On March 16, 2015, Jill LePore writes in The New Yorker:
For about a century, economic inequality has been measured on a scale, from zero to one, known as the Gini index and named after an Italian statistician, Corrado Gini, who devised it in 1912, when he was twenty-eight and the chair of statistics at the University of Cagliari. If all the income in the world were earned by one person and everyone else earned nothing, the world would have a Gini index of one. If everyone in the world earned exactly the same income, the world would have a Gini index of zero. The United States Census Bureau has been using Gini’s measurement to calculate income inequality in America since 1947. Between 1947 and 1968, the U.S. Gini index dropped to .386, the lowest ever recorded. Then it began to climb.
Income inequality is greater in the United States than in any other democracy in the developed world. Between 1975 and 1985, when the Gini index for U.S. households rose from .397 to .419, as calculated by the U.S. Census Bureau, the Gini indices of the United Kingdom, the Netherlands, France, Germany, Sweden, and Finland ranged roughly between .200 and .300, according to national data analyzed by Andrea Brandolini and Timothy Smeeding. But historical cross-country comparisons are difficult to make; the data are patchy, and different countries measure differently. The Luxembourg Income Study, begun in 1983, harmonizes data collected from more than forty countries on six continents. According to the L.I.S.’s adjusted data, the United States has regularly had the highest Gini index of any affluent democracy. In 2013, the U.S. Census Bureau reported a Gini index of .476.
The evidence that income inequality in the United States has been growing for decades and is greater than in any other developed democracy is not much disputed. It is widely known and widely studied. Economic inequality has been an academic specialty at least since Gini first put chalk to chalkboard. In the nineteen-fifties, Simon Kuznets, who went on to win a Nobel Prize, used tax data to study the shares of income among groups, an approach that was further developed by the British economist Anthony Atkinson, beginning with his 1969 paper “On the Measurement of Inequality,” in the Journal of Economic Theory. Last year’s unexpected popular success of the English translation of Thomas Piketty’s “Capital in the Twenty-first Century” drew the public’s attention to measurements of inequality, but Piketty’s work had long since reached American social scientists, especially through a 2003 paper that he published with the Berkeley economist Emmanuel Saez, in The Quarterly Journal of Economics. Believing that the Gini index underestimates inequality, Piketty and Saez favor Kuznets’s approach. (Atkinson, Piketty, Saez, and Facundo Alvaredo are also the creators of the World Top Incomes Database, which collects income-share data from more than twenty countries.) In “Income Inequality in the United States, 1913-1998,” Piketty and Saez used tax data to calculate what percentage of income goes to the top one per cent and to the top ten per cent. In 1928, the top one per cent earned twenty-four per cent of all income; in 1944, they earned eleven per cent, a rate that began to rise in the nineteen-eighties. By 2012, according to Saez’s updated data, the top one per cent were earning twenty-three per cent of the nation’s income, almost the same ratio as in 1928, although it has since dropped slightly.
Political scientists are nearly as likely to study economic inequality as economists are, though they’re less interested in how much inequality a market can bear than in how much a democracy can bear, and here the general thinking is that the United States is nearing its breaking point. In 2001, the American Political Science Association formed a Task Force on Inequality and American Democracy; a few years later, it concluded that growing economic inequality was threatening fundamental American political institutions. In 2009, Oxford University Press published both a seven-hundred-page “Handbook of Economic Inequality” and a collection of essays about the political consequences of economic inequality whose argument is its title: “The Unsustainable American State.” There’s a global version of this argument, too. “Inequality Matters,” a 2013 report by the United Nations, took the view—advanced by the economist Joseph Stiglitz in his book “The Price of Inequality”—that growing income inequality is responsible for all manner of political instability, as well as for the slowing of economic growth worldwide. Last year, when the Pew Research Center conducted a survey about which of five dangers people in forty-four countries consider to be the “greatest threat to the world,” many of the countries polled put religious and ethnic hatred at the top of their lists, but Americans and many Europeans chose inequality.
