Economic Inequality: Part 2

Have you ever heard of a “GINI score”? This “score” is a statistical coefficient used in economics (don’t run away, this gets better). A GINI score measures wealth distribution in a designated area (like a country). Cutting to the chase, the score has been used to predict revolutions. Apples and oranges? Not really. The theory goes like this: the greater the GINI score operative in any given society (that is, the higher the measure of inequality), the greater the likelihood of a violent revolution occurring in that society. The United States has one of the highest GINI scores in the history of the world!

This post represents the second part of an article on economic inequality (see sG: Wages of Inequality – Economic Inequality, Part I). While the previous post focused largely on economic disparity as an idea and practice with devastating bio-psychological consequences, this post focuses more on us as a collective, on how our group-think generates behaviors relative to economic inequality and how those attitudes and behaviors might affect future change in this country. This article is long, although not particularly complicated nor difficult to understand. Take your time. Think through the issues. You might be surprised by your own opinions on these matters.

On the Brink?

In a November 2017 article that appeared on the inverse.com website, the above mentioned GINI score was presented as a common thread tying together some of the most “disruptive revolutions of human history”. From the results of one of the largest studies of its kind (involving 14 institutions) the GINI coefficient as applied to the United States raised some serious concerns about the future of America (and, by extension, the world).

The GINI scale ranges from 0, for the most egalitarian societies, to 1 (representing those societies that are the most economically unequal). Throughout history, societies have drifted toward increased inequality as certain factions within those societies discover and implement ways of creating and maintaining economic power and control over other people (i.e., creating and perpetuating wealth vs. poverty). Technology along with various sociopolitical and economic machinations represent the most frequently utilized methods for such domination. The inverse.com article concludes that “the report showed, half of the world’s wealth really does belong to a super-rich one percent, and the gap is only growing.” Unfortunately, for us, the world has never been very good at resolving inequality peacefully.

We have all heard references to “one-percenters” over against the “99%”. These complimentary ideas most likely originated with economists Thomas Piketty and Emmanuel Saez. The chart below, presented in the Aug 7, 2017 issue of the New York Times (online), was created by Thomas Piketty, Emmanuel Saez and Gabriel Zucman to show the divergent trend in income growth between 1980 and 2014.

The Times article along with many other sources support the fact that regardless how some might attempt to spin the current economic situation, the common person poignantly understands and, more importantly, feels the extent to which economic inequality is out of control. One wonders, then, why the U.S. congress has voted to increase the economic disparity in the country through its various legislative machinations of 2017. If the sociopolitical ferment was active before, what might be the outcome if this trend continues? Such governing behavior which permits the level of economic disparity apparent in the U.S. gives the general impression that the government does not care about the people. If the congress is operating over against the will and common good of the people, these elected officials must be motivated by something other than the common good—that for which they were elected. When the people feel their government has abandoned them…

A Red Line of Ferment

Stepping aside from numbers for a moment, consider what the red line on the above graph really means. To provide some human perspective, try interpreting the red line as “worker dissatisfaction”. Folks are unhappy, and for good reason. Research shows that for at least the last decade or more (1) low to moderate wage earners have worked harder, (2) companies have increased their “know-how” (improved procedures), and (3) the country and the world have experienced advances in technology. All three components have contributed to increased productivity. Such increases have equated to increased profit. If our economic system was equitable or “fair”, workers would have reaped the benefits of that increased productivity through commensurate increases in wages. Indeed, the U.S. economy took off after World War II and continued a steady “normalized” improvement, spreading the prosperity to much of the population until the 1970’s. As the economy rose, so did salaries. Most people received benefit from this “progress”. However, this trend started to change in the 1970’s (see the graph below).

Source:  The Economic Policy Institute

Without getting lost in the weeds by exploring the ideas of Arthur Laffer, his “Laffer Curve” and advice to the Reagan administration, “trickle-down” theory proposes that short term gains afforded to corporations and wealthy individuals (usually effected through relaxed regulation and tax cuts) should boost the economy and everyone should benefit. Instead, this trickle-down notion marked the birth of the great, widening divide between the super wealthy and everyone else. Almost 50 years later, the results of income inequality has become for many, almost unbearable. Yet a certain body of the U.S. congresspersons not only continued to advocate this approach, they recently signed into law an expansion of this idea.

As noted above, wages should track with productivity gains. Unfortunately, while a small percentage of workers have experienced moderate wage increases, a vast majority or workers’ wages have stagnated. Some have actually decreased. How can this happen? Where is all that profit going? We all know where the profits end up. While some of us want to believe poor folks have only themselves to blame, history does not completely support this idea. The poor might always be with us, but they—WE—need not be so poor nor should we stay that way. We need not “settle” for a comparatively small amount of wealth and we need not remain so hindered or limited in how comparatively little we can acquire.

