Rising Inequality, Part 2: Why it’s a Problem

So inequality is alive, well and growing worse, approaching or exceeding the levels of the Gilded Age at the turn of the century – what’s the problem?  Hasn’t inequality, as Jesus says of the poor in the Gospels, always been with us?  Even if inequality is rising, haven’t the lives of the poor and middle class been improving as well?  Doesn’t “a rising tide lift all boats” and don’t the rich deserve their “success,” as the creators of wealth and jobs?

In a word, “no.”  Rising inequality is problematic, even deadly, on several levels.  It is:

Immoral & Unjust: Catholic social teaching and all mainstream religion is grounded on the principle of the basic dignity and worth of each individual, created equal in the eyes of God.  This is affirmed in secular form by our Declaration of Independence.  If the Creator intends equality, our gross inequality amounts to heresy and extreme social sin.  By what right should a US CEO earn more in a day than his average worker earns in a year?  Why should a Bangladeshi garment factory owner make more in a week than his typical worker gets in a lifetime?  By what moral logic or ethical principle is this justified?

Undemocratic & Oppressive:  Concentrated economic power is easily converted to political influence through lobbying, campaign contributions, bribes and influence peddling.  It is no accident that, over a year into the Trump presidency, the only major piece of legislation to pass Congress is a tax “reform” that drastically cuts rates on corporations and wealthy individuals.  Polls continually show widespread distrust of our political institutions, a sense that “the game is rigged” against average citizens by wealthy special interests.  This leads to further disengagement from the system and lower civic engagement, ceding the public sphere to the fortunate few.  As former Supreme Court Justice Louis Brandeis well said, “We can have democracy in this country, or we can have great wealth concentrated in the hands of the few; we can’t have both.”

Unpopular & Resented: The Oxfam report cites a survey of 70,000 citizens in ten representative countries that reveals over 3/4 of respondents agree/strongly that economic inequality is a serious problem in their countries that should be “urgently” addressed by their governments.  Most people vastly underestimate the degree of inequality in their society and, when asked, express a desire for levels far lower than exist anywhere in the world.  Today, February 21, is the anniversary of The Communist Manifesto by Marx & Engels, written in response to the mass inequality of the early Industrial Revolution in Europe.  It eventually sparked revolutions that established communist-oriented governments in nearly half the world by 1950.  Gross inequality has been the source of most violent revolutions throughout history.

Unearned & Untaxed:  Economic incentives to study and work hard, take risks and make investments are justified when they are proportional to the effort exerted and the benefits rendered.  Yet no one can plausibly argue that the few should live in limitless luxury while the world’s majority survives on less than $10 a day (with 800 million under $2 per day).   Moreover, much of this wealth is not earned in any meaningful sense.  Oxfam estimates that 2/3 of great fortunes are the product of inheritance, monopoly control and political cronyism.  To add insult to injury, the super rich then engage in widespread tax avoidance schemes, shielding some $7.6 trillion worldwide from national governments, as the recent Panama and Paradise Papers scandals have shown.  This is an unpatriotic theft of education, health care and social services from the poorer citizens of the very societies that privileged them.

Economically Inefficient & Wasteful: The recent World Inequality Report shows the top 1% captured 27% of total global income (and over 80% of wealth) from 1980 – 2016.  The top 10% got 42%, while the bottom 50% received just 12 cents of each extra dollar.  Under this level of inequality, the global economy would have to grow to 175 times its present level to lift everyone in the world above $5 a day!  This is not only absurd but impossible, as the biosphere would collapse long before then.   

Unhealthy & Deadly: According to Dr. David Ansell in The Death Gap: How Inequality Kills (2017), residents of the poor Chicago neighborhood where he works live 20 fewer years, on average, than those of a wealthy area one mile down the road.  Michael Marmott, in The Health Gap: Challenge of an Unequal World (2015), finds the same 20 year differential in cites worldwide, while David Johnston (Divided: The Perils of our Growing Inequality, 2014), cites a recent Harvard study that links 1/3 of all US deaths to a rising inequality, which “kills through structural violence.”  He notes that, despite comprising 42% of all global health spending (with only 4.5% of world population!), “Americans die younger than people in all other rich nations.”  Imagine the outcomes in a country like India, with 1.3 billion souls (800 million desperately poor) and no national health program to speak of.  Pope Francis was regrettably right: “inequality (quite literally) kills.”

Postscript: Having reviewed the recent rise in inequality and the reasons it’s a problem, I will move to some possible solutions.  I warn those of a conservative bent they may make you unhappy.  All involve increased taxation of the wealthy and redistribution (I know how you hate that word!) of resources to the lower classes.  How could it be otherwise?  I know of no “free market” solution to  rising inequality – how can you cure the disease with the cause?  Yet perhaps, like inoculating  a vaccine with a dose of the germ, we can find a way to harness the growth potential of the markets without the horrible maldistribution of rewards in our current system.  In fact, if we adhered to Adam Smith’s vision of early capitalism, based on free competition among many small enterprises, we might already be there.

 

 

 

 

 

 

 

 

 

As Martin Luther King Jr. said, “injustice anywhere is a threat to justice everywhere

 

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