Post #12: Some Footnotes on Inequality

Readers have raised issues related to the two previous posts on inequality.  Here are my responses:
1. Definitions of middle and upper class. There are economists’ answers and sociologists’ answers, the latter being much more diverse and based on many factors (notably, lifestyles) besides income. The statistics in my previous post (#10) belong to the economists, and they typically define class as follows: low income (the poverty line), $23,000 for a family of 4; middle class, which includes “working class” (blue collar); lower middle class (college educated), $32-60,000; and upper middle class (high-level white collar, advanced education), $100,000 and up; upper class, including the top 5% who earn over $150,000/year and the top 1% who earn $250,000 and up.
Robert Reich, the former Clinton labor secretary, defined middle class as those 50% above and 50% below median income, which is about $51,000.  (“Median” means that half the population is above and half below that figure.)  Median income has been going steadily downward since 1999, as have all other figures for the middle class (such as net worth and real/inflation-adjusted income).  It’s also relevant to note that whereas worker productivity has increased quite a bit over the last 25 or so years, and while US workers put in more hours at the job than their European counterparts, their income has declined considerably. If wages had kept pace, their median income would be over $77,000 today.
2. The risks of inequality. The World Economic Forum annually publishes a Global Risks report (http://reports.weforum.org/global-risks-2014/part-1-global-risks-2014-understanding-systemic-risks-in-a-changing-global-environment/).  Note where inequality stands on its top-10 list below, and the explanation cited below the list.  Since the Forum is often referred to as a club of the rich and powerful—its meetings at Davos, Switzerland attract world political and economic leaders—the report’s listing of inequality as the leading risk is worth noting.  Thanks to Mike Marien for bringing the report to my attention. The latest issue of his Global Foresight Books (www.globalforesightbooks.org) contains many titles relevant to inequality.

Table 1.2: Ten Global Risks of Highest Concern in 2014

Global Risk
1 Fiscal crises in key economies
2 Structurally high unemployment/underemployment
3 Water crises
4 Severe income disparity
5 Failure of climate change mitigation and adaptation
6 Greater incidence of extreme weather events (e.g. floods, storms, fires)
7 Global governance failure
8 Food crises
9 Failure of a major financial mechanism/institution
10 Profound political and social instability

The report states: “Closely associated in terms of societal risk, income disparity is also among the most worrying of issues. It raises concerns about the Great Recession and the squeezing effect it had on the middle classes in developed economies, while globalization has brought about a polarization of incomes in emerging and developing economies. This is true despite the obvious progress in countries such as Brazil and lower levels of poverty in several developing countries in Asia and Africa.” According to the study, income disparity is “the most likely” of all the risks.  (Extreme weather and climate change are among the others in the top 5 “most likely” risks.)

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Speaking (again) of climate change, here’s more late-breaking (and sobering) news:

“Panel’s Warning on Climate Risk: Worst Is Yet to Come”

http://www.nytimes.com/2014/04/01/science/earth/climate.html?hp&_r=0  (click the link for the article)

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3.  Subsidies of the rich.  Nick Kristof’s recent op-ed is quite relevant to our discussion (see “A Nation of Takers?” www.nytimes.com/2014/03/27/opinion/kristof-a-nation-of-takers.html?emc=eta1).  He reminds us of something we all know: that those who advocate reducing support of public welfare programs would do better to target the many tax loopholes and other devices by which rich individuals and the major corporations reduce or altogether avoid paying taxes.  Gaming the system adds significantly to the inequality problem.

4. The politics of wealth.  No discussion of inequality would be complete without at least mentioning the obvious: that great wealth–personal, organizational, and corporate–enables political power through access, influence, and sometimes direct involvement in government decisionmaking.  Whether we are talking about US global corporations and billionaires, Russia’s oligarchy, China’s princelings, or just about any other country’s super-rich families, cronies, or giant firms, these are folks with a political reach that you and I can hardly imagine.  And while there of course are progressive individuals, unions, and foundations with huge funds, I think it is fair to say that the balance of money power lies overwhelmingly with people who are determined to sustain inequality of every sort, and who will resort to every subterfuge to undermine humane values and democratic processes that would challenge their selfish interests.  (If specific references are needed on this last point, think in the US of the Charles and David Koch family foundations (see  http://www.nationofchange.org/who-are-koch-brothers-1396329912), the American Legislative Exchange Council/ALEC (www.alec.org), and ExxonMobil’s lobbying and funding to weaken efforts on global warming.)

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