“Since the late 1970’s, large wage gains have accrued to workers at the top of the distribution, and wages have been declining or stagnant for the bottom half of the income distribution.” (from Shambaugh/Nunn article in the Harvard Review).

Reverse Robin Hood

From the above stated and linked statistics one might or might not conclude that wealth has been systematically siphoned from the labor of lower wage earners to benefit more wealthy individuals. Regardless of the conclusion drawn, one should wonder about the general reason why wages have stagnated and what specific factors have caused wages for most workers to stall, to actually regress for some, while still others—those at the top—continue to soar. Just one example of the operation of this system can be seen in the practice of in wage freezing.

In order to increase profit (by reducing overhead costs) some companies suspend annual raises. These companies announce to their workers that “all” annual raises have been suspended. In the best case scenario, this process can be temporary, allowing a given company to stay afloat. On the other hand, some companies have begun to implement job-specific wage caps, even in situations where no advancement is possible to higher paying jobs. They announce that the wage or salary for a specific position is capped at a certain dollar amount, denying any further annual increases. When this policy is in place at the start of an employee’s career, such is the nature of the contract between the company and those workers. These workers can refuse the arrangement rather than commit to it. Unfortunately for many such workers, the policy is most often implemented long after the employee has worked in that company for years. The table is turned, apparently legally. Such is the nature of the system and the plight of workers.

The Demise of Labor Unions

Once upon a time in American, labor unions were strong—strong enough to effectively fight against wage freeze and other such tactics designed to force the burden of maintaining a company’s profits onto the backs of its lower wage employees. In a rather strident article appearing in the May 8, 2018 edition of Counter Punch, David Schultz points to the decline of labor unions as the reason why, despite the low unemployment rate, wages are still stagnant.

Are CEOs and upper management individuals subject to the wage freezing tactic described above? They could be, but they usually are not. Who reaps the benefits of such corporate behavior? In this regard, it should be noted that in most cases, lower and mid-level wage earners—not upper management—are those most likely to be burdened with wage freeze and other such tactics. Through such corporate behavior, the inequality that previously existed is intentionally expanded. Through this and other questionable, mostly unethical but completely legal means, lower and mid-level earning workers are systematically held back from advancing economically. Regarding such legal or “official” policies (specifically referring the the “Republican tax cut bill”, a November NBC news report commented:

“While Congress promises that slashing corporate taxes will deliver [the intended economic] boost, economists are skeptical that the benefit of a deficit-inflating corporate tax cut will benefit rank-and-file workers rather than the investor class.” (NBC New report).

Wage freezing is only one among many such tactics specifically designed to force hardship onto lower wage earners in favor of lining the pockets of wealthy stockholders and corporations. (Just a few of the other tactics include laying off or firing lower workers, systematic elimination of experienced, middle income workers to make way for inexperienced workers hired at a much lower wage, halting or retarding promotions, and diminishing or abolishing bonuses). As noted in a previous article [sG: Wages of Inequality ] according to a survey, for an individual to be able to afford the basics of living, some extras plus the ability to save a little requires an annual income of $150,000. Many, perhaps most of us just “get by”, some only barely. Is that really an appropriate measure of well being for the richest country in the world? The acquiescent attitude that affirms this situation as acceptable is the backdrop which permits the economic inequality we experience daily. However, that attitude has slowly begun to change.

A Measure of Discontent

Throughout history, in various places in the world, chronic economic (and political) unfairness has often led to the sociopolitical breaking point which appears as civil unrest at best and violent revolution in the worse cases. (If you are interested in what we might call “economic cataclysm through the ages”, take a look at the factmyth.com site – if you can get it to connect). According to a 2015 Gallup poll, 63% of Americans feel that wealth in the United Stated is distributed unfairly. That number has increased and continues to increase. What happens when people have had enough and refuse to take it anymore? Some might answer “Brexit”, others might suggest the outcome looks like what took up residence in the White House early in 2017. Still others might point to the rise of so-called “populism” (which, on the one hand might be partially defined as a movement for “the People” but on the other, particularly in certain parts of the world, as “fascism”).

This brings us full circle to the GINI score. Perhaps the simplest, most down to earth summary of the U.S./GINI issue is given by Lee Camp of Redacted Tonight. If you can deal with his incessant sarcasm, harsh language, and general snarky attitude, take a look at this video (from December 2017). For the propeller heads among us, try this video.

The current GINI score of the United States is .81!

