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Economic Inequality Needs to Be Alleviated

September 29, 2013

Economic inequality is one of the biggest problems facing America today. It pervades just about every aspect of our lives from birth and throughout our entire lives. Our economic, educational, health care and political systems have all been ravaged by the effects of having developed a society where the difference in wealth and income of those at the top and those at the bottom have been growing by leaps and bounds for years, even decades now. Many prominent economists and politicians have identified this as a situation in dire need of repair. President Obama has mentioned the issue of economic inequality on more than one occasion, along with calls for legislative action designed to rectify it and enable the vast majority of American workers to regain their economic well-being after years of stagnant wages and the loss of many good paying job opportunities.

Since the Reagan Administration, the bulk of American wage earners have seen minimal or no gains in their income relative to inflation. The conservative push to lower taxes on the wealthy and corporations in order to enable them to invest in job creation and expansion for the overall economy has achieved few if any of its promises, except to increase the gap between the wealthy and the rest of us. Jobs have been created, but often in lower paying service sectors as manufacturing has shifted abroad where cheaper labor is available. Economic globalization has benefitted the profit margins of large multinational corporations and increased the wealth of the rich while pauperizing more and more of what used to be the American Middle Class. Technological improvements which have enabled huge gains in worker productivity have not been met with corresponding gains for the workers, only for the corporate executives and shareholders.

So called “free trade agreements have also helped to accelerate the growing disparity. By making it easier for capital to flow globally, while workers are not so mobile, countries (and on a smaller, but also significant scale, states within the US) become pitted in a race to the bottom in terms of wages and working conditions to entice companies to locate manufacturing plants, etc. there instead of elsewhere.Tax laws are also used to lure capital away from one place to another, often with most of the benefit going to the corporations, with many job losses in one area and gains in another where wages are lower and working conditions often less than satisfactory.

Attempts to start reversing these conditions and rebuilding the middle class that the New Deal enabled to strengthen and even flourish after the Great Depression have so far been almost totally stymied by Congress over the past three years. Despite ample evidence that the gap between the 1% and the 99% in this country has grown even worse during the recent recovery, the House Republican caucus, in particular, has acted in a manner to make sure that nothing is done to remedy the situation. Raising the minimum wage and indexing it to inflation is one of many proposals made by the President which has seen absolutely no progress in Congress. An ambitious jobs proposal met with similar treatment last year. Their sole aim  seems to be to lessen the tax burden on the wealthy by refusing to meet the needs of the vulnerable among us.

The Senate has contributed mightily to this coordinated effort to stymie the will of the people and improve the economy for more than just the takers among the wealthy. By refusing to allow confirmation of key Presidential nominees to the National Labor Relations Board and the Consumer Financial Protection Bureau for two years, those bodies were left with far less power to do their jobs than was intended by the legislation that created them. Some easing of GOP senatorial recalcitrance this year leaves some room for optimism that some improvements may be forthcoming. The Administration recently also took an action which enabled home health workers to fall under the wage and hours provisions of national labor laws – a definite step in the right direction. A similar step could be taken without Congressional action to ensure that workers employed under federal contracts receive livable wages. That is a step that should be taken quickly. More workers in this group make sub-living wages than do at Walmart and McDonald’s combined.

Rather than trying to help out the workers and the economy by taking action designed to increase incomes and job creation through legislative action, Congress has chosen to act as a drag on the economy in several ways. The sequester directly drags on the economy by decreasing spending, largely in programs that assist the very young, elderly and poor. The objective seems to be to ensure that the wealthy are able to retain all of the gains they have received in the past several decades. The problem here is that, contrary to the views put forth by many opposed to strengthening social programs that help to alleviate economic pressures felt by those at the bottom of the socio economic pyramid, there is nothing particularly fair about why some of us are rich and some of us are not. The real “takers” are often the ones complaining the most about the less fortunate being “takers”.

There is also an obvious lack of equality in this society with regard to opportunity among the wealthy as opposed to the rest of us. The ability to get a good education, from birth through higher education, is directly correlated to the circumstances of one’s birth in this country. Mitt Romney’s and Bill Gates’ children do not face the obstacles that the child of a single mother working multiple jobs to make ends meet does. Schools are different. The same goes for nutrition, health care and so on. . Early childhood education is another area stressed by the President which has fallen on deaf ears in Congress. Food stamps try to address nutritional needs not met by our economic system otherwise. Health care is another important area where money matters. That should not be so, either. Wealth and privilege go together in our society in almost every aspect of our lives. Any attempts to place us all on equal footing are opposed by most of those seeking to retain the privileges for themselves. They often find it easy to persuade others to do their bidding in Congress, state and local government, and even the courts.

