Ignorance of Income Inequality is Damaging to our Society

Three years ago the Occupy Wall Street movement got America’s attention with the cry of “We are the 99%.” Income inequality was put under a spotlight for a time. But how far did the understanding penetrate? Unfortunately, not very far.  

First, in a recent poll the average American thought CEOs made 30 times the wage of their employees, which hasn’t been true for 50 years. Today the figure is ten times as much—over 300 times.

Second, most people are completely unaware of the extent of wealth inequality, which is much worse than income inequality.  The wealthiest 20% in the U.S. own about 84% of the wealth. Think about that for a moment: only 16% of wealth is left for over three-quarters of the population. When you get to the bottom half of the population, those 155 million people own only about 2% of the total wealth.

To see an illustration of the income and wealth inequality in the United States, watch this episode of a TV show I did with Arthur Hancock in 2010.

The chart above, created by Pavlina Tcherneva, an economics professor at Bard College, vividly shows one of the contributors to the rise of income inequality in the last few decades. The graph portrays the distribution of national income growth during economic expansions since WWII. The blue represents the bottom 90%, the red the top 10%. In the last thirty years all the gains have gone to the wealthy, in fact, in the latest expansion most Americans have been losers—the truth is most of us don’t even realize we’re in an expansion, the Great Recession hasn’t ended for us yet.

In a recent column, “Invisible Rich,” Paul Krugman asks:

So how can people be unaware of this development [massive income inequality], or at least unaware of its scale? The main answer, I’d suggest, is that the truly rich are so removed from ordinary people’s lives that we never see what they have. We may notice, and feel aggrieved about, college kids driving luxury cars; but we don’t see private equity managers commuting by helicopter to their immense mansions in the Hamptons. The commanding heights of our economy are invisible because they’re lost in the clouds…

Does the invisibility of the very rich matter? Politically, it matters a lot. Pundits sometimes wonder why American voters don’t care more about inequality; part of the answer is that they don’t realize how extreme it is. And defenders of the superrich take advantage of that ignorance. When the Heritage Foundation tells us that the top 10 percent of filers are cruelly burdened, because they pay 68 percent of income taxes, it’s hoping that you won’t notice that word “income” — other taxes, such as the payroll tax, are far less progressive. But it’s also hoping you don’t know that the top 10 percent receive almost half of all income and own 75 percent of the nation’s wealth, which makes their burden seem a lot less disproportionate…

Today’s political balance rests on a foundation of ignorance, in which the public has no idea what our society is really like.

And the wealthy, in control of the media and the government, have a vested interest in keeping us ignorant.

Simultaneously Tragic and Beautiful

Recently I got an email from a friend who had just spent some time with her ex-husband. She wrote: “That whole energy seems so...odd to me now....and it's simultaneously tragic and beautiful...like life, I guess.” [I didn’t cut anything out; that’s how she writes.]

Simultaneously tragic and beautiful. Yes! Lately I have been seeing how everyone’s life has some tragedy or sadness in it. I’ve met a lot of people in the last six months and everyone seems to have some sad story to tell. Many are recently divorced, another’s foreign wife took his children to her country when the kids were 5 and 7 and he’s never seen them since, a couple others have children in jail or addicted to drugs, another found out the woman she thought was her mother wasn’t…

Most of us operate under the illusion that there are people who don’t suffer. We think there are people who really have their act together and don’t have the problems we do.

The news that Mother Teresa lived with depression for years shocked me, and I imagine, most people. We think someone with that kind of spiritual dedication should be beyond the sufferings of ordinary people like us.

St. Francis of Assisi is one of the best-known saints of the Catholic Church, widely admired today for his humble embrace of poverty and his peaceful attitude towards nature. Statues of St. Francis are ubiquitous in gardens. Here was a golden life, without tragedy, right?

St. Francis with Sultan al-Kamil
Wikimedia Commons

A review of two new biographies of St. Francis of Assisi in the New Yorker reveals the tragedy in the saint’s life. [“Rich Man, Poor Man: The Radical Visions of St. Francis,” by Joan Acocella, New Yorker Jan 14, 2013] Francis was from a wealthy family, and when he was about twenty-one, in 1202, he went to war. His side lost and he spent a year in prison. When he came out he was changed; he was no longer interested in partying with his friends, but spent entire days praying.

By 1206 he had renounced his inheritance and gained two followers. He believed that property aroused envy and conflict and was, Ms. Acocella writes, “the one thing most destructive to peace in the world…To be part of the [Franciscan] group, a man had to sell all his goods, give the money to the poor, and, like Francis, sever all ties with his family.”

In ten years his order of friars became incredibly popular, and grew to number in the thousands. Francis began sending friars to France, Germany, Hungary, Spain, and the Middle East.

St. Francis went to Egypt in 1219 to try and convert the Sultan of Egypt, Syria, and Palestine to Christianity in order to end the Crusades. He returned (the Sultan didn’t convert) with malaria and trachoma, a painful eye infection. He was also vomiting blood. During the last six years of his life he suffered tremendously from the pain of his physical ailments.

Hidden Ways our Government Favors the Rich, part 1

I’m rereading “Wealth and Democracy: A Political History of the American Rich” by Kevin Phillips, published in 2003, and it has really sensitized me to ways our government's policies are slanted towards the rich.

For instance, today I read an op-ed, The Famine Next Time, in the New York Times about the current famine in Africa. The article asks: why do we never solve the problem of famine? There’s enough food in the world. The crisis builds slowly over months if not years; action could be taken before it becomes a full-blown catastrophe. Yet we seem to have to wait until we see starving infants on TV before we are moved to act.

What jumped out at me was this line: “By the end of June, with the crisis in full swing, the United States had committed a total of about $64 million to Kenya, much of it in the form of food supplies (this doesn’t include relief for the Somali refugees). But food aid loses at least half of its value, according to the Government Accountability Office, because we ship actual food instead of sending cash for local purchase, like most countries.”

What is this food aid but a subsidy to American agriculture, particularly the large-scale companies like Archer Daniels Midland? In a similar way we “give” military aid to various countries around the world with the stipulation that they purchase Americans weapons with that money. Our foreign aid is just another way to funnel cash into our corporations and their principal beneficiaries, the investor class, in other words, the rich.

The article describes a farm in Kenya, in the middle of the famine/drought zone that was

a green oasis — a farm, a greenhouse, a well, a water pump, a windmill. Running around were the first happy, healthy-looking children I had seen. This is the Kutulo Farm, a women’s cooperative in Wagberi, where they grow kale, cabbage and peppers. They received money for the well from the European Union, but otherwise have done everything on their own. They would like to expand, said Adey Issack, one of the founders, but have no access to credit.

Programs like the Kutulo Farm are significantly cheaper to start and maintain than sending mounds of food aid at the last minute, in large part because they leverage the skills and knowledge of local residents to do the work. The current crisis is a painful demonstration of how well such an approach works: those few communities that received small, well-designed assistance are weathering the drought relatively well.

Rajiv Shah, the head of U.S.A.I.D., told me during a trip he made in July to Kenya’s Dadaab refugee camp. “It is one-tenth the cost to provide effective agricultural support and help communities gain food security than it is to provide food aid at a time of famine.”

Our aid dollars could go TEN times further if we gave the aid in cash instead of sending food.

I titled this "part 1" because I am sure I will be adding lots more examples here.