What’s new about the chasm between the rich and the poor in the United States, then, isn’t that it’s growing or that scholars are studying it or that people are worried about it. What’s new is that American politicians of all spots and stripes are talking about it, if feebly: inequality this, inequality that. In January, at a forum sponsored by Freedom Partners (a free-market advocacy group with ties to the Koch brothers), the G.O.P. Presidential swains Ted Cruz, Rand Paul, and Marco Rubio battled over which of them disliked inequality more, agreeing only that its existence wasn’t their fault. “The top one per cent earn a higher share of our income, nationally, than any year since 1928,” Cruz said, drawing on the work of Saez and Piketty. Cruz went on, “I chuckle every time I hear Barack Obama or Hillary Clinton talk about income inequality, because it’s increased dramatically under their policies.” No doubt there has been a lot of talk. “Let’s close the loopholes that lead to inequality by allowing the top one per cent to avoid paying taxes on their accumulated wealth,” Obama said during his State of the Union address. Speaker of the House John Boehner countered that “the President’s policies have made income inequality worse.”
The reason Democrats and Republicans are fighting over who’s to blame for growing economic inequality is that, aside from a certain amount of squabbling, it’s no longer possible to deny that it exists—a development that’s not to be sneezed at, given the state of the debate on climate change. That’s not to say the agreement runs deep; in fact, it couldn’t be shallower. The causes of income inequality are much disputed; so are its costs. And knowing the numbers doesn’t appear to be changing anyone’s mind about what, if anything, should be done about it.
Robert Putnam’s new book, “Our Kids: The American Dream in Crisis” (Simon & Schuster), is an attempt to set the statistics aside and, instead, tell a story. “Our Kids” begins with the story of the town where Putnam grew up, Port Clinton, Ohio. Putnam is a political scientist, but his argument is historical—it’s about change over time—and fuelled, in part, by nostalgia. “My hometown was, in the 1950s, a passable embodiment of the American Dream,” he writes, “a place that offered decent opportunity for all the kids in town, whatever their background.” Sixty years later, Putnam says, Port Clinton “is a split-screen American nightmare, a community in which kids from the wrong side of the tracks that bisect the town can barely imagine the future that awaits the kids from the right side of the tracks.”
Inequality-wise, Port Clinton makes a reasonable Middletown. According to the American Community Survey conducted by the U.S. Census Bureau, Port Clinton’s congressional district, Ohio’s ninth, has a Gini index of .467, which is somewhat lower than the A.C.S.’s estimate of the national average. But “Our Kids” isn’t a book about the Gini index. “Some of us learn from numbers, but more of us learn from stories,” according to an appendix that Putnam co-wrote with Jennifer M. Silva. Putnam, the author of “Bowling Alone,” is the director of the Saguaro Seminar for civic engagement at Harvard’s Kennedy School of Government; Silva, a sociologist, has been a postdoctoral fellow there. In her 2013 book “Coming Up Short: Working-Class Adulthood in an Age of Uncertainty” (Oxford), Silva reported the results of interviews she conducted with a hundred working-class adults in Lowell, Massachusetts and Richmond, Virginia, described her account of the structural inequalities that shape their lives as “a story of institutions—not individuals or their families,” and argued that those inequalities are the consequence of the past half century’s “massive effort to roll back social protections from the market.” For “Our Kids,” Silva visited Robert Putnam’s home town and interviewed young people and their parents. Putnam graduated from Port Clinton High School in 1959. The surviving members of his class are now in their mid-seventies. Putnam and Silva sent them questionnaires; seventy-five people returned them. Silva also spent two years interviewing more than a hundred young adults in nine other cities and counties across the nation. As Putnam and Silva note, Silva conducted nearly all of the interviews Putnam uses in his book.
