Over the past three decades, market-worshiping politicians and their corporate backers have engineered the most colossal redistribution of wealth in modern world history, a redistribution from the bottom up, from working people to a tiny global elite.
This special issue of The Nation exposes the widespread costs of this rising inequality and offers a blueprint on how to reverse course. We will never achieve social and economic justice for those at the bottom of our economic pyramid until we tackle wealth concentration at the top.
Doug Henwood begins the issue by placing our current extreme inequality in historical context. We now live, he writes, in a second Gilded Age. Today, as in the robber baron era a century ago, the gap between those at the top and the rest of us is simply staggering. The richest 1 percent of Americans currently hold wealth worth $16.8 trillion, nearly $2 trillion more than the bottom 90 percent. A worker making $10 an hour would have to labor for more than 10,000 years to earn what one of the 400 richest Americans pocketed in 2005.
How vast has our parallel universe of the ultrarich become? The Wall Street Journal now dedicates a full-time beat reporter, Robert Frank, to cover what he calls Richistan. Richistan did not suddenly appear on the American scene. Our top-heavy era has evolved from a heavily bankrolled effort by conservatives and corporations to instill blind faith in the market as the magic elixir that can solve any problem. This three-decade war against common sense has preached that tax cuts for the rich help the poor, that labor unions keep workers from prospering, that regulations protecting consumers attack freedom. Duly inspired, our elected officials have rewritten the rules that run our economy–on taxes and trade, on wage policies and public spending–to benefit wealthy asset owners and global corporations.
To reverse this reckless course, we need to change our nation’s dominant political narrative and restore faith in the critical role that government must play to protect the common good. But we can’t stop there. We need to confront directly the threat posed by this inequality.
That won’t be easy. Too many Americans see the enormous concentration of our nation’s wealth as a symptom of a sick society, not a cause. Indeed, most of our politicians and pundits refuse to treat it as any sort of problem at all. They may sometimes bewail particularly unseemly CEO paychecks. They may twitter occasionally about the latest bilious billionaire extravagance. But that’s it. The Senate couldn’t even manage to eliminate a tax loophole for gazillionaire hedge-fund managers last year. And even progressive wish lists tend to call only for a return to pre-George W. Bush tax rates, a step that would undo a mere one-sixth of the rise in income inequality we have experienced since the late 1970s, according to the Brookings Institution.
Future historians, we have no doubt, will note a certain irony here. The “real problems” we Americans face owe their intensity–and often their origin–to issues of income and wealth distribution our society simply refuses to address.
Take, for instance, the mortgage meltdown, which has even sober analysts contemplating the prospect of economic collapse. The concentration of financial resources at the top of the economic ladder has left average families with too little income to keep the “real” economy–the production and distribution of goods for everyday use–strong and vibrant. With household debt at its highest level since 1933, families simply can’t maintain their former levels of purchasing. Meanwhile, rich investors, unable to find high rates of return in the real economy, have turned our financial markets into speculative casinos where few rules apply. What happened to the rules? In any age, the more wealth concentrates, the more political power concentrates in the hands of the wealthy. In our increasingly unequal age, these wealthy have deregulated the lending market and created a jungle where the rich can get endlessly richer, by any means necessary.
We cannot adequately address the mortgage crisis, or any other significant problems we face, as long as our country tolerates grand concentrations of private wealth. In April 2007, for example, a national coalition of organizations under the umbrella of Half in Ten (www.halfinten.org) put forward a broad set of proposals to cut poverty in half over the next decade. But this effort will likely fall short as long as concentrated wealth defines our nation’s political priorities. And until we seriously tax the holders of concentrated wealth, we will lack the funding resources that any bold poverty-fighting initiative demands.
So, have the plutocrats won? Has a generation of Reagan/Bush/Clinton/Bush rule left us with a polity that will privilege great fortunes far into the future? Should we accept extreme inequality as a fact of life? Or should citizens who care about our democracy consider grand concentrations of private fortune the central obstacle to social justice–as our forebears in the Progressive Era once did–and vow to do battle for a significantly more equal America?
We need to heed the lesson imparted by those who reversed the first Gilded Age: over the first half of the twentieth century, organized labor and other populist and progressive social movements advanced a program that explicitly aimed to reduce concentrated wealth and power. They and their successors fought hard to lift up the bottom and bring down the top, through efforts as varied as the original GI Bill and high tax rates on high incomes. Thanks to their efforts, our nation went from the Gilded Age of Newport mansions to a postwar era that celebrated a thriving middle class, full of economically secure families who owned their own homes and could afford to send their kids to college. Sarah Anderson and Sam Pizzigati, in their contribution to this special issue, show us how we can do this again. They lay out a practical guide on how to reduce our ignoble concentrations of wealth, a necessary step toward realizing efforts to reduce poverty, invest in green energy systems, rebuild our infrastructure and expand educational and economic opportunity for all.
Any successful mobilization against plutocracy must first dramatize the high price that wealth concentration exacts from the rest of us. In her contribution Barbara Ehrenreich laments a consequence of extreme inequality that few of us have adequately recognized: the plutocratic monopolization of our nation’s beautiful places. Gabriel Thompson tells the story of extreme inequality in one neighborhood–juxtaposing the hedge-fund titans who occupy the top floors of two Manhattan office buildings with the low-wage workers who guard their doorways and deliver their lunches.
The 2008 election could help open the door to tackling inequality. While previous leading presidential candidates have shied away from the issue, Barack Obama and Hillary Clinton have drawn attention to problems such as the staggering CEO-worker pay gap and tax loopholes for hedge-fund managers. And yet no President is likely to embrace a bold agenda on inequality without heavy pressure from unions, religious groups, small business, environmentalists and other activists. Concerted citizen action helped end the first Gilded Age and usher in a period of broadly shared economic well-being after World War II. Today we have the opportunity, and the imperative, to do so once again.