As you can see from the graph and as reported by the 2016 Allianz Global Wealth Report (PDF), the U.S. maintains one of the highest GINI scores in the world. So what is the sociopolitical significance of such a high score? Should we worry, and if so, what about?

“The Pitchforks are Coming!”

As a result of consideration of the high GINI score of the United States, observation of the trends toward accelerating economic inequality and understanding the growing dissatisfaction of low to mid-range wage earners in America, some have begun to fear the possibility of violent social unrest. Academics have entertained such thoughts, various political groups have advocated it. So conversely, are we hearing sentiments like “let them eat cake” coming from the multi-million dollar homes of the wealthy and the towers of multinational corporations? In some cases, of course. But there are some “at the top” who are beginning to worry. One of those is venture capitalist Nick Hanauer.

I am a plutocrat [a persons whose power comes from her/his wealth]. Like many plutocrats, I have a broad perspective on capitalism and business. And I have been rewarded obscenely for that with a life that most of y’all can’t even imagine—multiple homes, a yacht, my own plane, etc….But let’s be honest. I am not the smartest person you have ever met. I am certainly not the hardest working. I was a mediocre student. I am not technical at all. I cannot write a word of code. Truly, my success is a consequence of spectacular luck, of birth, of circumstance, and of timing.” ~ Nick Hanauer

So why is this person rewarded “obscenely”—more than an equally hard working school teacher? A bus driver? A secretary, librarian, a store clerk, or an insurance salesperson? Is such an income disparity really warranted? What is “fair in this situation?”

In a video from 2014, Mr. Hanauer (citing statistics presented above and previously on this site and others) presents his case regarding the dire nature of our socioeconomic situation.

In 1980, the top 1% of Americans shared about 8% of national wealth while the bottom 50% of Americans shared 18%. Thirty years later, today, the top 1% shares over 20% of national wealth while the bottom 50% of Americans 12 or 13%. If the trend continues, the top 1% will share over 30% of national wealth in another 30 years while the bottom 50% of Americans will share just 6%. ~ Nick Hanauer

So-called “Reaganomics” which articulated the trickle-down theory has worked, but only for those at the top of the economic scale. As recently as the 2016 presidential election, Jeb Bush and others promoted the same idea (albeit veiled in politi-speak). The Republican tax bill of 2017 seared this idea into legislation. According to Nick Hanauer “we need to put behind us the trickle down policies that so dominate both political parties and embrace something I call ‘middle out’ economics.” (This idea of “middle out” economics is a complicated topic for another time, but which Mr. Hanauer briefly explains in the video above).

Discounting the various characteristics and skills which might reasonably create a justification for his “obscene” financial compensation, Nick Hanauer points to a salient personal quality that has aided his success as an entrepreneur.  He boasts at possessing a high tolerance for risk—not a characteristic most of us would even notice in ourselves or others.  As a part of this tolerance of which Mr. Hanauer speaks, comes an ability to anticipate future events (useful for ameliorating avoidance of risk taking but also useful in foreseeing the pitfalls/dangers of such behavior).  Mr. Hanauer has a sense of what might happen as a result of certain current conditions.  Accordingly, he admonishes anyone who lives in a “gated bubble world” to “wake up! It cannot last!”

If we do not do something to fix the glaring economic inequities in our society, the pitch forks will come for us. No free and open society can long sustain this kind of rising economic inequality. It has never happened…You show me an unequal society and I will show you a police state or an uprising…It is not a matter of if, it’s when. … So what do I see in our future today? I see pitch forks, as in, angry mobs with pitchforks.…it will be terrible when [the pitch forks] come, for everyone. ~Nick Hanauer

Well, maybe the pitchforks are coming. But maybe not.

Tomorrow’s Revolution

A sociopolitical revolution requires solidarity of The People. At the very least, such an occurrence requires a strong focal point of the rebellion which consistently and effectively garners public support. Support comes in many forms—some active, some passive. Passive support usually takes the form of allowance—the public might not like what is happening, what is being changed in the society, but for whatever reason, it fails to rise up to prevent it. Active support, on the other hand, usually looks like what you might expect from “revolution”—people getting together to forcefully accomplish some type of sociopolitical or econopolitical change.

The true revolution killer in the United States rests in the fact that solidarity on socio- and econopolitical issues is as split as we are about just about everything these days. (And there as those among us who want to keep it that way). Of course, by definition, most of us are not one-percenters. Most of us actually work for a living. Most of us do not reap the benefits of a rigged economic system. Most of us feel the unfairness of the current economic profile of the United States, even if we are not willing to admit it. However, eventually, many of us will find ourselves in a less than “fair” economic situation if we have not already. But does this mean we will feel the need to resort to revolution?

