Wednesday, November 17, 2010

Does Income Inequity Raise the Tide?

Has a second Gilded Age dawned on America? Is the new economic morning we’re seeing all around us - damp with high unemployment, offshoring, and stagnant wages - a precursor to another depression or lost generation? Is what we're seeing dimly these days being illuminated by light refracted from the wealth America’s top earners have amassed?

Many conservatives bristle at the notion that exaggerated income disparity could be any sort of economic problem. Many liberals – even rich ones – bristle at the notion that America’s new super rich shouldn’t share more of their wealth with our lower economic classes. In between are, well, the rest of us. Only being in the middle doesn't have the same ring of prosperity that it did even a decade ago.

According to the liberal-leaning Institute for Policy Studies*, the top 1 percent of Americans received 23% of the income in 2007, the most since 1928. Is that true? Did one percent of wage earners get almost a quarter of 2007's entire payroll? If this statistic is true, does it depict a healthy economy?

Adjusted for inflation, America's average hourly wage was $20.06 in 1972, and $18.52 in 2008. Does this mean that middle-income workers are losing financial ground? Are the rich getting richer at the expense of everybody else, or have they simply managed to leverage their assets better than everybody else? Have we reached the upper limits of capitalism, where raw greed trumps innovation? Or do economic slumps simply make us have-nots more grumpy?

Indeed, is it petty jealousy which causes us to complain about how other people have more money than we do? Have the super-rich really earned their money, or have they simply benefited from a skewed system of rewards? Why do executives who manage but don't create merit significantly greater compensation than workers who actually produce the product for sale?

Why do airline pilots - by whose expertise an airline sinks or swims - earn less than their top-tier bosses? Why do doctors have to justify their life-saving skills to MBA's at insurance companies who earn more than them? Hasn't the system of value and rewards become woefully imbalanced in our country?

How do we all benefit when a small group of us amasses disproportionate wealth? Does a rising tide really lift all boats? Or have systemic subordinations, born of Darwinian economic ideologies, become the means by which income disparity has begun to whittle away at the middle class? Has Wall Street really provided the best method for paying people what they're worth to our economy?

Many conservatives claim taxation based on income represents another form of wealth redistribution. Some high-income folks balk at being subjected to higher taxation rates than lower-income folks, but if somebody who earns $1 million a year is taxed at the same rate as somebody earning $50,000, is the lower-wage-earner actually being taxed more in relation to the cost of living? Some evangelical conservatives point to the 10% benchmark provided in the Bible for tithing, saying that if a flat rate is good enough for God, it should be good enough for the IRS. What people who make this argument are missing is that the 10% is ONLY a benchmark - indeed, Luke 12:48 says that to whom much is given, much will be required. Is Christ talking about a dollar amount, or a percentage?

A lot these questions actually boil down to the intrinsic value a middle income class has within a society. If the super-rich keep firing employees to make their companies leaner so they're more profitable, will the society's overall buying power be adequate to support what these companies are trying to sell? If the super-rich are banking on global markets to compensate for their shrinking US market, then what's to stop corporations in other countries from poaching the remaining customers here? For example, what will happen if and when China comes up with a fantastic new computer operating system? Or SUV? Or any number of other widgets and services American countries are currently offshoring? Do conservatives go crying to Washington, wanting even stricter tariffs to keep foreign competition at bay?

I guess, after all of these questions, my one basic question is this: why do conservative elites** dislike the middle class? What have we done to offend you? Aren't middle class workers industrious and productive? Are we simply higher-paid lower class grunts? Why do you think everybody should be rich like you? If all 300 million of us were rich like you, who would be your business analyst, graphic designer, school teacher, police officer, nurse, or salesperson?

If income inequity is actually a rising tide that lifts all boats, then mine must have sprung a leak. And for all of you conservatives who are aspiring two-percenters, dreaming of being on Forbes' lists: don't look now, but your ship may have already sailed... with none other than limousine liberals like Gates and Buffet at the helm.

* Apparently, the Institute for Policy Studies has incurred the wrath of Koch brothers puppet Glenn Beck, which considering his feeble credibility, and the Koch brothers' Soros-esque machinations, probably says more about the Institute than Beck.

** After considering the feedback from a reader (see below) I have changed my wording in this sentence to better reflect the group to whom my question is addressed.


  1. You wrote:
    "why do conservatives dislike the middle class?"

    ??? most times i refrain from calling you out on your completely unsupported claims. In this case, to aim for the benefit of the doubt side, rather than say its an unsupported claim, can i ask you to support this claim? Knowing my own peers and associates I would actually suspect that most of the middle class ARE conservatives. Perhaps i'm the one more out of touch, by i do observe throughout your posts that wealth, status, social class could possibly be a personal stumbling block for you.
    (please feel free to delete this comment if you'd prefer to; i won't follow up against that, respecting your place as the owner of this blog :) )

  2. Thank you for the excellent question. I was hoping somebody would challenge me on this one.

    It seems to me that Republicans in general and Tea Partiers in particular bend the knee all too often to the super-rich. For example, the "Bush tax cuts" that Democrats would readily extend for the middle class but not high-income taxpayers. Why can't Republicans go along with that compromise, instead of insisting that high-income earners get to keep their tax breaks as well? Why allow so few people - the "top 2-percenters" - to control the taxation process? It's an honest question on my part to try and figure this out.

    Also, the conservative elite appears to have simply shrugged their shoulders at the striking evaporation of mid-level jobs. Are executive jobs disappearing at proportionate rates? It seems that those making the job reduction decisions - at companies which are still earning profits, mind you - are the ones whose own jobs seem pretty secure. Again, maybe I'm missing something here; were companies employing masses of people who weren't necessary to begin with? Or have decision-makers managed to convince the middle class that rich people are better for the economy? Yes, I realize that sounds like class warfare, but I suspect that's what we're heading for in America.

    Third, like you, I think most people in the middle class are conservatives. But we're being manipulated into accepting our declining incomes and earning power by elites on both sides of the political/economic aisle. We're being wooed by a talk radio bully pulpit into a mindset which is ushering in, through the back door, a subtle dismantling of programs which currently are protecting critical health & safety and financial regulatory issues. Tea Party backers want to roll back air quality standards (claiming, for example, that air pollution actually prevents skin cancer). They want to protect fossil fuel industries at the expense of alternative fuel research. They want to abolish the SEC so that financial transactions have even more risk and less accountability than they do now. All of these things sound like terrible liberal strategies designed to support big government; but in our sophisticated society, who's going to look out for our safety and security? Can big business be trusted to place principle over profit?

    I realize that my writing skills may not be good enough to convey what I really want to say, and for that, I apologize for exceeding my limits. I've been trying to hone my craft and become better able to explain myself, which may have inadvertently resulted in my "completely unsupported claims."

    Thanks for sticking with me during this process, and please feel free to keep calling me out on stuff that doesn't make sense.


Thank you for your feedback!