“The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.”
– John Maynard Keynes, 1936
There was the promise that once the glass had become full it would overflow and the poor would benefit. But what happens is that when it’s full to the brim, the glass magically grows, and thus nothing ever comes out for the poor…some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater social justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system”
– Pope Francis, 2014
Suddenly there is political noise about the existence of income inequality. Conservatives – Tea Party or otherwise – call any discussion of it ‘class warfare’ and dismiss it. Others suggest that it is becoming a reason we are losing our fundamental democracy and becoming a plutocracy – a people ruled by the super-rich.
But what is income inequality all about and why is it becoming a major factor in a national discussion of public policy? Why is it underpinning years of Congressional inaction and stalemate? Why do some suggest that the US Supreme Court bowed to powerful forces when it ruled that corporations are really private citizens and can therefore make any campaign contribution they wish within established rules, opening the door to massive funds coming from that very special, privileged few called the “one-percent”.
THE PROBLEM
Who are these one-percenters and what do they want?
Here’s the easiest answer: They are among the 400 Americans whose combined wealth exceeds the combined wealth of one hundred and fifty million Americans.
The difference in the wealth of a few versus the wealth of the rest of us is what makes for income inequality. Among all nations in the world we are far down the list…65th among them …with more income inequality here than in 64 other nations including Uruguay in South America and Uganda in Africa.
Income inequality is nothing new. We are after all a capitalist nation in what is now a world of capitalist nations. In that system, profit and profit alone is the measurement of success. When it works well and it can, everyone involved profits. But when it “goes off” and out of gear, bad things happen…not to those few who come to control the system but to all the rest of us. The way it is working today, bad things are happening in this country.
Many reading this piece will not remember the Wall Street crash of 1928 which plunged this nation into what was called The Great Depression.
Just one year before that, the rich in America were riding high. Income inequality between the very few and the many, was the greatest in our history. And then came the crash.
Readers today will remember our most recent crash in 2008 when our entire financial system and many of our major industries were on the brink of the greatest disaster we had ever known until bailouts saved those companies most involved and responsible for our Great Recession.
Yet, just one year before that in 2007 – the banking, mortgage and real estate industries were flying high and income inequality between the very few and the rest of us was higher than it was in 1927.
And then came the crash.
It took years for the crash in the late 1920’s and 30’s to re-right the course of the nation. In fact many historians and economists believe that the national effort it took to fight World War II guaranteed the success of government efforts to equalize our standard of living and the markets that rule it.
No question that it helped. And no question that the years immediately after the War saw the development of the largest most successful Middle Class in the economic history of the World.
Big business prospered and realized that if the workers through their unions prospered too, everything good was possible. And it was.
From 1947 to 1974, America prospered as never before and became the greatest most powerful nation the world had ever known.
It wasn’t easy but it happened.
And if you analyze what existed in those years – just a few simple realities – you will see what no longer exists today, why the Middle Class is disappearing and why income inequality is destroying equality of opportunity and worse, the stability of our democracy.
KEEPING IT SIMPLE
Liberalism is about a lot of things but mostly about working for equal opportunity for all. Not equal results for all…but equal opportunity for all. We call it ‘leveling the playing field’ so that everyone has a reasonable chance to succeed – with lots of luck thrown in.
That’s it. Equal opportunity. Because capitalism puts power in the hands of the business class and money is an overpowering weapon in the development of rules, regulations and laws that keep “things in their place” (and remember, we are a nation of laws).
Liberals see government as the only institution which can work to level the playing field for those who cannot buy the field itself.
Liberals do not – despite the political banter – believe that government is the answer. Rather we see government as the only referee the people have in their efforts to temper the power of Big Business at the expense of people; the only pathway to equal opportunity.
The level playing field from 1947 to 1974 was based on Federal tax rates which during those years ranged around 60 to 70% and meant that the government had the money necessary to provide States with the income they needed to provide basic services and to encourage full employment even though that came to mean government employment even more than private employment.
The unions prospered and reached their heights during those years in many fields – including the automobile industry. (Some of you may remember that statement “What’s good for General Motors is good for the nation”)
America manufactured. The world bought – even if many nations received loans from America which were used to buy our goods. The 20th Century belonged to America.
And the Middle Class burst wide open – able to buy homes, able to educate their children, able to fulfill the promise of America – if you worked hard you were able to live comfortably.
And then came the four year term of Jimmy Carter, who after two years as Governor of Georgia became President by defeating Gerald Ford, the long-term Congressman from Michigan and Richard Nixon’s Vice President – who became President when Nixon resigned after Watergate and who pardoned Nixon thereafter.
Carter began the move toward income inequality gradually, almost imperceptibly, by beginning to lower the tax rate, reducing income to the government and deregulating certain industries.
His ineptitude in foreign policy and Ronald Reagan’s superior presence produced President Ronald Reagan in 1980 and with it the end of the liberal America we had become, with reasonable income equality, extraordinary production and wide-spread prosperity. What he did will explain very simply, why we are in the economic doldrums and why the power of Big Business and weak, ineffectual government has made living so difficult for so many Americans. And is threatening our democracy.