Confused Morality

As stated in a previous post, most of us at seekingGood are not Marxist, we are not communists and we are not even “official” socialists. But we do, however, honor the idea of fairness. If you remember the graphs presented in association with Jonathan Haidt’s Moral Foundations Theory, in general, the United States (at least the conservative wing) does NOT honor fairness as one of the most important moral categories.

We might point to the graph, suggesting that while many relatively conservative folks might be poor, these folks also do not hold fairness as a particularly important category. Such belief automatically creates a tacit (or even explicit) level of cognitive dissonance (discomfort). While these folk might feel the system is unfair, and while they might feel cheated, they find themselves in a “cast the first stone” dilemma when the question of railing against the system comes around. While these folks might feel the unfairness of the economic system, at the same time, many of these same folks continue to treat people unlike themselves unfairly, too often blaming those folks for their economic woes. In this regard, without much effort, one will immediately recognize the hubbub about immigration as a red herring designed to deflect the attention of economically strapped conservative folks from the true Nemesis of the People. Furthermore, such folks tend to gravitate to notions of “self-reliance”, championing the “boot straps” myth and generally subscribing to some form of survival of the fittest. In general, the moral profile adopted by these folks—people who are sorely needed if any kind of economic revolution is to be effective—is very similar if not identical to the ideological paradigm that preserves control of plutocratic dominance. For these folks, adopting a stance against economic oppression actually violates several their own conservative moral codes. (See Moral Politics:  How Liberals and Conservatives Think by George Lakoff for a through explanation of this phenomenon. Also consider the concept “threshold of mutuality” proposed in a previous post.) As long as such folks can point to other people as “lower” and in that, not worthy of fair treatment, these “definers” can pretend they are not the victims of a system designed to keep themselves compliantly oppressed.

A House Divided

Could it be that our economic woes can be reduced to simple “unfairness”? Maybe. We certainly do not agree when it comes to what we think about economic distribution. Because of our moral stances on “fairness” as it relates to the economy, we cannot collectively decide what is “fair”. Besides, the statistics on economic inequality clearly indicate a sustained disparity. But perhaps such inequality is “fair”. On the other hand, the fairness issue might not be an ontological question at all. Some of us have been led to believe in a certain kind of “exclusionary fairness” that allows for cheating and selective exclusion of “certain” people from prosperity.

Note: The red highlight boxes represent opinion relationships we found interesting. You draw your own conclusions.

Americans’ views on how money and wealth should be distributed in the country are strongly correlated with their partisanship and ideology. Agreement ranges from 86% among Democrats and 85% among liberals, down to 34% and 42% among Republicans and conservatives, respectively. (from Frank Newport’s May 2015 Gallup Economy report).

The best way to prevent the kind of revolution Mr. Hanauer describes and to which the U.S. GINI score portends is to fan the flames of partisanship along every possible line of disagreement such that The People never actually become what they are—a powerful, unified force. Instead, we, The Partisans, remain an ineffectual bickering rabble the so-called “power elites” need not fear. Besides, we have not yet reached the necessary critical mass to initiate a revolution (defined in the traditional sense). We have not achieved a sufficient number of folks who are willing to believe and finally voice an opinion that “this is not fair! Life in the United States is wrong for most of its citizens!” While many people manage to complain in such a manner, consider this. What did you think about yesterday? What do you see as your pressing problems of the week, of the month?

Red Herrings

The U.S. public has been beset by a plethora of dire situations–heavy, sometime heart wrenching situations that tug at our sense of decency and flood us with fear, outrage or both. In early 2018 alone, we found ourselves in fear of imminent nuclear war, we saw children killed in yet another mass shooting while other children were being ripped from the care of their parents and effectively incarcerated. While this and more occurred, beneath the cover of sensational headlines, the country’s wealth was and continues to be stolen by the corporate barons of the economy along with their wealthy stockholders.

This is not to say that the above calamities are not sad, tragic and dangerous events and situations. The question is not about the events. The question is about our attention. On what are we focused? On what do we fix our mental energy? Whatever that is, for most of us, it is not making sure the person down the block has enough to eat or that the primary wage earner residing in that abode is being treated fairly at work so there is enough money to put healthy food on the family dinner table. Instead, we think about “a Russia investigation”, headline grabbing statements and accusation flung between a porn star and a so-called “master deal maker”. We are effectively distracted by the newest iPhone, the latest shenanigans of our favorite celebrities, the agony and thrill of our local sports teams and, oh yes, the ever present obfuscating pageantry enacted in Washington, D.C. between the Capulets and the Montagues—the Thespians Extraordinaire.