“Our Kids” is a heartfelt portrait of four generations: Putnam’s fellow 1959 graduates and their children, and the kids in Port Clinton and those nine other communities today and their parents. The book tells more or less the same story that the numbers tell; it’s just got people in it. Specifically, it’s got kids: the kids Putnam used to know, and, above all, the kids Silva interviewed. The book proceeds from the depressing assumption that presenting the harrowing lives of poor young people is the best way to get Americans to care about poverty.
Putnam has changed the names of all his subjects and removed certain identifying details. He writes about them as characters. First, there’s Don. He went to Port Clinton High School with Putnam. His father worked two jobs: an eight-hour shift at Port Clinton Manufacturing, followed by seven and a half hours at a local canning plant. A minister in town helped Don apply to university. “I didn’t know I was poor until I went to college,” Don says. He graduated from college, became a minister, and married a high-school teacher; they had one child, who became a high-school librarian. Libby, another member of Putnam’s graduating class, was the sixth of ten children. Like Don’s parents, neither of Libby’s parents finished high school. Her father worked at Standard Products, a factory on Maple Street that made many different things out of rubber, from weather stripping to tank treads. Libby won a scholarship to the University of Toledo, but dropped out to get married and have kids. Twenty years later, after a divorce, she got a job as a clerk in a lumberyard, worked her way up to becoming a writer for a local newspaper, and eventually ran for countywide office and won.
All but two of the members of Putnam’s graduating class were white. Putnam’s wistfulness toward his childhood home town is at times painful to read. The whiteness of Port Clinton in the nineteen-fifties was not mere happenstance but the consequence of discriminatory housing and employment practices. I glanced through the records of the Ohio chapter of the N.A.A.C.P., which included a branch in Port Clinton. The Ohio chapter’s report for 1957 chronicles, among other things, its failed attempt to gain passage of statewide Fair Housing legislation; describes how “cross burnings occurred in many cities in Ohio”; recounts instances of police brutality, including in Columbus, where a patrolman beat a woman “with the butt of his pistol all over her face and body”; and states that in Toledo, Columbus, “and in a number of other communities, the Association intervened in situations where violence flared up or was threatened when Negro families moved into formerly ‘all-white neighborhoods.’ ” Thurgood Marshall, the director of the N.A.A.C.P.’s Legal Defense and Educational Fund, spoke in Ohio in 1958, after which a sympathetic Cleveland newspaper wrote that Marshall “will never be named to the Supreme Court.” In 1960, the Ohio N.A.A.C.P. launched a statewide voter-registration drive. One pamphlet asked, “Are you permitted to live wherever you please in any Ohio City?” Putnam acknowledges that there was a lot of racism in Port Clinton, but he suggests that, whatever hardships the two black kids in his class faced because they were black, the American dream was nevertheless theirs. This fails to convince. As one of those two kids, now grown, tells Putnam, “Your then was not my then, and your now isn’t even my now.”
In any case, the world changed, and Port Clinton changed with it. “Most of the downtown shops of my youth stand empty and derelict,” Putnam writes. In the late nineteen-sixties, the heyday of the Great Society, when income inequality in the United States was as low as it has ever been, the same was probably true of Port Clinton. But in the nineteen-seventies the town’s manufacturing base collapsed. Standard Products laid off more than half of its workers. In 1993, the plant closed. Since then, unemployment has continued to rise and wages to fall. Between 1999 and 2013, the percentage of children in Port Clinton living in poverty rose from ten to forty.
Silva found David hanging out in a park. His father, currently in prison, never had a steady job. David’s parents separated when he was a little boy. He bounced around, attending seven elementary schools. When he was thirteen, he was arrested for robbery. He graduated from high school only because he was given course credit for hours he’d worked at Big Boppers Diner (from which he was fired after graduation). In 2012, when David was eighteen, he got his girlfriend pregnant. “I’ll never get ahead,” he posted on his Facebook page last year, after his girlfriend left him. “I’m FUCKING DONE.”
