Welcome friends!
Happy New Year everyone! Woo hoo! 2018! Oh I’ve got a very good feeling about this year! Well OK not really but hey let’s show a little optimism shall we? My goodness we’re only a few days in. Too early to get all mopey and depressed just yet. Last year was …. well …. maybe not the best the old USA has ever seen. And huge or as I suppose some might say yuge challenges for the country lie ahead. The next three years are going to be tough that’s for sure but of course they will inevitably be a heck of a lot tougher for some than for others. Indeed some Americans are making out very well indeed. We’re not all in it together by any means. I read an article recently that noted the richest one percent of Americans now hold forty percent of the nation’s total wealth, a greater share than at any time in the past fifty years and significantly more than the bottom ninety percent, which currently lay claim to about twenty percent of the nation’s total wealth. And of course with President Trump and the Republican Party in charge the share going to the wealthy elite is set to rise dramatically in the short term due to their recent top heavy changes to the tax code and in the near future by the elimination or drastic reduction of the public programs and resources hitherto devoted to helping out the less fortunate that will be necessitated by their top heavy changes to the tax code. Well, either that or we’ll have a rather notable increase in our national debt. Seems like an auspicious time to think about the future wouldn’t you say?
First let me just quickly review the article that got me going this week. Lots of fun statistics. I already gave the one about the richest one percent of Americans claiming forty percent of the total wealth. Did I mention the top twenty percent hold a full ninety percent of the wealth? Well they do. Also fun to compare the USA to other developed countries. Our closest competitor in the inequality game must be Germany where the top one percent own about twenty-five percent of the wealth. I say competitor but honestly they’re a rather distant second aren’t they? The fat cats are getting only about half what they get here in the USA. In terms of inequality at least the USA is Number One! In the UK and France the top one percent claim a relatively modest eighteen percent of the wealth and in Canada sixteen percent. And how about little Finland where the League of Fancy Pants only manages a measly twelve percent? Got to love Finland. I think I read they do their traffic tickets based on a graduated scale according to the wealth of the malefactor as a gesture toward making tickets equally onerous to people at different wealth levels. Can one imagine the USA ever doing anything like that?
I’m sure I’ve mentioned before that our respectable national wealth statistics can give foreigners a rather inaccurate idea of life here in the USA. I know I’ve discussed in previous posts articles that have pointed out the median American (by which I mean in this instance residents of the USA) by wealth, that is, that hypothetical person with the characteristic that exactly fifty percent of Americans have greater wealth and fifty percent less, is rather worse off than the median resident by wealth of many or dare I say most developed countries. In other words the person in the middle of our wealth scale is basically tanking compared to his or her counterpart in most other developed countries. You can see the same phenomenon by looking at the share of wealth claimed by the richest percentiles. But numbers can be so impersonal can’t they? Let me just lay it out in words. The USA is a county in which some people live like kings and many many others live like paupers. Don’t make the mistake of thinking of it as roughly similar to other developed nations in the EU or elsewhere. Think more along the lines of Czarist Russia or Medieval Europe or colonial Haiti and you’ll be closer to the mark. Basically a vast sea of poor, ignorant, unemployed, frequently violent, quite often drug addled and basically forgotten people surrounding a few shining gated communities of successful greedy self infatuated jerks lolling on couches and divans with guns under the pillows.
But you know what’s even more comical? The funny ideas about distributions many Americans apparently hide away in the dark recesses of their confused minds. Another humorous bit from the article I was just discussing involved a little survey conducted in 2010 by some researchers who asked a random sample of 5,500 Americans what sort of wealth distribution they thought would be reasonable or justified. As one might expect it came out to nothing at all like what we actually have. They had in mind the top twenty percent might be getting thirty-two percent of the wealth with the bottom twenty percent claiming about eleven percent. Rather different from the reality wouldn’t you say? Ninety percent of wealth to the top twenty percent and a resounding negative one percent for the bottom twenty percent? Yes, on average that benighted lower wealth group actually has negative net worth. Ouch. So if many Americans think the distribution we actually have is so different from the one they feel might be justified does that mean they’re prepared to stand up and do something about it? No. Not at all. They’ll elect Republicans all but guaranteed to make the real distribution of wealth diverge ever more from what these Americans say they would find justified. And they’ll do it again and again and again. Why do they do that? Hmm. Interesting question. I have a few ideas.
