealthier. I don’t think that everyone should make the same income, because some people certainly work harder than others. I do however feel that it shouldn’t be such exaggerated differences. Having such a small amount of people with an extremely larger income than most Americans gives them too much power. It isn’t right that they are in control, because they use their power to continue to benefit themselves, and leave the middle class at a disadvantage. It is frightening that you stated that the wealthy control the same amount of income as they did at the beginning of the great depression. The gap between the two income groups will continue to grow, and this economic problem will only continue to get worse. I don’t agree with you saying that there will be some sort of a karma on a societal level. This has been the trend for decades, and the wealthy will continue to thrive while the rest of us struggle.

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  18. I agree with most of what you said in this article. I believe that the rich are getting richer, while the poor are getting poorer. I believe the society needs capitalism to thrive, however there needs to be some form of socialism also. I do not think its fair that the super wealthy pay a lower tax rate as the middle class. Middle class families are much more affected by tax rates compared to billion dollar corporations; by having something such as a "flat tax" more money will be able to be generated into society to help the economy. Obviously tax cuts for the wealthy have not created many new jobs or strengthened the economy in recent years. There also has to be more regulation of these companies so average americans can sustain themselves as opposed to the 1% getting richer.

    It is also interesting to me that although most people are aware of what is going on in the system no one is truely doing much about it. Aside from the people of "Occupy Wallstreet". Although, I don't fully agree with their stances, I applaud their effort. It seems to me that people are just dealing with the situation, although a lot of families are struggling. I agree with someone's previous comment about the people who are in such a need to have an income, taking any kind of job they could get just to survive. People shouldn't have to live like this. Unfortunately, many are struggling and I know this from personal experiences. Something needs to be done to fix the economy, or I firmly believe things will just get worse and people will be suffering more. And it's digusting that the people in charge are allowing these things to happen, and aren't doing much to go in a direction to help the citizens. It's inhumane.

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  19. I did not realize how severe this problem of income inequality really was on Long Island, until, of course, my family and I were directly affected by it two years ago. Our "social status" if you will changed drastically, and not for the better. My family had to not only move off of the island, but out of the state. I think that many of the wealthy people in the top 1% turn their head to such issues, because it does not affect them directly. I found it interesting to read that your colleague finds your concerns for this issue misguided. Perhaps, because it does not affect him or her directly? Bottom line is that many Americans are greedy, money hungry and selfish. It it was the media is brain washing our country to be like. Why should these rich folk care about the underdogs of society? How would it benefit them? I agree with most of what you are saying. Your idea that America is now a corporatocracy hits the nail on the head. The rich have control over everything.

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  20. I agree 100% with your writing. It is truly a catastrophe for our democratic institutions. We are no longer a democracy but clearly but a corporatocracy. the top 1% is so selfish and do not seem to be changing there ways. You said it best, these rich people that have bought there way out of all their problems and have bought and bought and bought do not understand what the every day struggle is. There is an "inability of business people to understand the anxieties that Americans are experiencing." If times continue the way they are, protests, violent protests, will definitly come about. Income inequality needs a facelift.

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  21. I agree that our country's income inequality is big issue that continues to ruin our country. The rich people use the economy and government to their advantage and the "bottom 90%" suffers. It is sad that the majority of the U.S. is in the same dilemma and the government isn't helping their people. At this rate, the wealth will have it their way and dominate the economy while the rest of the people can't afford to stay a float anymore. All the protests will go to deaf ears because the top 1% will not want to support any government changes that would hurt their advances. The cycle will reoccur until the second FDR comes along and buys us time to rebuild a fair economy.

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  22. With growing income inequality in the United States, it is hard for Americans to be hopeful of having a chance to move up the ladder. It seems that the rich are getting richer and the poorer are getting poorer. I agree with you that the top 1% receive lavish incomes at the expense of the hardworking middle and lower class which further widens the gap. There was a time where being the in middle class in the United States was considered a life that was well lived and prosperous. Now, fewer people are able to life that lifestyle anymore, with many people living from paycheck to paycheck. Today’s jobs often want people with the required education and skills to be hired, since big companies outsourcing to other countries to make a profit. Many would consider it would be beneficial to have people that are educated and skilled as workers, and it would give a chance for those in the lower class to move up, but you can’t deny that the upper class have the advantage of sending their children to better schools and investing in their education. Overall, I hope that major change happens in the United States and the greediness of the wealthy is put to an end, and that the hardworking majority of Americans are put back in control.

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  23. I strongly believe that we are at a stage where the income inequality is at its greatest point. The rich are only getting richer and the poor are only getting poorer. This is a very sad thing to see. I strongly believe that we do not have a say in things that go on because the ultimate decision comes down to the rich which are in charge of us and everything. What happened to being a "democracy"? I also agree that we will continue to see more and more protests because many people are starting to realize what in fact is going on to our society but then again many are still blind. We need someone strong like FDR to take over and do what is right for our people because it seems like if someone does not do that it may never change or will just take a very long time before anything does change.

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  24. I would have to agree. we are definatly growing in a manner where income inequality is an issue. The richer are getting richer, and the middle class is working harder and remaining stagnent. The working class is still working, and the rich are reaping all the benifits. I really doint think i have ever sat down and really researched or thought about this issue, but it is definatly apparent that the rich have to much control and something needs to be done.
    Joanna B

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  25. Maybe these statistics and information should be put out to the public because it seems as though everyone is turning the blind eye. I know because I am a part of the lower class. But what is there really I can do when we all know the wealthy is the one who controls the decisions?

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  26. It is very unfair and saddening to see that income inequality is still going on. The part where you address that Republicans want to cut back on government programs makes me support you one hundred percent and that is why I am a Democrat. It is unfair to have those struggling now continue to struggle and the wealthy continuing to live the good life. As a member of the middle class, I see my family working hard while facing struggles to get to where they have to be. This whole system is not right at all and those who have all the money and getting richer really need to see what its like for those in the middle/poorer class. They seriously need a reality check.

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  27. I did not realize how bad that income inequality was, until I read the story. I agree, something need to be done,but when? and who is going to start? It's so sad to see how much left for the poor to share between them.

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  28. It is a shame to see how income inequality is going on in America. The riches are getting richer and the other classes are struggling.The reality is we have to do something about it.

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  29. The rich keep getting rich and the poor keep getting poorer. We live in a society run by men with large bank accounts and fancy suits. The only way for a change to be made or a voice to be heard is by protest. The guy with an average bank account in jeans and a t-shirt has to come together with a large group of average joes and begin a protest. There are times where protest does work and if it doesn't as long as others know of what's going on then at least their voice was heard. If people don't stand and at least try to make a difference then nothing will change and they have no right to complain about how terrible things are in their society. -Megan B

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  30. I agree with this. Its the truth, the rich are getting richer and at who's expense, the working class. As time goes on it is only going to get worse. And the sad reality is that even when the information is known people are not doing anything to change the now almost inevitable future. That is the way the cookie or rather are society is crumbling though. Eventually in the not so far future I think some form of a rebellion will occur. It will most likely change the way we are currently running are society. As for the people working on Wall Street I will not be sorry for whatever may happen to them. I feel they have plenty of warning to look elsewhere for work before things get really ugly.

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