Wealthy newcomers began arriving in the nineteen-nineties. On the shores of Lake Erie, just a few miles past Port Clinton’s trailer parks, they built mansions and golf courses and gated communities. “Chelsea and her family live in a large white home with a wide porch overlooking the lake,” Putnam writes, introducing another of his younger characters. Chelsea was the president of her high school’s student body and editor of the yearbook. Her mother, Wendy, works part time; her father, Dick, is a businessman. In the basement of their house, Wendy and Dick had a “1950s-style diner” built so that Chelsea and her brother would have a place to hang out with their friends. When Chelsea’s brother got a bad grade in school, Wendy went all the way to the school board to get it changed. Chelsea and her brother are now in college. Wendy does not appear to believe in welfare. “You have to work if you want to get rich,” she says. “If my kids are going to be successful, I don’t think they should have to pay other people who are sitting around doing nothing for their success.”
Aside from the anecdotes, the bulk of “Our Kids” is an omnibus of social-science scholarship. The book’s chief and authoritative contribution is its careful presentation for a popular audience of important work on the erosion, in the past half century, of so many forms of social, economic, and political support for families, schools, and communities—with consequences that amount to what Silva and others have called the “privatization of risk.” The social-science literature includes a complicated debate about the relationship between inequality of outcome (differences of income and of wealth) and inequality of opportunity (differences in education and employment). To most readers, these issues are more familiar as a political disagreement. In American politics, Democrats are more likely to talk about both kinds of inequality, while Republicans tend to confine their concern to inequality of opportunity. According to Putnam, “All sides in this debate agree on one thing, however: as income inequality expands, kids from more privileged backgrounds start and probably finish further and further ahead of their less privileged peers, even if the rate of socioeconomic mobility is unchanged.” He also takes the position, again relying on a considerable body of scholarship, that, “quite apart from the danger that the opportunity gap poses to American prosperity, it also undermines our democracy.” Chelsea is interested in politics. David has never voted.
The American dream is in crisis, Putnam argues, because Americans used to care about other people’s kids and now they only care about their own kids. But, he writes, “America’s poor kids do belong to us and we to them. They are our kids.” This is a lot like his argument in “Bowling Alone.” In high school in Port Clinton, Putnam was in a bowling league; he regards bowling leagues as a marker of community and civic engagement; bowling leagues are in decline; hence, Americans don’t take care of one another anymore. “Bowling Alone” and “Our Kids” also have the same homey just-folksiness. And they have the same shortcomings. If you don’t miss bowling leagues or all-white suburbs where women wear aprons—if Putnam’s then was not your then and his now isn’t your now—his well-intentioned “we” can be remarkably grating.
In story form, the argument of “Our Kids” is that while Wendy and Dick were building a fifties-style diner for their kids in the basement of their lakefront mansion, grade-grubbing with their son’s teachers, and glue-gunning the decorations for their daughter’s prom, every decent place to hang out in Port Clinton closed its doors, David was fired from his job at Big Boppers, and he got his girlfriend pregnant because, by the time David and Chelsea were born, in the nineteen-nineties, not only was Standard Products out of business but gone, too, was the sense of civic obligation and commonweal—everyone caring about everyone else’s kids—that had made it possible for Don and Libby to climb out of poverty in the nineteen-fifties and the nineteen-sixties. “Nobody gave a shit,” David says. And he’s not wrong.
“Our Kids” is a passionate, urgent book. It also has a sad helplessness. Putnam tells a story teeming with characters and full of misery but without a single villain. This is deliberate. “This is a book without upper-class villains,” he insists in the book’s final chapter. In January, Putnam tweeted, “My new book ‘Our Kids’ shows a growing gap between rich kids and poor kids. We’ll work with all sides on solutions.” It’s easier to work with all sides if no side is to blame. But Putnam’s eagerness to influence Congress has narrative consequences. If you’re going to tell a story about bad things happening to good people, you’ve got to offer an explanation, and, when you make your arguments through characters, your reader will expect that explanation in the form of characters. I feel bad for Chelsea. But I feel worse for David. Am I supposed to hate Wendy?
