The subject of American Inequality is almost too hot to handle right now with any objectivity. It has that same volatile quality of so many American issues, like abortion. The moral core of the subject is expected to be self-evident. People are expected to choose a side as a matter of moral reflex, rather than intellectual deliberation.
The result is a contentious debate between two seemingly irreconcilable sides. Everything you can find to read about it is a tirade.
Much of the contentiousness and polarization comes from the fact that this is an election year. The issue of American Inequality is being used opportunistically to foster partisan division and drive votes, both hither and yon. The upcoming election is not only polarizing the public on the issue of American Inequality, it’s giving it urgency and bringing it to a head.
To speak of the subject without bias is difficult. The words available to describe it convey bias. Even the use here of “American Inequality” suggests a bias. And there will be other terms below, whose mere use suggests bias. Words like “The Rich” or “One Percent” are hard to separate from the accusatory context in which they are normally presented. In this case, the words are here just because these are the terms that people will recognize. I’m not interested in assessing the rightness or wrongness of these terms, but in being able to talk about this thing called American Inequality. And to do that meaningfully, it seems best to use the words that people are already using in the conversation, rather than to try to introduce new, neutral (or more equivocal) terms, whose meaning may be unclear.
You can certainly credit the Occupy movement with bringing American Inequality to our greater attention in 2011, but the widening gap between haves and have-nots has been evident for quite some time. The metric most commonly used to gauge Inequality is called the Gini Index. As you can see here, the Gini gap for Income in the US has been widening for more than thirty years.
Of course, it’s not merely that the Gap is wide or getting wider that alone creates concern. The numbers are just data that can be used to support an argument. The numbers by themselves would mean nothing to most people, unless they were given a framework with which to connect those numbers to their personal situation. In this case, the framework is apparently a zero-sum economic system in which income gains at the top come at the expense of income gains at the bottom. Then, it helps that lots of people in America right now are actually unemployed, poor, etc., to popularize the idea of income inequality as a possible cause of unemployment and poverty.
Whether or not this cause-and-effect relationship really exists between increasing income at the top and decreasing it at the bottom is the subject of some discussion. But, on the surface at least, it seems arithmetically plausible, even likely. The ways to correct the imbalance, after the fact, are much easier to see. Perhaps the most obvious of these is taxation. The logical reasonableness of using taxation as a way to redress income disparity makes it easy to boil the whole Inequality problem down to a matter of tax adjustment. And the moral argument, accordingly, collapses down to the manageable “Should the Rich support the Poor?” The Rich can only morally villainize themselves whenever they object.
The financial collapse of 2008 exposed a different model for villainy of the Rich against the Poor. Because it intersected greed and disregard for the Poor, this one is a lot more morally damnable than just saying “No” to paying more taxes. This example put the spotlight on the banks, first, then on the permissive de-regulation, then, finally, on the money that made it happen — by supporting elected officials, lobbying etc.
The widening of the Gap feels a lot less abstract, suddenly.
Now that we have a few mechanical examples, we can better understand what the change in the Gini Index really shows us. The widening of the Gap is the result of ongoing optimization by the wealthy for wealth-creation and wealth-retention. Simple as that. This includes using their money to shape the world into the form most optimal to their interests. And that includes using money to buy political influence, which in turn has the capacity to influence a wide range of factors, from legislation to public policy. Some of the money goes right into marketing. But, it’s the strong political affiliation (with the Republican Party) that creates their most powerful infrastructure for messaging to the People.
This gives great insight into how the relationship between the Republican Party and the One Percent must have been developing over the last thirty years. It is difficult to overstate what an absolutely indomitable combination this is.
It’s safe to assume that, in some way, there has been a strong, money-driven relationship between Wealth and Politics for at least as long as the Gap’s been getting wider. What is remarkable today is the openness of this relationship and the clear polarization of Wealthy interests over to the Republican Party. It becomes the raison d’etre of the GOP, now, to convince us that the best things for America are closely aligned with what’s best for the One Percent. With unlimited resources, that’s going to be a powerful truth-manufacturing machine.
The Democratic Party is left holding the shitbag, having to stick up for the unclean masses.
The political polarization based on this dichotomy makes it easy to create a dialog that is dominated by negotiation over handouts. This is what we have right now. The illusion that the Big Picture is about getting more money from the Rich to support the Poor.