That economic inequality has been exacerbated during the most recent economic “recovery” is indisputable. That our government has been hesitant to do anything about it is also indisputable. Neither situation is acceptable in a fair and just society. We could probably be more patient if the evidence of a deteriorating situation was not so striking and the lack of concerted effort to rectify it not so glaring. The time for 21 hour speeches to glorify one politician and try to deny the entire nation of the government and policies it deserves and voted for is over. Delay tactics and refusal to address needs for immigration reform, gun control, an improved economy for all and a better balance between domestic and military spending aren’t cutting it for us. Spending half the year on recess and either missing or nearly missing every important deadline or doing nothing at all to fix problems is not doing your job. In 2014, I hope there will be more people like Elizabeth Warren and Bernie Sanders elected to Congress, and fewer like Ted Cruz, Rand Paul and others who appear to only be using their office as a form of personal aggrandizement or a stepping stone to the Presidency.

Politicians who govern by generating fear of any change, trying to pit people against each other, stifling the voices of dissent and/or suppressing the votes of those who oppose them will serve neither the needs or interests of their constituents nor the greater good of democracy within our country. Economic inequality, as well as all the other forms of inequality prevalent in our society,  helped to generate the Great Depression in the last century, and could well do the same in this one, or worse. We need representatives in Congress who listen to, identify and address the needs of ALL our people, not just their benefactors with loud wallets. The status quo no longer meets the needs of enough of us to justify its preservation.

 

Further Suggested Readings:

RIP, the Middle Class: 1946-2013

Robert Reich asks Bill Moyers: "When do you reach a point where inequality is simply too much?"

‘Inequality for All’: Documentary tracks American income gap – YouTube

How One Stroke of the Pen Could Lift Wages for Millions

Federal Regulators Finally "Mind the Gap"

Supreme Court Appears Poised to Allow More of the Wealthy Few to Buy Elections

Believe it! Resistance to Corporate Power and Warmongering is Growing All Around Us

This Week in Poverty: New Data, Same Story (and Same Dangerous House Republicans)

"Trickle-Down" Is an Unfair Economic Policy

A New Voice of Morality Responds Bluntly to Right-Wing Rants Against Anti-Poverty Programs

Low-Wage Federal Workers Call on Obama for Living Wage Executive Order

Workers Protest Taxpayer-Funded Poverty Jobs

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9 Comments
  1. I very much appreciate this clear, solid analysis and would like to send you the latest draft of content for the forthcoming “get Congress to guarantee living-wage job opportunities” campaign on Causes.com so you can review and comment on it. See https://www.causes.com/campaigns/71174-get-congress-to-guarantee-living-wage-job-opportunities. If you send your email address to wade [at] wadehudson [dot] com, I’ll send it to you as a Word doc.

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  2. Rick, logic and straight forward good plans have been over shouted by the current GOP Congress. Big business, through the media, has presented an image of Americans as poorly qualified greedy, lazy people looking for a handout.
    The Current GOP is presented a picture like this….. People that are still working are afraid that the number of unemployed will grow and the these takers will end up skimming off what little they are making through higher taxes for them. I was astounded that my dear little sister (56 years old) was so ignorant about unemployment. She and her husband lost about 1 million dollars in real dollars in the last 6 years through a very poor business decision and a terrible Real Estate decision just before the Wall Street Collapsed. Their income is still good but they lost almost everything. Now they listen to Fox News and blame the poor people for their problems. She was upset that I was getting the maximum unemployment from the State of CO. I was laid off 3 months ago. She didn’t know that my company paid into the unemployment fund. She thought she was paying for it.

    My point is that almost everyone in the bottom 95% of the population did not recover their 401Ks and lost a lot of money in their rental property. Many middle class families lost the one rental property they had. They are mad at someone. Fox News, CBS, NBC, ABC, and now the Public TV and radio (after Mitt Romney was going to cut their funding) do not paint a real picture of the American economic condition. The Media (except sources like you) do not point out who is to blame.

    Who is to Blame? Wall Street; who does not manufacture anything or produce food, gasoline, or clothing yet they were able to take the World’s economy’s down? Wall Street is a Casino…. and the house always wins. There should be people in the streets dragging the Wall Street & Bank CEOs out of their offices.