Some people make arguments by telling stories; other people make arguments by counting things. Charles Dickens was a story man. In “Hard Times” (1854), a novel written when statistics was on the rise, Dickens’s villain, Thomas Gradgrind, was a numbers man, “a man of facts and calculations,” who named one of his sons Adam Smith and another Malthus. “With a rule and a pair of scales, and the multiplication table always in his pocket, Sir, ready to weigh and measure any parcel of human nature, and tell you exactly what it comes to.”
Numbers men are remote and cold of heart, Dickens thought. But, of course, the appeal of numbers lies in their remoteness and coldness. Numbers depersonalize; that remains one of their chief claims to authority, and to a different explanatory force than can be found in, say, a poem. “Quantification is a technology of distance,” as the historian of science Theodore Porter has pointed out. “Reliance on numbers and quantitative manipulation minimizes the need for intimate knowledge and personal trust.” It’s difficult to understand something like income inequality across large populations and to communicate your understanding of it across vast distances without counting. But quantification’s lack of intimacy is also its weakness; it represents not only a gain but also a loss of knowledge.
Corrado Gini, he of the Gini index, was a numbers man, at a time when statistics had become a modern science. In 1925, four years after Gini wrote “Measurement of Inequality of Incomes,” he signed the “Manifesto of Fascist Intellectuals” (he was the only statistician to do so) and was soon running the Presidential Commission for the Study of Constitutional Reforms. As Jean-Guy Prévost reported in “A Total Science: Statistics in Liberal and Fascist Italy” (2009), Gini’s work was so closely tied to the Fascist state that, in 1944, after the regime fell, he was tried for being an apologist for Fascism. In the shadow of his trial, he joined the Movimento Unionista Italiano, a political party whose objective was to annex Italy to the United States. “This would solve all of Italy’s problems,” the movement’s founder, Santi Paladino, told a reporter for Time. (“Paladino has never visited the U.S., though his wife Francesca lived 24 years in The Bronx,” the magazine noted.) But, for Gini, the movement’s purpose was to provide him with some anti-Fascist credentials.
The story of Gini is a good illustration of the problem with stories, which is that they personalize (which is also their power). His support for Fascism doesn’t mean that the Gini index isn’t valuable. It is valuable. The life of Corrado Gini can’t be used to undermine all of statistical science. Still, if you wanted to write an indictment of statistics as an instrument of authoritarian states, and if you had a great deal of other evidence to support that indictment—including other stories and, ideally, numbers—why yes, Gini would be an excellent character to introduce in Chapter 1.
Because stories contain one kind of truth and numbers another, many writers mix and match, telling representative stories and backing them up with aggregate data. Putnam, though, doesn’t so much mix and match as split the difference. He tells stories about kids but presents data about the economy. That’s why “Our Kids” has heaps of victims but not a single villain. “We encounter Elijah in a dingy shopping mall on the north side of Atlanta, during his lunch break from a job packing groceries,” Putnam writes. “Elijah is thin and small in stature, perhaps five foot seven, and wears baggy clothes that bulk his frame: jeans belted low around his upper thighs, a pair of Jordans on his feet.” As for why Elijah is packing groceries, the book offers not characters—there are no interviews, for instance, with members of the Georgia legislature or the heads of national corporations whose businesses have left Atlanta—but numbers, citing statistics about the city (“Large swaths of southern and western Atlanta itself are over 95 percent black, with child poverty rates ranging from 50 percent to 80 percent”) and providing a series of charts reporting the results of studies about things like class differences in parenting styles and in the frequency of the family dinner.
