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Why The Right AND The Left Won’t Talk Seriously About Inequality

September 30th, 2010


Let’s put together some recent data and academic research on inequality in America.

First, according to this week’s census report, the gap between rich and poor is steadily growing wider. You can cut it any number of ways, and there has been lots of number crunching in recent days, but here’s the official verdict from the Census Department: the gap between the top 20 per cent of Americans and the bottom 20 per cent has nearly doubled since 1968.

That top fifth of Americans now earns half of all the income generated in the country, while the bottom fifth earns only three per cent of that amount. The top five per cent of Americans alone earns one-out-of-every-five dollars paid out as income.

(Does it really make this issue of unequal distribution less worrisome to remind us that the situation was worse in 1929 – just before the Great Depression – as some conservative voices are doing?)

Second, Americans are woefully unaware of how unequal the country actually is in terms of income earned. Dan Ariely (author of Predictably Irrational) and Michael Norton have just published a survey demonstrating that Americans of all persuasions – Republicans, Democrats, men, women, well-off, poor – significantly underestimate how amazingly rich the richest Americans actually are.

Even more intriguing is that those same Americans are adamant that they want to live in a country where wealth and incomes are much more equally distributed, because it seems to them to be strong evidence of a much fairer society at play. In fact, in a blind choice between living in a more egalitarian society based on income (Sweden) and the US, they picked Sweden over the US by an overwhelming majority.

Third , this week, along comes a new study by another group of prominent economists (that includes Emmanuel Saez, widely-acknowledged as a leading expert on income and wealth distribution in the US) demonstrating the extent to which, as humans, we simply don’t like income inequality.

The researchers surveyed the reactions of more than 6,000 employees of the sprawling state-wide University of California system upon learning exactly what each and every one of their colleagues is earning. (Starting in 2008, the pay of every state employee in California is posted on an open website.)

In a nutshell – and why would you or I feel different? – it turns out that knowing that we are making less money than our co-workers makes us unhappy about our jobs, more likely to look for work elsewhere, more worried about the inherent fairness of our workplace and of our society in general and ultimately, that affects how we vote.

In other words, understanding how unequal the country has become can be really important in electoral politics.

The problem right now, of course, is that neither political party is much interested in talking about inequality.

For Republicans, talking about inequality raises the danger that, almost regardless of how it’s spun, voters will realize that the rich are steadily getting richer. Or more precisely, that a relatively fewer rich Americans are getting a great deal richer than the vast majority. Why should Republicans initiate a discussion about something that just makes voters demand, because it’s the only option, increasing taxes for those at the top? Republicans don’t do that!

For Democrats, talking about inequality requires talking about … wait for it! … raising taxes and cutting spending, because in the dire economic situation the US now finds itself in, once again, there really isn’t a way to avoid this hard prescription. And it’s become party dogma that Democrats don’t do that!

As a result, both political parties have a short-term interest in simply avoiding making too much of the fact that America is becoming a more and more unequal society, where more and more Americans are struggling to live decent lives.

Does that sound like good leadership to you?

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