Why are these things at the front of our awareness? Why do we focus on these situations over which we have no control nor, and about which we plan to do absolutely nothing, in most case, and even possess no vested interest? [queue carnival music]. We love the spectacle—the distraction that helps us ignore EveryDayLife experience laced with insanity and abuse.

As the one percenter, Nick Hanauer, suggests, inequality itself is not the issue. The high degree of inequality and the fact that it continues to worsen at a rapid pace is the problem. “If wealth, power, and income continue to concentrate at the very tippy-top, our society will change from a capitalist democracy to a neo-feudalist rentier society like 18th century France.”

[For those not familiar with the term “rentier”, it roughly refers to a society controlled by those who do not actually contribute to society but who live off of interest or income derived from the work of (“lower”) others who actually do the work of maintaining the society’s economy.]

Somehow, we need to find our way past hedonistic self-interest, sensationalism and an avarice for entertainment as well as inter-tribal warfare and intra-tribal commiseration, seeking, instead, a place we share to our mutual benefit. It could happen—maybe.

You Say You Want a Revolution?

Despite our penchant for seeking satisfaction of self-interest, most of us really would like to see “things change”. Could it be we are already in midst of a revolution that will bring about a dramatic change in EveryDayLife? Since the beginning of 2017, many commentators have made reference to a “changing America”. Is this the revolution? Is the apparent negative shift in the projected personae of the great and powerful U-S-of-A the change we can continue to expect?  Is this newfound, seemingly heartless shift in the way we treat “huddles masses”, heedlessness toward the tired, aging and impoverished, and a willingness to run roughshod over the civil liberties anyone who is not a white male (and maybe even some of those as well) the novel world view from the most powerful country ever?  Is this the profile of a revolution in the making? Maybe. But maybe not.

As noted in previous posts (sG: Perspective I and Perspective II) everything is perspective. Maybe the revolution is seeing masses of teachers converging on state legislatures with the aim of receiving “respect”. Perhaps the revolution is the congregation of students protesting gun violence. Could the revolution be all kinds of people coming together to see positive change, people seeking to correct rather than endure or simply appease the obvious wrongs in our society. For instance…

The Poor People’s Campaign is now entering its sixth week of nationwide nonviolent direct actions. Hundreds of local and grass-roots groups continue to join. To date [June 15, 2018], over 2,000 people have been arrested and thousands have signed on with coalitions in 39 states and Washington, D.C., to challenge environmental devastation, systemic racism and poverty, locally and at the federal level, and to demand a moral agenda for the common good. This movement has nothing to do with left or right, Democrat or Republican, conservative or liberal. It’s all about right and wrong. ~Michael Nigro, (from a recent truthdig! article).

Maybe we are in the midst of a tacit revolution. How would you know?  Have you been following the events of the Poor People’s Campaign?  The more you become aware of such political descent, feeling akin to it, feeling the humanity in it,  the more you are likely to want to participate. Only through some form of media are you likely to become privy to the actions of rebellions sisters and brothers. On the other hand, perhaps the newest cadre of miscreants to descend on Washington, D.C. and their government dismantling behavior is only the lancing of the boil that effectively begins the healing process. Perhaps the revolution is not about a single issue, or any issue. Perhaps pitchforks are not the primary tools of this paradigm shift that has begun to peers from our ranks in such a nascent manner. Perhaps tomorrow’s revolution is today. Perhaps the real revolution is the coming together itself.

Hindsight might be the only way to see what is happening right now—hindsight and a specific manner with which historians will recall the events surrounding the presidential election of 2016 and its aftermath. We might simply be too close to these odd circumstances to see what they really mean. The events of 9/11 taught Americans to be afraid in ways they had never been. We learned that U.S. cities are no longer invulnerable to foreign-born violence. The economic catastrophe of 2008 suggested to us that our most trusted financial institutions might not be as reliable as we thought. For many, the Obama presidency was the final straw. This “straw” for some was the outrage they felt at the sight of a Black man in the White House (and not as a servant). For others, perhaps even more profoundly, with the Obama administration, an audacious hope had been dashed. Seeking truth in the chant “yes, we can”, that great hope of liberation from a history of racial and inevitably class separation—through multiple means and for a collection of reasons—dissipated, crashing against the rocks of partisan bickering and strife. Could it be that all of this apparent negativity is the silver lining? Perhaps we can begin to look beyond expectation of Sir Galahad, a white horse, and a Golden Age of 20 Acres and a Mule, look beyond all this and begin to look expectantly only toward each other.