"The most likely explanation of the relationship between inequality and polarization is that the increased income and wealth of a small minority has, in effect, bought the allegiance of a major political party. Republicans are encouraged and empowered to take positions far to the right of where they were a generation ago, because the financial power of the beneficiaries of their positions both provides an electoral advantage in terms of campaign funding and provides a sort of safety net for individual politicians, who can count on being supported in various ways even if they lose an election." — Paul Krugman
As influential and powerful as the hand of the One Percent in politics may already be, it’s reasonable to expect that the power and influence will continue to increase as does the Wealth.
If you want to see the Big Picture, you have to look at this self-optimizing, self-perpetuating system that’s going to keep widening the Gap ad infinitum. And the big moral question, finally, is whether that system is insupportable on moral grounds.
Admittedly, this is not the easiest moral perspective to sell when everyone is more “locally” distracted by the (arguably more pressing) moral imperative of dealing with present poverty and present need. This is, by comparison, an abstraction, where the moral argument is practically in the realm of philosophy.
"An imbalance between rich and poor is the oldest and most fatal ailment of all republics." — Plutarch
Objections on principle don’t shed much light on the moral problem. To grasp the moral implications of ever-increasing Inequality, you have to look back in History. I think it’s fair to say that, given some time, the current widening trend could create class differences in the United States as meaningful as the power imbalance between the Conquistadors and the Incas. Remove the necessity for mistreatment and direct, physical conquest, and the comparison loses much of its absurdity.
Ultimately, the relationship between the One Percent and the American Public will be dictated by how we fit into the world they create. It needn’t be all bad. If the Rich will require us to Produce on their behalf (and they almost certainly will), there is at least the prospect of employment. In essence, the relationship is the same as that between the Pharaohs and the workers who built the Pyramids. All that’s different are the terms of employment. And this is the model for civilization that we see everywhere in Human History, and even today in many parts of the world.
What was exceptional in the American Experiment was the conscious desire on the part of the Founding Fathers, not to depart entirely from this basic model, but to establish new and better terms of employment for the masses. Exhibit: The Bill of Rights and The Constitution. These documents possess much prescient insight, but they offer no direct counsel on the problem of American Inequality.
On the one side, there are all these great sentiments about the importance of unlimited opportunity.
On the other side, there is only the vague, future-facing admonition that we should keep our eyes open for Tyranny, and be prepared to take revolutionary action when necessary.
Some say that people need to re-engage the political process.
“Sadly, contemporary intellectuals have shown remarkably little informed interest in the nitty-gritty of public policy, preferring to intervene or protest in ethically-defined topics where the choices seem clearer. Young people with activist inclinations may mistakenly believe that, conventional avenues of change being hopelessly clogged, they should forsake political organization for single-issue, non-governmental groups unsullied by compromise.” — Tony Judt
But it’s hard to put full faith in that process, given all that we’ve learned. It may already be beyond the powers of legislation to do anything about the widening Gap. It’s not just that the Money interests would block the legislation. It’s also that the legislation is itself difficult to imagine. How would we go about limiting the Gap? Would we try to impose a ceiling on net worth? No, of course not. That’s silly. What we get to vote on, instead, are remedial programs intended to appease local needs over the short term.
For some people, the moral problem of unchecked Inequality disappears entirely when Opportunity is ensured for all.
"Is the problem simply that some households make more than others, in which case policymakers should be focused on closing this income gap by any means at their disposal, indifferent as to whether government policies aimed to close relative inequality result in lower absolute levels of income? Or is the problem that incomes for households in the middle- and lower-quintiles are not rising fast enough, in which case policymakers should focus first and foremost on creating the conditions for income growth and job creation?" — Paul Ryan
That will be the GOP Party Line for November on American Inequality, and you’ll hear it from Mitt Romney as soon as he learns it.
We’ll have to see how that commitment to Opportunity holds up over time.
But, no matter what happens in November, it’s very difficult to imagine how the influence of money could ever be extricated from politics. The cynic would say that there has never been a separation of Money and Politics, in America or anywhere else. And that it’s folly to seek to separate the inseparable.
This may be true.
From this historical remove, it appears that the period of comparatively narrow Gap (roughly between the end of World War II and the end of the Reagan Administration) may have been an anomaly. The exception, rather than the rule.
The fear is that with great power imbalance comes Tyranny, unavoidably. That’s all we’ve seen so far from Humans.
But, maybe America will prove the Exception it set out to be.
Small Area Income and Poverty Estimates, November 2011, US Census
Household Income Inequality Within U.S. Counties: 2006–2010, US Census
Inequality in the Distribution of Income: Trends and International Comparisons, 2009, Congressional Research Service