So what – America Was Never Really About Equality

For years, we have been told that rising income for the mega-rich floats all boats. We’ve seen conservatives with strong ties to those at the top of the economic ladder tell us for decades that money favoring the rich – through tax breaks and regulatory loopholes – will trickle down and benefit us all. That Reagan-era message changed over time, as the supply-side “trickle down” theory crashed and burned in the harsh light of statistical analysis; it became “supporting the job creators” instead. Same theory, same statistical result. Today, its seems with the reality that the rich indeed are only getting richer just as the rest of us own a decreasing share of the U.S. economy, everyone accepts that income inequality is the new America, an issue now recognized by both parties.

“After the Great Recession which started in 2007, the share of total wealth owned by the top 1% of the population grew from 34.6% to 37.1%, and that owned by the top 20% of Americans grew from 85% to 87.7%. The Great Recession also caused a drop of 36.1% in median household wealth but a drop of only 11.1% for the top 1%.” Wikipedia. 90% of Americans still own less than 15% of our nation’s assets. So what?

“One, if average people aren't making decent wages, they're not spending money and contributing to the success of the economy. Inequality knocked off 4.7% of cumulative economic growth in richer countries between 1990 and 2010, according to analysis from the Organization for Economic Co-operation and Development (inequality clearly isn't just a U.S. issue, though gaps in this country are some of the widest among developed economies).

“The second reason is that these large income gaps deepen the cycle of poverty, perhaps making it an endless loop. We know that children of poor families do less well than the children of richer families, but the question is at what point are many kids starting too far behind that they can never get ahead? ‘It's just ridiculous to suppose that an unequal society can have equality of opportunity,’ says veteran Nobel Prize economist Robert Solow. ‘It helps a lot to have a good diet when you're young, to be well taken care of, and to be well-dressed, and warm and comfortable, and to get an internship from your parents when you're older.’” FastCompany.com, September 9^th.

Mixed in with this economic malevolence is a press by conservatives to “solve” that inequality by reducing government and alter the tax code to put more money in everyone’s pocket. They call that the saving of the middle class, which currently is in a state of disturbing contraction. But those tax cut proposals, especially the regressive flat tax or “fewer tax levels” suggestions, favor the rich. We’ve been here before. “Examples include lower tax rates for capital income compared to wage income and President Bush’s 2003 dividend tax cut, which exempted corporations from taxes on the money they pay shareholders and increased corporate profits. Those profits, which are passed on to a company’s owners, have risen in direct proportion to decreases in employee compensation; wages now make up a falling share of gross national product as a result.” FastCompany.com.

Cutting government reduces social programs and slashes contributions and support for education, again benefitting those who pay the most taxes. But without ‘the great equalizer’ of public education working the way it once did – instead of producing constantly sinking math, science and reading scores in global comparisons – social mobility has all but vaporized. Today the lucky ones are those who just maintain the class status of their parent.

Changes in the way we work have made the situation more difficult. “Independent contractors,” part-timers, and contract workers just aren’t getting those fringe benefits – vacation pay, healthcare, retirement, and sick leave – that workers of old, in traditional employment situations, enjoyed. But conservatives oppose affordable or universal healthcare with zero in the way of alternative proposals. While courts are grappling with many of these anomalies, those caught in the middle continue to squirm. As the uptick from productivity increases now flow to the owners of the automated systems instead of the workers, the shift of income upwards just goes on.

“There are several reasons, starting with the role of globalization and technology. The emergence of China, India, and other large economies allowed companies to move production overseas, offshore functions, outsource service roles, and move capital around more freely. These trends have all led to job losses and downward pressure on wages.

“At the same time, technology allows companies to automate a growing number of jobs, both physical and mental, eliminating even more jobs. ‘Technology is especially good at doing routine, repetitive types of work and tasks, especially for information processing work,’ says Erik Brynjolfsson, a professor at MIT and co-author of the book Race Against the Machine. ‘Tens of millions of people in the U.S. and other advanced countries work in [these fields]. Repetitive tasks with forms, book-keeping, clerical work are increasingly easy to automate. As a result, there is a decline in demand for a lot of middle skill jobs.’

“According to Brynjolfsson and others, advances in robotics and artificial intelligence could result in the replacement of an ever-larger number of people. Technology is increasingly substituting for workers, rather than just complementing them, he says. And it's allowing IT entrepreneurs to make ‘winner-take-all’ levels of profits themselves. By making a series of previously labor-intensive processes more efficient, IT services such as Google and Dropbox are effectively transferring income away from workers to business owners and investors.” FastCompany.com.

Notions of increasing the tax burden on the rich, eliminating hard-to-justify special rules (like allowing capital gains tax treatment for fund managers on their earned income – the ‘carried interest’ rule), seem to fall on deaf ears among conservatives. With under 6.6% of our workforce protected by unions, the balance of workers have to rely on governmental policies to do what unions used to do. But they oppose raising the minimum wage, where the last federal increase took place six years ago, claiming that entry-level workers will lose work. But with more people having more money to spend, isn’t that effectively good for the United States? Are those at the top of the food chain just worried about reduced profits, so keeping workers at, near or below the poverty is simply good for their business?

Are “most of us” simply support-workers for the richest in the land? Is there no way to change income inequality and remain Americans? It’s really hard to believe that we cannot.

I’m Peter Dekom, and societies that are no longer serving the overwhelming masses seldom survive.