"I came here to drink milk and kick ass. And I've just finished my milk." - Moss, The IT Crowd

Wednesday, April 6, 2011

Income inequality: Houston, we have a problem

Earlier this week I had an interesting conversation on Facebook about Vanity Fair's recent article on income inequality in the U.S., and I've been struggling for the last few days to put my thoughts into the form of a coherent essay. It's easy to look at income disparities and be shocked by them, but it's far more work to articulate what has gone awry in the underlying processes that have brought those disparities into being; the widespread deleterious effects of allowing those processes to continue unchecked; and what ought to be done to restore more balance to the situation. I've been reflecting on my beliefs about fairness and the proper role of government in income distribution, and... it's complicated. It's very difficult to find solutions to the problem of rising income inequality that satisfy all of my fundamental beliefs. I think it's essential that we start applying ourselves more seriously to this problem, though, if we want the United States to continue being a country of opportunity and innovation. Believe it or not, there are people near the top of the wealth pyramid who think so too.

On the one hand, I think that it is essential to keep the government from becoming a tool that the rich and powerful can manipulate in order to enrich themselves further at the expense of the less powerful. On the other hand, I believe that people who are able to understand market forces and provide desirable products in clever ways should be able to make money through their ingenuity and hard work, and that their profits should not just be siphoned off by the government to be redistributed to every lazy sod looking for a handout. These views aren't mutually exclusive -- but they interact in complicated ways. (Note: I am not using "lazy" as code for "poor." Plenty of rich people and corporations act as lazy sods by trying to squelch competition through monopolistic behavior, aggressive deployment of lawsuits and legal threats, and lobbying for bailouts and laws written in their favor.) While I think that the U.S. government currently fails its most vulnerable citizens in many crucial ways, I don't think that the answer is a simple as jacking up tax rates on wealthy individuals to 1970s levels and distributing cash to people with poverty-level incomes in the form of tax credits and welfare/unemployment benefits.

I'm deeply troubled by the widening of the gulf between rich and poor in this country, because I think it weakens the fabric of society in a myriad of ways. Class divides that are too wide and too visible provoke feelings of hopeless envy and violent resentment, and encourage rampant consumerism in the middle class as people try to portray an image of moving up the socioeconomic ladder even while they slide into debt. Meanwhile, both the middle class and the wealthy denigrate the poor (more frequently than I remember from my childhood) as lazy or stupid or feckless, because doing so allows a sense of control over one's fate; promotes a feeling of virtuousness about one's own good fortune; and assuages the fear that comes from knowing most of us are one serious illness, or accident, or lawsuit, or stock market collapse away from poverty ourselves. Meanwhile, the very wealthy become ever more motivated to insulate themselves with gated communities, private schools, country clubs, and exclusive social gatherings. When you live in a gilded bubble, it's also easier to avoid being troubled by questions as to whether the CEOs of corporations produce a work product that is actually worth a salary several hundred times that of a schoolteacher or a home health aide. (No, the true value of your work is NOT measurable solely by the amount of money that you're able to shovel into your own bank account. Look at Ken Lay, Bernie Ebbers, and Dennis Koslowski.)

Using government solutions to tinker with income distribution is a tricky business. I don't simply discount the concerns of people who are worried that a stronger social safety net will create disincentives to holding jobs and using money prudently, especially among those who grow up in a neighborhood of government-run housing that boasts few role models for bettering oneself. Plenty of cautionary tales can be found in Britain's council estates. Whether that means their social safety net is not strong enough, that they provide too much in benefits, or that the programs are simply badly administered, I don't know. Clearly it won't work to just throw money blindly in the direction of people currently living below the poverty line. But acknowledging that fact shouldn't be an excuse for ignoring that America has too many homeless children and veterans, too many people unable to afford healthcare (a factor in large numbers of foreclosures and deaths), and too many long-term unemployed who don't see a future.

So let's start with the premise that extreme income inequality is, long-term, bad for the overall health of the United States body politic. And let's accept that the solution is not as simple as uniformly raising tax rates on corporations and individuals, with accompanying closure of loopholes, and then using the government as a mechanism for distributing those funds to low-income households. There's still a lot that we can do to improve the situation, but there is no one simple master stroke, and the two major political parties we have today have very little incentive to change the status quo. The problem is multifaceted, and its effects send out tendrils across almost all aspects of our society.

If I have one grand unifying theory underlying my thoughts on this topic, it's that money and power have gravitational force. You get enough in one place, and the effect is like a black hole.

Next up: Corporate welfare and how it contributes to the increase in income inequality.

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