Now that we’re on the other side of the Bernie Sanders campaign, the claim that American society suffers from rampant inequalities is no longer a shocker. If anything, Senator Sanders’ candidacy proclaimed inequality as public enemy number one. He’s helped us understand that inequality in the US (and elsewhere) consists of three sub-categories: income, wealth, and opportunity.
Income inequality is the most accessible of the three, revealed by comparisons in hourly wages, daily wages, and yearly salaries of workers. Income inequality is on the rise in the US, and has been for more than thirty-five years.
To understand wealth inequality, consider that the Dow Jones Industrial Average recently crested 18,000. Climbing since July, the average has now hit an all-time high of more than 18,500. Are you among the 55 percent of American adults who own stocks? Before the 2008 “Great Recession” when the Dow Jones index fluctuated between 12,000 and 13,000, close to 65 percent of Americans owned stocks. Today, the pool of stock owners as a percentage of total population is the smallest it’s been in a generation, concentrating wealth. Increases in stock market indices generally mean those that already have plenty get more.
A number of us (myself included) have retirement pensions and other holdings in the stock market. I fit the majority stockholder profile: white college grad living in a household making more than $75,000 per year. According to the Pew Research Center, 55 percent of whites, 28 percent of blacks, and 17 percent of Hispanics held stocks as of 2013. Financial market holdings, along with business and home ownerships are the main markers of accumulated wealth. The racial wealth gap has increased since 2008 in the US – whites have thirteen times greater wealth (overall assets minus liabilities) than blacks, and ten times greater than Hispanics.* Double or triple would be a significant difference – thirteen and ten times greater reveals a rigged system, historically and currently so.
Economist, financier, and author Mohamed El-Erian best explains opportunity inequality in his book The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse (Penguin Random House, 2016): “The worsening of income and wealth inequality has been so pronounced within countries that it now also undermines opportunities” (p. 84). In other words, as inequality continues to increase in the sub-categories of income and wealth, opportunities decrease. This explains why the great American tradition of economic and social mobility is morphing, especially during the past thirty-five years, into economic and social immobility. El-Erian, an American with extensive work experience worldwide, warns that the important role of inequality serving to incentivize and reward hard work and entrepreneurship now takes a back seat to excessive inequalities that harm society in many ways. We’re becoming stuck, and it’s not a good place in which to get stuck.
El-Erian further details inequality’s tightening grip. Wall Street has recovered from 2008’s Great Recession. Corporate profits, as a share of GDP, have reached record highs in the post-Great Recession era. Job creation has improved, but wages remain flat. El-Erian says while the rich continue to get richer, “conventional cyclical redistribution policies have been noticeably absent. With active budget policy making heavily constrained by political polarization, there has been a reduced emphasis on transfer payments and other support for the poor” (p. 87).
“Redistribution” – El-Erian knows that the use of the word is dangerous in today’s era of inequality. Since the first era of rampant inequality – the Gilded Age of the late nineteenth century – redistribution, however, has been an important tool to help make an unequal society a better society. Social Security, Medicare and Medicaid, Title 1 of the Education and Secondary Education Act, and Supplemental Nutrition Assistance Program (food stamps) are some examples of redistribution and transfer payments that specifically benefit the elderly and children in America. Without these programs, American society would be decidedly worse off.
What kind of society do we want to live in? What kind of society do we want our grandchildren to live in? I’m all for continuing to advocate for a society that is egalitarian, civil, and full of opportunity with just rewards.
And for those of us concerned that public administration is by design corrupt and inefficient? Yes, those in government need to be held accountable so that the above mentioned programs and other transfer programs are designed smartly and implemented efficiently. Hopefully, just as smartly and efficiently as have been the decisions and policies we’ve seen in the last thirty-five years to siphon income and wealth upward helping to create the trifecta of inequality that now threatens to destabilize our society.
*For you curious types (like me), as of 2013, Asian-Americans have wealth stores that are 70 percent of the level of whites.
This blog and website are representative of the views expressed in my book Just a Little Bit More: The Culture of Excess and the Fate of the Common Good. Distributed by ACTA Publications (Chicago), JaLBM is available on Amazon as a paperback and an e-book. It’s also available on Nook and iBook/iTunes, and at the website of Blue Ocotillo Publishing.
If you’re a member of a faith community – Christian, Jewish, Muslim, Buddhist, or other – consider a book study series of Just a Little Bit More. The full-length book (257 pgs.) is intended for engaged readers, whereas the Summary Version and Study Guide (52 pgs.) is intended for readers desiring a quick overview of the work. It also contains discussion questions at the end of all eight chapter summaries.
Readers of both books can join together for study, conversation, and subsequent action in support of the common good.
The Spanish version of the Summary Version and Study Guide will be available in September 2016. ¡Que bueno!
¡El librito de JaLBM – llamado Solo un Poco Más – saldrá este Septiembre de 2016!