In “The Age of Acquiescence: The Life and Death of American Resistance to Organized Wealth and Power” (Little, Brown), Steve Fraser fumes that what’s gone wrong with political discourse in America is that the left isn’t willing to blame anyone for anything anymore. There used to be battle cries. No more kings! Down with fat cats! Damn the moneycrats! Like Putnam’s argument, Fraser’s is both historical and nostalgic. Fraser longs for the passion and force with which Americans of earlier generations attacked aggregated power. Think of the way Frederick Douglass wrote about slavery, Ida B. Wells wrote about lynching, Ida Tarbell wrote about Standard Oil, Upton Sinclair wrote about the meatpacking industry, and Louis Brandeis wrote about the money trust. These people weren’t squeamish about villains.
To chronicle the rise of acquiescence, Fraser examines two differences between the long nineteenth century and today. “The first Gilded Age, despite its glaring inequities, was accompanied by a gradual rise in the standard of living; the second by a gradual erosion,” he writes. In the first Gilded Age, everyone from reporters to politicians apparently felt comfortable painting plutocrats as villains; in the second, this is, somehow, forbidden. “If the first Gilded Age was full of sound and fury,” he writes, “the second seemed to take place in a padded cell.” Fraser argues that while Progressive Era muckrakers ended the first Gilded Age by drawing on an age-old tradition of dissent to criticize prevailing economic, social, and political arrangements, today’s left doesn’t engage in dissent; it engages in consent, urging solutions that align with neoliberalism, technological determinism, and global capitalism: “Environmental despoiling arouses righteous eating; cultural decay inspires charter schools; rebellion against work becomes work as a form of rebellion; old-form anticlericalism morphs into the piety of the secular; the break with convention ends up as the politics of style; the cri de coeur against alienation surrenders to the triumph of the solitary; the marriage of political and cultural radicalism ends in divorce.” Why not blame the financial industry? Why not blame the Congress that deregulated it? Why not blame the system itself? Because, Fraser argues, the left has been cowed into silence on the main subject at hand: “What we could not do, what was not even speakable, was to tamper with the basic institutions of financial capitalism.”
Putnam closes “Our Kids” with a chapter called “What Is to Be Done?” Tampering with the basic institutions of financial capitalism is not on his to-do list. The chapter includes one table, one chart, many stories, and this statement: “The absence of personal villains in our stories does not mean that no one is at fault.” At fault are “social policies that reflect collective decisions,” and, “insofar as we have some responsibility for those collective decisions, we are implicated by our failure to address removable barriers to others’ success.” What can Putnam’s “we” do? He proposes changes in four realms: family structure, parenting, school, and community. His policy recommendations include expanding the earned-income tax credit and protecting existing anti-poverty programs; implementing more generous parental leaves, better child-care programs, and state-funded preschool; equalizing the funding of public schools, providing more community-based neighborhood schools, and increasing support for vocational high-school programs and for community colleges; ending pay-to-play extracurricular activities in public schools and developing mentorship programs that tie schools to communities and community organizations.
All of these ideas are admirable, many are excellent, none are new, and, at least at the federal level, few are achievable. The American political imagination has become as narrow as the gap between rich and poor is wide.
“Inequality: What Can Be Done?,” by Anthony Atkinson, will be published this spring (Harvard). Atkinson is a renowned expert on the measurement of economic inequality, but in “Inequality” he hides his math. “There are a number of graphs, and a small number of tables,” he writes, by way of apology, and he paraphrases Stephen Hawking: “Every equation halves the number of readers.”
Much of the book is a discussion of specific proposals. Atkinson believes that solutions like Putnam’s, which focus on inequality of opportunity, mainly through reforms having to do with public education, are inadequate. Atkinson thinks that the division between inequality of outcome and inequality of opportunity is largely false. He believes that tackling inequality of outcome is a very good way to tackle inequality of opportunity. (If you help a grownup get a job, her kids will have a better chance of climbing out of poverty, too.) Above all, he disagrees with the widespread assumption that technological progress and globalization are responsible for growing inequality. That assumption, he argues, is wrong and also dangerous, because it encourages the belief that growing inequality is inevitable.
