Sunday, August 08, 2010

Economic Inequality

After reading a blog where the author made the argument that economic inequality was the cause of many social ills in our country and listed off quite a few using a recent book, The Spirit Level,  it made me think again about the issue of have and have-nots, about economic fairness.

I haven't read the book and know only what the article and blog said about it, but it seems it's making the case for socialism and communism as economic tools-- not the dictator version where the rulers are living a different life than those under them. This is where the citizens have decided to level the economics and that it -- supposedly-- leads to happier people on all levels. Examples come from the richest countries around the world where some are more equal economically and some decidedly less.

What has led to this economic disparity and, of especial interest to me, to the increasing inequality in the United States? There is no doubt that the difference between the richest and poorest or even the ordinary working stiff and the top of the food chain has grown a lot in my lifetime. The argument from the book is that our violence and many other social negatives are directly attributable to this disparity.

Not taking up their argument, or trying to disprove or prove it, I think there is another factor at work in the United States that is contributing to more unhappiness and that is the fear that the middle class may be disappearing as we see the jobs that fueled its growth disappearing to other countries.  The belief that there will always be a middle class is shown to be false by history. And despite the concern for poverty, a valid concern, the middle has always been where the poor could rise up into. It was their hope.

It's not like most people who grow up in poverty will end up being Demi Moore and wealthy through a combination of talent, beauty, marriage, and luck. They won't be a top sports star or become a president.  But they might become an engineer, store manager, or a teacher and earn a good living, get a nice house, raise some kids, and know a peaceful retirement.. Most felt that could be possible for children from any economic class with hard work.

I grew up in a working class and union home. I heard my father and grandfather argue over whether communism was the ideal way-- grandpa's view-- or whether communism would impoverish even him-- my father's view. Neither of these men were intellectual elites. They didn't have high school diplomas and both worked hard their whole lives. Both had seen the advantages unions brought to their jobs but also the cost in strikes.

My grandfather was in the meat industry until he retired to be a faller for a logging operation and when that got too tough, he became an independent dory boat fisherman which means he went out into the ocean in a small boat, over the waves in this case, and fished to earn his living. Even way back then, he didn't like the direction he saw the country heading if unions and the power of people banding together for rights was lost.

My father also worked hard his whole life with construction jobs when younger, then the meat industry and finally as a school janitor. When he came to live on this farm with us, he was always busy at something because he liked working and did so until the day he died. He felt if the world leveled what everybody had, the end result is most people would have less; but he also saw the dangers of an increasing time of have-nots. He died in 1980; so that wasn't any recent concern that he was viewing.

So here we are thirty years later and we are still looking at the issue without a lot more solutions so far as I can see. In our country we definitely are seeing more disparity in wealth that has gotten to the obscene level (yes, righties, it has). The Republicans support this growth of the richest as the result of capitalism and fairness (like our economic system is so fair), while the Democrats talk of its problems and unfairness but do nothing about it. What can they do?

That's the real question I have right now. It's happening more and more that we see the extremely wealthy getting richer while the ordinary working people are getting less raises, being fired more often, seeing their dollars worth less, and having to work longer and harder for less money if they are lucky enough to have a job.

[Incidentally it's not that there are no jobs like some say. Look at any city newspaper. Here is what Portland's has for August 8, 2010-- Classified ad jobs. It's that many people cannot qualify for what is needed or they don't want to accept the pay and retraining required. There are jobs; and in many cases, like my kids' business, the business owners cannot find people willing to be responsible and honest for the living wage jobs they offer (with benefits). People want to do less or be paid more in many cases. Sometimes they physically cannot make the grade.]

Here's another of those conundrums we face in our world today. A lot of the benefits workers had for so long came through unionization. Some of the inability of corporations to be competitive in a worldwide market likewise came from unionization.

Back to the original question-- if you accept the concept that income inequality is a problem, what can be done about it?

