In­come inequal­ity — does any­one care?

In 1980 in both Europe and the United States the top 1 per­cent of adults earned around 10 per­cent of na­tional in­come. To­day, as noted in the World Inequal­ity Re­port 2018, in Europe that has risen to 12 per­cent, while in the United States it has reached

Tampa Bay Times - - Opinion - WIL­LIAM FELICE Wil­liam Felice is pro­fes­sor of po­lit­i­cal sci­ence at Eck­erd Col­lege and the author of “The Ethics of In­ter­de­pen­dence: Global Hu­man Rights and Du­ties” (2016). Felice can be reached via his web­site: williamfe­lice.com.

U. S. Depart­ment of Hous­ing and Ur­ban De­vel­op­ment Sec­re­tary Ben Carson recently an­nounced strict new work re­quire­ments to qual­ify for hous­ing sub­si­dies and higher min­i­mum rents. The plan will “re­sult in a 44 per­cent rent hike for more than 4 mil­lion low­in­come house­holds” and elim­i­nate in­come de­duc­tions for fam­i­lies who pay med­i­cal or child­care ex­penses. The poor will now have to choose be­tween feed­ing their chil­dren, buy­ing medicine or pay­ing their rent.

Yet for the wealthy, on the other end of our eco­nomic di­vide, life could not be bet­ter.

Ox­fam, the Bri­tish hu­man­i­tar­ian and de­vel­op­ment or­ga­ni­za­tion, recently re­ported that 82 per­cent of all global wealth gen­er­ated in 2017 went to the world’s rich­est 1 per­cent. Trag­i­cally, those liv­ing among the bot­tom 50 per­cent saw no in­crease in wealth at all, and in­stead per­formed of­ten danger­ous and poorly paid work to sup­port the ex­treme wealth for the few.

These star­tling global trends re­gret­tably held true in the United States as well. For ex­am­ple, in 1980 in both Europe and the United States the top 1 per­cent of adults earned around 10 per­cent of na­tional in­come. To­day, as noted in the World Inequal­ity Re­port 2018, in Europe that has risen to 12 per­cent, while in the United States it has reached 20 per­cent. Dur­ing this same pe­riod the an­nual in­come earn­ings for the top 1 per­cent in the United States have risen by 205 per­cent, while for the top 0.001 per­cent the fig­ure is an as­tound­ing 636 per­cent. In con­trast to this growth, the av­er­age an­nual wage of the bot­tom 50 per­cent has stag­nated since 1980.

Yet, does any­one care? There is cer­tainly no strong move­ment in ei­ther of our ma­jor po­lit­i­cal par­ties to ad­dress eco­nomic inequal­ity. In­stead, there is an over­all ac­cep­tance of poverty and huge dis­par­i­ties of wealth as a nec­es­sary con­se­quence of our eco­nomic sys­tem. This ac­cep­tance of mas­sive suf­fer­ing as a nec­es­sary side effect of eco­nomic de­vel­op­ment is not only morally wrong, but also an­a­lyt­i­cally wrong. Inequal­ity at this level is not “nec­es­sary” in any eco­nomic sense. In fact, ex­treme inequal­ity is in­ef­fi­cient and counter-pro­duc­tive to­ward build­ing a strong and vi­brant econ­omy and so­ci­ety.

Ex­treme eco­nomic inequal­ity in the United States has eroded a sense of trust and fair­ness in the in­sti­tu­tions of our so­ci­ety. This is man­i­fested not only in the rise of crim­i­nal­ity, but also in the lack of pop­u­lar sup­port for pub­lic goods, in­clud­ing our schools, hos­pi­tals, parks, trans­porta­tion sys­tems and so­cial ser­vices.

The poor find them­selves with re­duced op­por­tu­ni­ties — fail­ing schools, lack of med­i­cal care, un­af­ford­able hous­ing, and un­able to bor­row to start a small busi­ness. Equal­ity of op­por­tu­nity for mil­lions is sim­ply a mi­rage. Ac­cord­ing to the U.S. Cen­sus Bureau, in 2017 more than one in ev­ery eight Amer­i­cans were liv­ing in poverty, 40 mil­lion, equal to 12.7 per­cent of the pop­u­la­tion; with al­most half of those (18.5 mil­lion) liv­ing in deep poverty with fam­ily in­come below one half of the poverty thresh­old.

Amer­i­cans of all races on the very bot­tom liv­ing in “ab­so­lute poverty” ex­pe­ri­ence a life of im­pov­er­ish­ment and mis­ery al­most be­yond com­pre­hen­sion. Ac­cord­ing to An­gus Deaton, the 2015 No­bel lau­re­ate in eco­nom­ics, there are 5.3 mil­lion Amer­i­cans who are ab­so­lutely poor by global stan­dards. Such des­ti­tu­tion leads Deaton to con­clude: “It is hard to imag­ine poverty that is worse than this, any­where in the world.”

For­mer U.S. Supreme Court Justice Louis Bran­deis elo­quently stated: “We can have democ­racy in this coun­try, or we can have great wealth con­cen­trated in the hands of a few, but we can’t have both.” Our lead­ers have ig­nored this warn­ing. In­stead, the three rich­est peo­ple in the United States own the same wealth as the bot­tom half of the U.S. pop­u­la­tion (roughly 160 mil­lion peo­ple).

We can do bet­ter. The late, great econ­o­mist John Ken­neth Gal­braith ar­gued that the poor have a spe­cial claim on re­sources. Our econ­omy can be more equal and ef­fi­cient at the same time. Pub­lic spend­ing can recre­ate fair­ness with nec­es­sary in­vest­ments in pub­lic ed­u­ca­tion, health care and pub­lic trans­porta­tion as pri­or­i­ties. Our bud­get and spend­ing pri­or­i­ties should re­flect in­vest­ments that meet the needs of all our cit­i­zens and not just the 1 per­cent.

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