The Always Rich and Forever Poor, Wealth Inequality in America
Wealth inequality is a growing problem and is more than a question of disparate incomes. It is instead a matter of vast disparities in the allocation of resources, the determined protection of favored interests and the gross accumulation of wealth by the very few.
Economist Emmanuel Saez and Gabriel Zucman help clarify the issue. “Income inequality describes the gap in how much individuals earn from the work they do and the investments they make. Wealth inequality measures the difference in how much money and other assets individuals accumulate from all sources…”
“There is no dispute that income inequality has been on the rise in the United States for the past four decades. The share of total income earned by the top 1 % of families was less than 10 % in the late 1970s but exceeded 20 % by the end of 2012. Wealth is about 10 times as unequal as income and in America and the wealthiest 160,000 families own as much wealth as the poorest 145 million families. http://fortune.com/2014/10/31/inequality-wealth-income-us/.
In 2006 alone more than 40 % of total income went to the wealthiest 10 % of the population. http://www.nytimes.com/2006/06/25/business/yourmoney/25view.html?_r=o. And according to a recent report by the IRS, 80% of the U.S. population has seen their income fall in the last 5 years.
The economic recovery, while helpful, has not closed the gap. In 2012, the National Employment Law Project issued a report on the impact of the recent recession entitled “The Low-Wage Recovery and Growing Inequality” The report studied the job loss and growth trends during and after the recession/recovery.
“During the recession, employment losses occurred throughout the economy, but were concentrated in mid-wage occupations. By contrast, during the recovery, employment gains have been concentrated in lower wage occupations (retail sales persons, food preparation workers, laborers and freight workers, waiters and waitresses, personal and home care aides, office clerks and customer representatives), which grew 2.7 times as fast as mid-wage and higher-wage occupations.”
“The unbalanced recession and recovery has therefore meant that the long-term rise in inequality in the U.S. continues. The good job deficit is now deeper than it was at the start of the 21st century.”
Regrettably, education and hard work provides no counter balance. For example, most college professors have master’s and doctorate degrees. “Yet, a majority of these teachers … are in fact adjunct professors, who are paid next to nothing ($2,000 to $3,000 per class), receive no employment related benefits such as health insurance, are only hired semester by semester and are rarely employed during the summers. See Troy Earl Camplin, “A Degree of Exploitation”, the Dallas Morning News, Wednesday, June 17, 2015, p. 19 A.
Not surprisingly, it is the top of the academic food chain that is well if not overly paid. The heads of 93 colleges and universities made more than the President’s reported total annual income of $503,183. Nine of the 93 made more than 1 million in 2013. The national average for college presidents is $428,000/yr. http://www.huffingtonpost.com/2014/07/02/college-presidents-make-paid-million_n_5381836.html.
And these are not the most well compensated campus employees. This distinction belongs to college and university coaches many of whom make millions of dollars/yr. The same disparity of income applies to the medical profession. While many health care providers struggle to get by, American doctors are the highest paid physicians in the world.
This one-sided redistribution of wealth is in large part the result of the now discredited “trickle down” economics. Cutting taxes for the wealthy has not created a “rising tide” that lifts all boats. It has instead produced a tsunami that has sunk the poor and middle class. Nor does wealth trickled down. Rather, every drop of moister has been absorbed by top 10 %.
The late historian Tony Judt, in her book “Ill Fares the Land” discusses the significant social and political implications of wealth inequality:
“There has been a collapse in intergenerational mobility: in contrast to their parents and grandparents, children today in the UK as in the US have very little expectation of improving upon the condition into which they were born. The poor stay poor. Economic disadvantage for the overwhelming majority translates into ill-health, missed educational opportunity, and—increasingly—the familiar symptoms of depression: alcoholism, obesity, gambling, and minor criminality.”
Consider also the negative impact of economic disparity on the family. The major cause of divorce is neither infidelity nor miscommunication. It is instead financial stress and insecurity. Little wonder that approximately 1.3 million students enrolled in U.S. public preschools and elementary schools were homeless during the 2012-2013 school year. http://money.cnn.com/2014/09/22/pf/student-homelessness/index.html?hpt=hp_14. Three years hence that number has undoubtedly grown.
In addition, wealth inequality agitates already fragile social fault lines. When times are bad, the tendency is to blame others, especially those outside one’s group or political/religious persuasion. Witness the inflammatory comments of a certain presidential candidate regarding Mexican immigrants. Consider recent public disturbances like those in Ferguson and Baltimore. And ponder the recent massacre in Charleston.
The main terrorist threat in the United States is not from violent Muslims, but from right-wing extremists. Over the last 13 and ½ years, 20 plots were carried out by violent Muslin extremist, resulting in 50 fatalities.
In contrast, a study by Arie Perliger, a professor at the United States Military Academy’s reveals that American right-wing extremist averaged 337 attacks per year in the decade after 9/11, resulting in 254 fatalities. See http://www.nytimes.com/2015/06/16/opinion/the-other-terror-threat.html?_r=0,
But the greatest danger posed by wealth inequality is to our democracy. Money and wealth are liquid assets which pool in financial and political reservoirs. So after amassing more wealth than can be spent in any one lifetime, the super rich turn their attention to acquiring and preserving political and social dominance.
Citizens United (money is speech and corporations are people), the Hobby Lobby case (corporations have 1st Amendment religious rights), the increase in corporate mergers and the decrease in corporate regulations, the decades long assault on unions, as well as policy outcomes that favor corporations, business and professional associations do more than simply benefit the rich. The same applies to the reduction in estate and capital gains taxes, the playground of the rich, i. e., the Stock Market, a tax rate of 15% on capital gains versus 35 % on wages and the shame of sales tax on bread but not on bonds, stocks and futures.
Rather, these and other wealth based advantages are designed to maintain the status quo. And despite the growing chorus for criminal justice reform, we can expect no meaningful improvement of a system that is designed to protect the property and political interest of the dominate class.
In conclusion, the American Dream provides no guarantee of financial success. It does however constitute the promise of opportunity. Wealth inequality and economic disparity circa 2015 negates this promise by making a few of us forever rich while the remainder always poor.
Wealth inequality will therefore be a significant issue in the 2016 Presidential election. We can only pray that the candidates will provide practical solutions to this festering problem.
Leo Barron Hicks, Founder and CEO
Blackacre Policy Forum