If you read the newspapers, you saw Mark Hurd just got fired from HP over an ethics violation.  (Incidentally, when you get fired at his level, you don't go quietly into the night but you take a big paycheck with you.) Hurd had instigated policies that the stock market loved hence HP stock fell immediately. He did it by a policy of firing the bottom 5% of the employees regularly. Jack Welch apparently wrote in his book about how he did the same thing at GE; so it's not like Hurd invented the idea. This firing happens even if the workers are doing a good job, meeting all requirements, because they can be replaced by 'new blood' and likely at lower salaries.

Now the stock market loves such policies but can you imagine what that does to the worker knowing that if he helps someone else look good, he may fall below that guy's percentage of looking good? Forget genuine cooperation. What you get is making it look like you cooperate while you feather your own nest first and foremost. It is certainly the opposite of socialism and more of a Darwinian theory of to the fittest go the spoils and make sure it looks like you are the fittest.

What can any individual worker do about policies like that? When these policies were instigated at HP, the stress diseases showing in nearby medical clinics likewise rose and all a doctor had to do was ask-- work at HP?

Still the problem with the other side of this coin, the one those authors are promoting is long term do you ever, given the nature of humans, see socialism or communism work (not that you see many pure examples of it). A lot of what looks good is only for awhile. To make it work, you would have to convince the workers that what matters most is the system and not the individual. In a way, that was the power of unions (for those who see unions as bad guys, it depends on where you sit. About the only real pensions left have been gotten through collective bargaining).  Unions though have been out of favor for quite a few years. They have earned disfavor through corruption and often being shortsighted about the very jobs they were supposed to protect.

Our country, more now than at any other time in my life, worships at the cult of the individual. Especially to the right wing, if the individual flourishes, the whole system will benefit. That doesn't make it possible to accept socialism as anything but an evil foisted onto mankind to destroy the individual. Say the word and people think Mao not Sweden.

The other problem with the idea of either socialism or communism, as a leveling economic tool, is quickly raised. What does it do to the work ethic? How hard will you work if you see someone else goofing off but not paying a penalty for that? Most communes, with a few exceptions, have run into this problem. People might work for awhile anyway; but after that awhile, they don't like it if they see others not working.

To make such systems work long term would have to require some kind of regulatory body forcing everyone to work hard-- there goes freedom. And here comes power of the regulatory body which generally is going to be a government. It's not like I trust government anymore than a lot of righties. You know the old saying about power and how it corrupts-- with absolute power corrupting absolutely. Giving more power to a body that I don't trust to use what it has? Not likely.

So, after this rambling conversation, is there any solution to economic inequality? Does anybody really believe we are born equal? Should those with more skills earn more money? Want government to regulate wages? Tax to a level that some are losing it all and others being handed money? Anybody really believe we have pure capitalism in the United States or that we ever had it? How about Santa Claus?


Robert the Skeptic said...

Pure Capitalism is children working 14-hour days with no health or safety benefits. We've been there and out of that came unions.

I was a union employee before I retired. As you said, unions run on collective power - but we have evolved into a nation of individuals so the question on everyone's minds is, what can I get for ME?

Some people have suggested that the "middle class" was an aberration, a result of the economic boom times after WWII - an anomaly on the radar of history. Perhaps it's false to assume that it can/should be the norm, maybe the norm is lots of poor people and a few rich who own the rest. Sure seems to be going that way.

Like the saying goes: "Democracy is a bad form of government. But never forget, all the others are so much worse".

Dion said...

If we could just get the rich to pay a progressive tax rate...

And if the corporations wouldn't get their mail offshore to avoid paying tax...

And if the corporations would keep jobs in America that pay a living wage. A sort of anti-Reagan era is needed to bring back a semblance of balance.

For change of any substantial degree, corporations need to be removed from the business of government. This will not happen so kiss the middle class good buy. The corporation and government are now one entity.

Annie said...

I haven't read the book either, but from other reading, here are my thoughts on the issue.

The USA is at one extreme for income inequality vs equality, several European countries at the other. Canada, my country, is somewhere in the middle. Countries with less economic inequality do have more in the way of social programs to redistribute income and provide a social safety net, and the outcomes in these countries include higher longevity and lower infant mortality, among other things. Again, Canada is in the middle on these things.