    This did not happen overnight, by the way, …. Since Ronald Reagan’s admin looked the other way while corporations around the world came to the USofA to merger and build a global economy that works them (not the world). The continued to merge until they had control of their markets or an oligopoly had formed that would move as group. Their lobbyists drew up a rosy picture of this helping the world. The Global economy has only been good for them. IE nets put out from Apple’s IPhone manufacturers living quarters to cut down on suicides in China. IE the garment manufacturers working conditions, fires, and deaths. Ronald Reagan also emotionally sanctioned (hating unions) as ok and the American Way.
    I have studied politics and Economics since 1973.
    When I was working as hard as could took make a living I was the part of the problem and I did not get involved in Politics and I felt that American Politicians would do the right thing. It was not until George W Bush was elected that I realized this was becoming too obvious where we were headed. George used War as a great excuse to cover his true economic and political moves.
    I left the GOP in 1992 when the Democratic Party seemed to care more about the Middle Class than the GOP. President Clinton sold the middle class out when he could not deliver Health Care and then approved NAFTA. Tele Communications Act and the worst thing which was too strike down the Glass Steagall Act. President Clinton was a Rhode Scholar. Bill knew what he was doing when he sold out to big business.
    Unemployed for the last 3 months I have been able to research more and get back in to the things I really do love. Our country is in tough shape. The middle class does not have the capital to invest in franchises or businesses any more. Franchise sales are to the upper class and the inherited one percent.
    Nothing in this country is really going to improve until we break down these huge corporations. I could not open a hardware store on my own. I could not complete with Lowes, Home Depot, and Ace. I could not open a drug store and compete with Walgreens, King Soopers, Safeway, and Wal-Mart.
    Horatio Alger is dead and buried. Horatio would be mad as hell that a person can not accumulate enough capital to start his own business. This was why everyone moved to the USA for a century and one half. Now they move here to work a minimum wage job but at least (in their home country) they are not being shot at.
    In Colorado an old prohibition law only allows a person or corporation to own one full service liquor store. This is the only business a smart person can get in to and make money without some large company crushing them. This type of economic regulation should be in every state and with almost every industry. Kroger and Wal-Mart should only be able to have 4 locations in every state. This would build back a regional economy where people work for companies and support a local property tax base that supports their children’s education.
    By the way, John Boehner, Government’s role is to maintain a competitive atmosphere for capitalism so that innovation, production, and economic growth can occur. Apparently John Boehner did not read about the Robber Barons of the late 1800s .
    The USofA is a perfect economic example of what Multi-national companies have done to the world.
    Did I digress? It is Saturday.
    Mark Schlueter

    Liked by 1 person

  3. The Tax Code, excessive regulations, the national debt and the Federal Reserve are the major causes of the widening inequality gap.

    Solutions:
    Abolish Tax Code and IRS
    Enact Fair Tax (national sales tax)
    Minimize regulations to only what is absolutely necessary.
    Balance the budget.
    Start decreasing the national debt.
    Abolish the Federal Reserve as we know it. Replace with automated system as Milton Friedman suggested until better solution is discovered.
    Allow gold and silver as legal tender.

    National Debt. $17 trillion costs or is financed for each household, who is ultimately responsible for that debt. This comes out to $148,000 per household if paid for in one lump sum. Financed for 15 years at 5% interest it would take a monthly payment of $1170.
    Do not be fooled each household pays this one way or another, not the rich; whether you pay it directly in taxes and fees or by a lower standard of living than you would otherwise have if the government had not spent that money.

    The question is: Is your household getting its money’s worth?

    The inequality problem is counterintuitive. Big government equals more inequality. Smaller government equals less inequality.

    The middle class is the byproduct of a free market economy; it is not manufactured by a politician’s tax gimmicks, minimum wage laws, or government redistribution of wealth.

    There is no such thing as a living wage, there is only a wage that someone can afford to pay.
    You have to tailor your living around your wage, not have government tailor your wage around your living.

    It is about supply and demand. If you have an easy time filling your employee needs, you offer lower wages, if you have a hard time filling your employee needs, you offer higher wages; because if you do not your competition will and you will be out of business.

    It is not about what people deserve or what is fair or what is just, it is about what the market will bear.

    Blame the consumer for shopping for the lowest price and blame the voter for voting for government to fix their problems.

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  4. EXCELLENT piece. I read a figure in a book (that I’m now kicking myself for not having purchased, and I hope I’m remembering correctly) that the wealth gap between the top 5% and the rest of us can actually be quantified monetarily: it’s as if every single household in the bottom 95% wrote a check for more than $8,000 to the top 5% … EVERY SINGLE YEAR since 1980!!! That annual $8,000 figure reflects the money we’ve lost to inflation, the raises we’ve never received, and our share of the growth of the economy that we were never allotted.

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  5. Uncle Odie permalink

    Income growth for middle class stopped when we separated our dollar from the gold standard. Since then, the Fed manages interest rates to keep inflation CONSTANT with median wage thus keeping real income growth near zero. Of course the top 1% have manipulated their way around this fact, but they will find their way around anything. The Fed needs to disconnect interest rates from a floating dollar, and only then will real median income grow.

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  6. Economic inequality is another word for poor. We either create a government that fairly allocates resources and opportunists or we have what the Confederacy wanted to preserve: a feudal class system that benefits the few,

    At the heart of this disaster was the republican’s decision to pander for 40 years to racism. The people were tricked into voting themselves into bondage.

    If we want to reverse this the first thing we have to do is vote the GOP completely out of power.

    The modern GOP is toxic to American Democracy.

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  7. Reblogged this on Art by Rob Goldstein and commented:
    Excellent post!

    Like

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