First, many Americans just don’t like to talk about money and in particular distributions of income or wealth. It’s awkward. It’s uncomfortable. Addressing it would require people to come together and discuss their values and so on and we’re just not very good at it. We’re fine touting our own values or even talking with other people who share our values. We’re just not very good talking with people holding other values. It’s most likely a function of the fact that most Americans view their values as delicate little hot house flowers more akin to religious sentiment of the etherial swoony sort than intellectual propositions. Values for most Americans are meant to be protected from scrutiny and potential criticism not brought out into the light of open debate.
Second, many Americans and in particular conservative Americans believe the free market allocates wealth, wages, and just in general goods and services in the ethically correct and optimal way and that consequently whatever level of inequality falls out of such a system must be both equitable and appropriate. Liberals ted to compare the results of real world markets to results they would find ethically justifiable or optimal on other bases but conservatives do things the other way round. They are enamored of the ethical principles expressed in the mechanics of free markets and are more likely to adjust their thinking about what results are ethical and appropriate based on what happens in a market system. When one comes at the issue from this perspective fretting about inequality and the share of wealth going to different bits of the population is irrelevant and really rather unethical since changing it would require one to change what happens in a market system. According to this view it’s really irrelevant if for example most Americans end up dying on the street because if that’s what falls out of the market then that’s what should happen. If some people are destined to die they should get on with it and reduce the surplus population.
Third, many Americans and in particular conservative Americans hold the rather fanciful belief that market systems tend naturally to spread wealth about rather than concentrate it. This is the view expressed in so-called “trickle down” economics in which resources allocated to wealthy people are understood to help the less fortunate as well. I would argue this is pretty much the opposite of what real markets do. Indeed, one of the notable features of market systems I would say is that it’s a lot easier to make money if one already has money. In other words, the natural result of a market system is most likely an ever increasing concentration of wealth. Anyway that’s how it has seemed to me during my fleeting lifetime. We tax income from working at a much higher rate than we tax income from investments. Now that I’m older and investments contribute relatively more to my total income than when I was younger I’m finding it relatively much easier to make a buck. And that’s just one example. Many rich people have money simply fall into their laps as their wealthy parents pass on to that great country club in the sky. Before that happy day if they find they need to prepare for actual work they can afford the best education and can undertake the sort of activities like unpaid internships and so on that poor students may find untenable. As adults they can relocate easily, have no messy financial commitments to struggling relatives, can afford to take risks, can easily find the money for any ventures they might care to try, will always have plenty of second chances, can take their time to find the fields and areas in which they excel, and are likely to have friends and relations with well paying positions who can help them along. How different is their experience of life from that of the poor in this country. How simple for them to prosper where others struggle. And so the share of wealth going to the already wealthy rises year after year. Why would it do anything else? Certainly nothing inherent in a market system.
So on it goes. Here in the USA the wealthy elite have relentlessly increased their stranglehold on all facets of American life including most notably our national politics. The man and woman in the street or many of them anyway go along with it hoping forlornly and impotently for better days just around the corner, their thinking and imaginations manipulated by both the confused and the unscrupulous in academia and our burgeoning infotainment and propaganda industries. Living vicariously. Watching the rich cavort on TV. Hunkered in their little houses, the lucky ones anyway, surrounded by the precious guns they trust will defend them against their increasingly poor and desperate neighbors who they fear may fall upon them at any moment like the proverbial rats in a sewer. Taking drugs to ease the pain. And how will it end I wonder? Well, let’s not think about that right now shall we? It’s not the time to think about endings but about beginnings. It’s a new year! Let’s all dream a happy dream! Let’s say we liberals rally and defeat conservatism and that the little guys and gals learn to stand up for themselves against Mr. and Mrs. Moneybags. Let’s say we reaffirm the power of democracy to give voice to the economically weak and to serve as a counterpoint to the market power of the wealthy. Let’s say we strengthen our national government instead of weakening and shrinking it. Let’s say we reduce the influence of big money in politics rather than increasing it. Let’s say philosophers and maybe even some economists begin to get real and people finally start to understand some of the real issues involved in social ethics including the weakness and implausibility of the ethical components of so-called welfare economic theory. Let’s say they start to look seriously and critically at market systems to understand both their strengths and weaknesses rather than being content to contemplate them in starry eyed wonder. The future can be beautiful for all of us. We can make it happen if we try.
References
The richest 1 percent now owns more of the country’s wealth than at any time in the past 50 years. Christopher Ingraham. December 6, 2017. The Washington Post. https://www.washingtonpost.com/news/wonk/wp/2017/12/06/the-richest-1-percent-now-owns-more-of-the-countrys-wealth-than-at-any-time-in-the-past-50-years/?hpid=hp_regional-hp-cards_rhp-card-business-technology%3Ahomepage%2Fcard&utm_term=.68f307c45f59.