Unions have never been strong in the USA, they are far stronger in countries with less income inequality, and apparently far more effective in protecting worker members.

Americans do emphasize individualism more than anyone else, people in other countries do not have so hard a time accepting government controls on their lives that limit extreme wealth but provide higher living standards for greater numbers of the population. I don't know what it would take for the USA to make that shift, individualism seems to have such power in your country.

Rain said...

All comments are right as I see them. I appreciate your giving perspective from Canada, Annie.

Here is the other problem the US faces and the world for that matter. We have maintained a huge military, most say best in the world right now, and in many cases the countries that have better social programs have been able to do that because they did not have to have a huge military nor were they fighting any wars with any big numbers. Would that have changed if the US said they weren't doing that anymore? Would say the Soviet Union have taken any of Europe if the US had not been there as a deterrent? What about the Middle East, how would it be different if the US didn't offer the military might to balance the equation there?
And I am not saying nobody else contributes but nothing to what the US does. I don't know the answer and really nobody else does but it's an economic factor that makes it easier for some to offer more in say health care than us.

While we do have lower federal taxes, if you figure in our whole tax picture-- sales, property, excise, special fees, local, it isn't as low as some might think. Over a fourth of it goes into keeping an active military even in good times, let alone what it's been the last 10 years.

To add to this question, some in our country feel it is the duty of the US to go around the world righting wrongs which would make us the world's mercenary (and not always appreciated either) but with not much contribution from elsewhere beyond sometimes a few thousand or even hundred troops for this engagement or that.

Personally I am not fond of the role we have found ourselves and do think our corporate interests have done a lot to get us here; but do wonder supposing nobody did that, would the bullies of the world (and they do exist) start taking over this or that prime piece of land? If they attempted that, would those who have no military currently (say Costa Rica) be forced to build one and there goes their ability to offer the social services?

Wouldn't it be nice if nobody played greedy and mean that way and there was no need for any military units! Can you imagine the difference it would make in quality of lives but it's unrealistic to imagine it would happen given human nature. Has there ever been a time from the beginning of man's emergence that might hasn't made right? Might or the promise of it...

wally said...

Capitalists warn us of the evil of Socialism. I’ve always wondered how an economic system that is based on common ownership of property and means of production could be evil. Socialists look at society as a group and think that the even distribution of wealth will benefit all. Of course, the countries that have claimed to be socialist were actually governed by despotic elites who restricted the freedom of their citizens. So socialism is not really a system that has been tried and found wanting as much as one that has not been tried at all. And it may never be tried because it’s the nature of the human animal to be competitive. The least competitive among us still want just a little more than our neighbors, or just a little more than we ever get. Capitalism views society as a group of individuals and if the individual is allowed the freedom to pursue his own interests then the entire group will benefit. In a perfect world either of those systems or a combination of both just might work.( I think the socialism we see in some European countries, such as Sweden is a blend of the two ideologies) But we don’t live in a perfect world. Why not? A religious person will tell you that man has a fallen nature and although he has the potential to do what is right he tends to mess things up. A more scientific person would say that we have evolved into a creature that preys upon his own kind. The old survival of the fittest doctrine. Social Darwinism is an idea adhered to by the wealthy and the powerful. They have more because they deserve more.
In America we have our own hybrid of the socialism/capitalism mix. The profit goes to private pockets and the risk is born by the taxpayers. As Dion pointed out the government has been hijacked by the capitalists. When the bankers created the biggest financial meltdown since the Great Depression instead of going to prison for their criminal ineptitude they were given the keys to the Treasury. Too big to fail? Nonsense. The Bush administration borrowed money to give the richest a tax cut. We’re told that the redistribution of wealth is a bad thing yet the wealth had been redistributed from the bottom up for generations. The corporations and the wealthy have been waging war against the middle class for years and we didn’t even know it because the politicians owned by the corporations have been successful in demonizing any social program that would give a hand up to those of us who were not born rich.