America: Land of Unequal Opportunity
Introduction
Do you remember your last ride on the New York City subway? Chances are there was a homeless person isolated in the corner, while no more than a few feet away a business executive was sporting a Rolex and sipping an $8 latte. Although the physical distance may seem short, economically, the two are leagues apart. This may be an extreme example of income disparity, but it reflects income inequality in the United States as a whole. It is humbling to know how lucky I am, even though I’m in the bottom 10% of the income bracket. I cannot help but speculate that the wealthy executive must have been born in a wealthy family and lived in a community that afforded them the education and opportunities needed to succeed, whereas the homeless person did not have those privileges. When I see that stark juxtaposition of wealth on the subway, I am always struck with the same question: “What can I do?” The resounding answer is that the responsibility lies within government policy. The government has an obligation to its citizens to curb income inequality as it negatively affects the American society, often beyond what we see in our everyday lives.
History
Picture the New World at the end of the 18th century as a place with “fertile farmland plentiful enough for most people to earn a decent living and little of either extreme poverty or extreme wealth to be found,” (Clemmitt, p. 998). With the advent of the industrial age, nearly a century later, the gap, between the rich and the poor widened. By 1910, the richest 1% held 15% of the nation’s income, meaning they were making hundreds if not thousands more than the average American (Clemmitt, p. 998). The disparity was sharply punctured by the blistering needle of the Great Depression which leveled the playing field.
During WWII, the top income earners were taxed at a rate of 90% or higher (Clemmitt, p. 999). “There’s an era ...between the Second World War and the 1970s marked by far less income inequality; this is an era that some economists refer to as ‘The Great Compression,’” (Ahmed et al., p. 156). Ahmed et al. explained that during this period, the economic and productivity growth were in tandem, and the revenue from the growth was equitably distributed across all income levels. This era was cut short by the technological age, though, where suddenly middle-class blue-collar workers were replaced by machines (Clemmitt).
During the late 70s and 80s, New York City saw the era of financialization. It allowed the market to make economic decisions, while also favoring profits “through financial channels rather than through productive activities,” (Chronopulous, p. 857). The economy was not spurred by the toils of the working-class but by money made through investments, bonds, and securities. As a result, “the top 10% in the U.S. [as of 2014] receive more income than the other 90% of the population combined – the first time this has happened in the last hundred years,” (Ahmed et al., p. 155). The ordinary workers were stuck in the same spot while the elites soared light years ahead; “95% of all income growth since the end of the Great Recession has gone to the wealthiest 1%,” (Ahmed et al., 157). The last time we faced such income disparity was on the eve of the Great Depression. It is best to avoid repeating history.
Argument
Income inequality has a direct effect on the macroeconomic wellness and stability of the nation. Experts have argued that the Great Recession of 2008 occurred as a result of income inequality (Treeck). Christine Lagarde of the International Monetary Fund admitted that “a more equal distribution of income allows for more economic stability, more sustained economic growth, and healthier societies,” (Abrahamian). Treeck posits that “rising inequality has led to a deterioration of savings‐investment balances, as the poor and middle class borrowed from the rich...to finance consumption,” (p. 422). The middle, working, and lower classes deviated from saving and investing and instead chose to use loans of credit to satisfy their consumption. Like all good things, this overreliance on credit came to a halt with the crash of the housing market in 2007. The fallacy that the lower-income classes could use the government-endorsed credit loans as a crutch eventually came to an end (Treeck).
The U.S. government encouraged easy loans of credit, and the middle class hopped on board to keep up with the consumption of those in the top-earning brackets (Treeck). Rajan claims, “easy credit has been used as a palliative throughout history by governments that are unable to address the deeper anxieties of the middle class directly,” (qtd. In Treeck p.428). It is easier for the U.S. government to ignore the fundamental problems of income inequality as long as the economy keeps growing under the misguided belief that everyone will be better off in the long run. This mentality has been reinforced by the trickle-down economics doctrine which states that the spoils of the wealthy will eventually make their way down to the lower classes (Abrahamian).
The trickle-down economics doctrine has been outspokenly rebuffed by the recent uproar of the Occupy Wall Street movement. The people no longer believe that the spare drops that spill over from the over-brimming chalice of the wealthy will satisfy their needs. Income inequality is the fruit of government policy, and it is up to the government to amend it so that the richest 388 individuals don’t hoard half of the world’s wealth (Abrahamian). The government must address income inequality at the root of structural problems instead of simply applying a bandage on the wound by issuing more liberal credits, which ultimately led to the Great Recession. If the government does not take bolder actions, the nation’s economy will suffer and this will most likely result in another economic collapse.
In fact, income inequality impacts more than just the nation’s economy; it will influence democracy. The reality that those in the extreme echelons of wealth hold powerful sway over politicians is undeniable, “High levels of inequality hurt democracy because, among other things, they allow rich people and corporations to buy the support of politicians” (Abrahamian, p. 14). Moreover, the top income earners conceal their wealth in offshore, nontaxable accounts which deprives the government of the funding needed for social welfare (Abrahamian). Contrary to popular belief, the main danger to democracy is not an abrupt coup d’état but a “slow strangulation by insidious oligarchy,” (Karl, p. 152). The oligarchy here refers to the affluent elites, who become more influential as the income disparity widens, and use their power to execute their self-serving agendas. If policies are not put into place to stop this, the top income earners will influence the government much more than they already do.
Karl goes on to claim, “It is difficult for democratic institutions to function correctly or be maintained in a polity sharply divided by income and wealth, especially one that does little to redress this situation,” (p. 152). Moreover, those who suffer steeper inequality “are more willing to accept authoritarian rule, less likely to be satisfied with the way democracy works, less trusting of their political institutions, and more willing to violate human rights,” (Karl, p. 152). The less you feel equal in your society, the less you appeal to democracy. The feeling of being unequal will lead to the embodiment of an authoritarian rule because of the vanishing self-worth. The U.S. government must take action before the value of democracy diminishes for the lower-income groups and before the elite use their wealth and power to take a more pervasive control of the government. If the government fails to take action against income inequality, they risk the loss of democracy.
