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The Problem with Inequality

The 2013 movie, Inequality for All premiered at Sundance Film Festival in the Documentary Competition section and won a Documentary Special Jury Award for Achievement in Filmmaking. Directed by Jacob Kornbluth, the film examines widening income inequality in the United States, which lately has been a major national topic among academics, politicians, and plain old folks that are tired of working more for less.

Since the 2007-08 financial crisis the issue of income inequality has gained public awareness. The foundation for much of the concern is grounded in some stark and troubling data. In the thirty years before the latest recession the U.S. economy doubled. But, according to this documentary, these gains went to a very few. As of 2013 the top 1% of earners now take in more than 20% of all income—three times what they did in 1970. Distortions are even more extreme at the very top. The 400 richest Americans now own more wealth than the bottom 150 million combined. This level of inequality poses a serious social and economic risk to all Americans, regardless of income level, due to skewing a playing field that historically allowed virtually anyone to make it big. We are now seeing much more anger and resentment from a frustrated middle class who feel the American Dream has been taken away and is being held hostage by the rich and powerful.

At the heart of the film is a simple proposition: What constitutes a ‘good’ society and what role does the widening income gap play in the deterioration of the nation’s economic health? Narrator Robert Reich, former Secretary of Labor and professor of economics at the University of California-Berkeley, distills the story through the lens of widening income inequality—currently at historic highs—and explores what effects this increasing gap has not only on the U.S. economy but American democracy itself.

Pulitzer Prize winning author Michael Hiltzik noted on February 4 in LATimes.com that discussion about the middle class being left behind has become, “part of the mainstream kitchen table debate” in America. Also cited is the new Gallup poll that found fully two thirds of adults are either somewhat or very dissatisfied with the distribution of wealth in this country.

The trend is growing more acute. Since 2009, 95 percent of U.S. economic gains have gone to the wealthiest 1 percent of the population. While stocks on Wall Street are soaring, salaries across America remain stagnant, not even keeping pace, dollar for dollar, with salaries and wages of 25 years ago. Los Angeles Times writer David Horsey noted (January 21) that those at the top of the social ladder have one overriding goal: “to protect what they have and get even more.”

New York Times columnist David Brooks weighed in with a deeper review, citing the need to understand the many contributing factors to income inequality. He noted that growing affluence among the wealthiest Americans is definitely not causing problems within the middle or poorer classes. Most issues, which have also been reported by Pulitzer Prize winning New York Times writer, Tom Friedman, result from the phenomenon of globalization and cheap foreign labor that has dampened U.S. wages. Moreover, mitigating social forces include a dysfunctional (or at least unequal) education system, insufficient technical training, an entitlement culture, and decades of largesse even among the poor have contributed to the current condition. Friedman’s book, That Used to be Us (Farrar, Straus and Giroux, 2011), cited numerous contributing factors and forces responsible for a perfect storm of economic stagnation for the American middle class and those who remain classically poor.

In a January 26 article (The Other Kind of Inequality) Wall Street Journal writer Mickey Kaus suggested that the decline of American social egalitarianism is more worrisome than differences in how much people earn. Merely hiking the tax rate for the wealthiest Americans or boosting the minimum wage will not solve deeply ingrained problems that began over 50 years ago.

In the Land of the Free, people pursue the American Dream and, even with the wealthy taking home the top 50 percent of the nation’s income, there is no absolute barrier to success. Just ask the many private and public sector employees who began their careers among the poorest and least advantaged. There remains ample proof that virtually anyone can break free of economic, social and educational shackles to become highly successful. Those One Percenters who are calling for income redistribution miss the point. Taxes pay for the infrastructure and services we all enjoy and the rich cannot enjoy those benefits any more than the poor. They do, however, pay more for that infrastructure due to making more. In essence, this already redistributes wealth to sustain America’s framework- its roads, ports, airports, schools, bridges, public safety services, health services, military, etc

As Kaus noted recently, it is a problem without a clear solution. Some people somehow get through high school, technical school or college and go to work. Some prosper, some don’t; and, some had to work through school and some didn’t (most did or borrowed to the hilt); but of those who gravitated upward, most did it through hard work, perseverance, grit and luck. Inequality is a social norm. Even the most primitive societies tend to stratify. What could and should make America different is the role the wealthy play in helping others, teaching, sharing ideas, and contributing to institutions that open more doors to all citizens. I like the Buffet/ Gates approach-make a lot of money then use it to help others by financing innovation, healthcare, preventive medicine, research and education. Taxes aren’t the answer. The true answer lies in one’s conscience, world view and commitment to the global community.

jfl-pic-blue-shirtyellow-tie.jpgWith over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). Reprints of his book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders (2010) has sold out three times. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at http://www.futurescorp.com).

One Response

  1. Outsourcing to increase corporate profits have not helped the U.S. economy. Dell has become a brand name that can’t produce anything. Asus produces everything for them and has effectively erased Dell’s core competencies — manufacturing and supply chain management. Similar problems exist in several industries: auto, steel, pharmaceuticals….

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