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.

Greed is a Killer

Recently I watched The Treasure of the Sierra Madre, a story of three men prospecting for gold in the mountains of Mexico. It’s a tale of greed; how the lust for money corrupts the human heart. All of the men are affected to some degree, and the character played by Humphrey Bogart is driven insane by the power of his greed. In the end it kills him.

I related this to a friend of mine who is a devotee of a guru in India. She said, “My guru tells a story of greed too!”

A yogi went into the woods to find a cave to live in. At the same time, a group of four thieves were walking through the woods on their way to find something to rob. The yogi went into a cave, and just as the thieves passed by came running out, yelling “There’s a killer in there!” The thieves were intrigued and entered the cave. There they found a pile of treasure. Each of the four immediately started plotting how to get all the treasure for himself. The two senior members sent the younger ones off for a cart to haul the loot, and then lay in ambush and killed them on their return…

My friend couldn’t remember all the details, but the end result was all four of the thieves lay dead. The treasure was indeed a killer.

The Importance of Hard Copies

Recently I watched the film “V for Vendetta.” The movie is set in an authoritarian future, and dangerous books and artwork have long ago been eliminated from people’s lives. But V, the hero who is resisting the authoritarians, has an underground home filled with books and art that he has “rescued” from the censors’ vaults. Seeing the books piled high in one of the rooms, I was reminded of the importance of hard copies.

When information is digital, access to it can be taken away very easily. For example, if you own an e-reader, you don’t really own the books on it. The Kindle Store user agreement makes that very clear: “Kindle Content is licensed, not sold, to you by the Content Provider.” Amazon can remove a book from your device at any time.

Ironically, the premier example of this so far are some George Orwell books. The person who uploaded them for sale on Amazon did not own the copyright. When Amazon realized the error in 2009, those books just disappeared from the Kindles of the people who thought they’d purchased the books. And there was no notice or explanation from Amazon.

Maybe this seems insignificant now, but if at some future point we have an authoritarian government, any books that that government disliked could be disappeared at the stroke of a button. It’s not so easy to collect and burn every book.

I like reading on my Kindle; I like the convenience of looking up words and making notes onscreen. It’s nice being able to pack just one small device that holds multiple books when I travel. It’s nice not having to dust more books on my bookshelves. Yet understanding the importance of hard copies makes me resolve to keep buying physical books.

This Mark Fiore cartoon illustrates the importance of another object that is being made obsolete by our new devices: printed maps. Who needs to worry about carrying maps when you can just use your GPS or pull up the map on your phone? But devices and Internet connections fail, and if you’re out in the wilderness that failure can be fatal. 

Nickel and Dimed - On Not Getting By in America

Mike Lukovich of the Atlanta Journal-Constitution

This cartoon really impacted me because I saw it just after finishing Barbara Ehrenreich’s 2001 book, Nickel and Dimed: On (Not) Getting by in America.

This book was inspired by the welfare-to-work reform of the 1990s; it attempts to answer the question: can a person live on minimum wage? Ms. Ehrenreich courageously endeavored to find out by actually living the life of a low-wage worker (she was in her 50s which makes her willingness to undergo the humiliations and physical strain even more admirable). She spent a month in three different cities, working as a chain restaurant waitress, maid, and Wal-Mart associate. She lived in housing and ate the food that was affordable at her wages. She lived in horrible places—a tiny trailer, a squalid motel, and ate fast food because of a lack of kitchen facilities. Working one job full-time, she could barely afford to cover her most basic expenses, and she had a lot of advantages: no children, and because this was a short-term experiment, she didn’t have to worry about medical expenses or things like clothing (other than what she had to purchase for the job).

This experiment was done in 1999 and 2000, before the bursting of the dot-com bubble, when the country was experiencing prosperity and jobs were easy to get. This was also before corporations learned that they could save money by not hiring people as full-time workers. Ms. Ehrenreich tried to work two jobs so she could afford a better apartment; she just didn’t have the stamina required to pull off cleaning hotel rooms in the morning and waiting tables in the evening.

She also discusses the psychological effect of low-income work, that it encourages submissiveness and lack of initiative. At the same time, she makes clear that these are hard-working people, doing their best with the pitiful resources at their disposal.

In the aftermath of the Great Recession, things are much worse, which after reading her account, is hard to imagine. Certainly, jobs are much harder to get. Ms. Ehrenreich was able to get a job almost instantly in 1999; today she might have spent her entire 30-day allotment just finding a job (if she was lucky).