Income inequality also takes a toll on people’s mental wellness, as suicide rates have risen in low-income communities. This inequality exacerbates “a psychological strain due to material impoverishment, perceived position in the social hierarchy, decreased sense of control, and paucity of opportunities,” (Miller et al., p. 449). In a consumerist and capitalist-driven country, your income and occupation are the main indicators of success and self-worth. Without ample funds to participate as a consumer, you might be left with vexing questions: Am I enough? Am I in control of my life? Is it worth living? Miller et al. investigated this in their study on suicide rates in relation to income inequality in New York City. They found that “persons living in neighborhoods characterized by more inequitable distribution of income had an increased likelihood of committing suicide…” (Miller et al., p. 453). The results of the study confirmed that younger people who may be under “psychosocial stress” as a result of financial burden were more inclined to use lethal force in suicide attempts and were more likely to suffer from social isolation and “anomie,” (Miller et al., p. 454). The troubles that income inequality yield are not just on a macroscale, but a microscale as well. Young men and women are failing to see their self-worth because of the financial hardships they face. The government has an obligation to protect its people from deliberating between the choice of living in an unfair world that is skewed against them or living at all.
Counterargument
There are individuals who suggest the government refrain from alleviating income inequality because it is exaggerated and misrepresented. Early allegations redefined the metrics used to measure income, and claim that the current measurements “exclude about $1 trillion in annual transfer payments to lower-income households and do not account for the effects of taxes. When those transfers and tax effects are included, income inequality in the United States is lower than that in many Western democracies…”. Similarly, Gordon claims that conventional measurements of the change in rate of median income compared to the rate of change in economic productivity are incorrect. He suggests that the conventional way of measuring the differences between the two has forced us to believe that productivity is increasing four times the rate of median income; when under his set of metrics, the difference between the two is a tenth of the size (Gordon).
This statistical smokescreen is an effective way to obscure the fact that Gordon admitted in his first sentence, “The evidence is incontrovertible that American income inequality has increased in the United States since the 1970s,” (p. 1). Regardless of how it is measured or quantified, it is undeniable that the gaping chasm that exists between the bottom 99% and the elite “can be entirely explained by the behavior of incomes in the top 1 percent” (Clemmitt 1004). Abrahamian expands, “Between 1993 and 2010, the top 1 percent in the United States saw their incomes grow by 58 percent, compared with 6.4 percent for everyone else.” We can manipulate the numbers however we like, but the bottom line remains: the top has more than their fair share of the pie, and the government must do something about it.
There are even those who concede to the disparate current state of income inequality but still don’t view it as a crisis worthy of intervention. For instance, Spatz argued that “a true meritocracy is incompatible with government intervention,” (“Let’s Take Another”). The idea that “you get what you deserve if you work hard for it” has discounted the need for higher education in order to achieve any real advancement in society. Darren Walker claims the only way he was able to “climb out of poverty [was the] public investment in education program[s]… and that the fiscal policies that support them are disappearing,” (Abrahamian). The opportunity to receive quality education indubitably requires accessibility and the ability to afford it. It is fairly well-known that “[poorer] districts tend to have more students in need of extra help, and yet they have fewer guidance counselors, tutors, and psychologists, lower-paid teachers, more dilapidated facilities, and bigger class sizes than wealthier districts,” (Semuels). Those who claim that we live in a merit-based society are disillusioned about the structural barriers faced by the poor to escape poverty. Mathur expands, “What people really want are jobs and the opportunity to earn a decent wage, to send children to good schools and to earn their success.” Linda Greenberg encapsulates the mentality of many conservatives when she poses the question “Why should [the poor] feel that [the rich] should share with all, particularly those who are lazy or unmotivated?” (“Let’s Take Another”). The notion that the poor remain poor because they would rather not work, or lack integrity, is unfair as “these tremendous differences in wealth aren’t a product of moral turpitude or personal failure, but of calculated and determined policy,” (Abrahamian). The issue of inequality is based on system-wide faults that must be addressed by the government, and the government must find solutions to shrink this disparity.
Conclusion
The next time you stand clear for the closing doors, take stock of your surroundings. Realize that just one of the hundred persons squeezed into that car holds more than forty percent of the wealth represented in that train car. Realize, also, that this individual has more money than ninety poorest people in the car combined. This represents the current reality in the United States. I acknowledge it is not possible to exist in a capitalist meritocracy where everyone gets an identically equal slice of the economic pie. Nonetheless, it is painful to see the meager crumbs so many are afforded while a select elite shovel the rest of the pie down their avaricious throats. The government is responsible for guaranteeing each of its citizens an equal opportunity to get a slice of the pie. If the U.S. government fails to do so, the United States will face the deterioration of the economy, democracy, and the fabric of people’s lives and their willingness to live. Without intervention from policymakers, the U.S. will also lose its status as the bastion of equality. No doubt the world has already peeked behind that façade and begun to realize the truth: America is truly the land of unequal opportunity.
By Jonathan Peralta
Illustrations done in collaboration with the New Media Artspace at Baruch College. The New Media Artspace is a teaching exhibition space in the Department of Fine and Performing Arts at Baruch College, CUNY. Housed in the Newman Library, the New Media Artspace showcases curated experimental media and interdisciplinary artworks by international artists, students, alumni, and faculty. Special thanks to docent Jose Daniel Benitez for creating artwork for this piece.
Check the New Media Artspace out at http://www.newmediartspace.info/