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Resistance See other Resistance Articles Title: Income Inequality Lately, there has been a plethora of articles in the mainstream media about income inequality in the U.S. Typical is a recent Vanity Fair piece by Nobel Prize-winning economist Joseph Stiglitz. You can read the whole thing here if you like. But the gist of the argument is laid out in his first paragraph: "It's no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation's income every year. In terms of wealth rather than income, the top 1 percent control 40 percent ... Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall ... All the growth in recent decades - and more - has gone to those at the top." An article such as Stiglitz's asks some very familiar questions. Are the rich somehow too rich? Did they come by their wealth honestly? And, as a result of their success, must everyone else settle for a shrinking piece of the pie? These questions are raised periodically in a market economy, with a frequency that's inversely correlated with the health of that economy. When they come up, the media will stir the class envy pot, and liberals wanting to score with the disadvantaged won't hesitate to grab a spoon. Conservative commentators will push back. All very predictable. Even talking about the subject will be considered inflammatory by some, while others will dismiss the discussion as inconsequential. Yet talk about it we must, because there are larger questions here: Is this much ado about nothing? And if not, are there potentially serious consequences? Answers: no, and yes. While the middle class in America is extremely well off compared with most other countries, or with even the kings and pharaohs of the past, the distribution of wealth in the country is shifting ever higher. Stiglitz's numbers tell the tale, and they are confirmed by the most frequently used measure, the Gini Coefficient. If you're good at calculus, you can hack your way through the equations. But if not, just scroll down to the chart on income disparity since WWII. There you can see how the disparity line for the U.S. has been steadily rising since 1980, after being essentially flat for the previous 35 years. Academics can and do dicker over the validity of the Gini Coefficient as a measure of the economic health of the nation. But in general, it aligns with the real-world experience of people for whom it matters that their incomes are static while the dollar buys less and less. This is not a good thing. Our cohesion as a society is based, to a large extent, on maintaining a healthy middle class. When that class is stable and growing, as it was from the late '40s through the '70s, people are generally content (even during the turbulent '60s, the majority never understood what all the fuss was about). They aren't anymore. Despite the widespread distribution of Toyota Camrys, PCs, and flat-screen TVs, the middle class is being strangled - choked by high taxes and high inflation, and the evaporation of the hopes they once had for their future and that of their children. At the same time, the rich are becoming ever more distant from the center. Never mind that we can never calculate what constitutes "more than" someone's "share." That no one can define who is or isn't "wealthy." Or that so many people caused their own problems by living for so long beyond their means. The convenient target is the rich, who are seen as grabbing way more than their share, aided and abetted by the political elite in D.C. And that cuts straight to the heart of the "fairness" issue. More and more people are coming to understand that, however much Democrats and Republicans fight over this and that, in the end both have only one ongoing agenda - to try to arrange the best deals possible for the powerful people who bankroll them. The business of politics has become little more than that. Thus, as the federal government intervenes in every aspect of economic life, the special-interest groups that benefit from those interventions are going to do well. Really well. Moreover, they are going to ensure that they continue to do so. The well-connected move easily from the private sector to either appointed or elected posts in Washington, where they proceed to craft legislation favorable to themselves, and then they're rewarded with even better jobs when they leave the capital behind. And when, despite all their advantages, they screw up... they get bailed out. At taxpayer expense. However you define fairness, this is not an illustration of it. Average citizens can see this very plainly, and they don't like it. They will express their anger at the ballot box, as they did last November. But things never change in D.C. Raging against politicians is little different from raging against the sun. Which leaves the rich. However honestly some wealthy people may have come by their money, they're going to be lumped in with those who prospered by gaming the system. It's a matter of perception. They're all going to be deemed guilty of something, at least among the majority who are just running in place, if not slipping further behind. Small wonder that the seed of class envy has already sprouted and threatens to burst into the flower of class warfare. Will there be fighting in the streets? Possibly. If there is, the repression will be brutal. Those in charge are in control of overwhelmingly superior force, and our increasingly militarized police departments have shown they're not at all reluctant to use it, as we saw when demonstrations turned violent in Seattle, Pittsburgh and elsewhere. And if order still appears to be slipping away, true martial law is always on standby. We could easily look less like Cairo and more like Tiananmen Square. More likely, though, is the continued expansion of the surveillance state. It has become child's play for the government to identify would-be "troublemakers" and pick them off before they make any actual trouble. The category called potential terrorist will constantly be redefined. Eventually, it will probably come to include anyone who takes an illegal drug, stockpiles gold and silver coins, or once had a Muslim friend, and much more. Ironically, real help is on the way. The good news is that technology, from the kind of companies we cover in Casey's Extraordinary Technology, will someday usher in an era in which everyone can have more or less whatever they want. Class distinctions will disappear. The bad news is that that day is probably fifty or more years off. In the interim, the fabric of society threatens to come unraveled. The growing income gap is real, and it has been stoked by government largesse. For many, it's a short jump from there to the perception of the rich as inherently evil people who don't deserve what they have, especially when it looks like membership in the club is being cut off. The question is, can anything be done? Income inequality - and, importantly, the perception of same - is a serious problem that isn't going away. Historically, government's only answer has been forced wealth redistribution. That hasn't worked. In fact, it's made things worse by creating an expanding population dependent on its handouts, thereby stifling that group's potential for new wealth creation. But can the private sector somehow take the lead? How do we quiet the anger and restore hope? I don't know the answer, do you? If so, send it in. I'd love to see it.
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