Atkinson points out that neither globalization nor rapid technological advance is new and there are, therefore, lessons to be learned from history. Those lessons do not involve nostalgia. (Atkinson is actually an optimistic sort, and he spends time appreciating rising standards of living, worldwide.) One of those lessons is that globalizing economies aren’t like hurricanes or other acts of God or nature. Instead, they’re governed by laws regulating things like unions and trusts and banks and wages and taxes; laws are passed by legislators; in democracies, legislators are elected. So, too, new technologies don’t simply fall out of the sky, like meteors or little miracles. “The direction of technological change is the product of decisions by firms, researchers, and governments,” Atkinson writes. The iPhone exists, as Mariana Mazzucato demonstrated in her 2013 book “The Entrepreneurial State,” because various branches of the U.S. government provided research assistance that resulted in several key technological developments, including G.P.S., multi-touch screens, L.C.D. displays, lithium-ion batteries, and cellular networks.
Atkinson isn’t interested in stories the way Putnam is interested in stories. And he isn’t interested in villains the way Fraser is interested in villains. But he is interested in responsible parties, and in demanding government action. “It is not enough to say that rising inequality is due to technological forces outside our control,” Atkinson writes. “The government can influence the path taken.” In “Inequality: What Can Be Done?,” he offers fifteen proposals, from the familiar (unemployment programs, national savings bonds, and a more progressive tax structure) to the novel (a governmental role in the direction of technological development, a capital endowment or “minimum inheritance” paid to everyone on reaching adulthood), along with five “ideas to pursue,” which is where things get Piketty (a global tax on wealth, a minimum tax on corporations).
In Port Clinton, Ohio, a barbed-wire fence surrounds the abandoned Standard Products factory; the E.P.A. has posted signs warning that the site is hazardous. There’s no work there anymore, only poison. Robert Putnam finds that heartbreaking. Steve Fraser wishes people were angrier about it. Anthony Atkinson thinks something can be done. Atkinson’s specific policy recommendations are for the United Kingdom. In the United States, most of his proposals are nonstarters, no matter how many times you hear the word “inequality” on “Meet the Press” this year.
It might be that people have been studying inequality in all the wrong places. A few years ago, two scholars of comparative politics, Alfred Stepan, at Columbia, and the late Juan J. Linz—numbers men—tried to figure out why the United States has for so long had much greater income inequality than any other developed democracy. Because this disparity has been more or less constant, the question doesn’t lend itself very well to historical analysis. Nor is it easily subject to the distortions of nostalgia. But it does lend itself very well to comparative analysis.
Stepan and Linz identified twenty-three long-standing democracies with advanced economies. Then they counted the number of veto players in each of those twenty-three governments. (A veto player is a person or body that can block a policy decision. Stepan and Linz explain, “For example, in the United States, the Senate and the House of Representatives are veto players because without their consent, no bill can become a law.”) More than half of the twenty-three countries Stepan and Linz studied have only one veto player; most of these countries have unicameral parliaments. A few countries have two veto players; Switzerland and Australia have three. Only the United States has four. Then they made a chart, comparing Gini indices with veto-player numbers: the more veto players in a government, the greater the nation’s economic inequality. This is only a correlation, of course, and cross-country economic comparisons are fraught, but it’s interesting.
Then they observed something more. Their twenty-three democracies included eight federal governments with both upper and lower legislative bodies. Using the number of seats and the size of the population to calculate malapportionment, they assigned a “Gini Index of Inequality of Representation” to those eight upper houses, and found that the United States had the highest score: it has the most malapportioned and the least representative upper house. These scores, too, correlated with the countries’ Gini scores for income inequality: the less representative the upper body of a national legislature, the greater the gap between the rich and the poor.
The growth of inequality isn’t inevitable. But, insofar as Americans have been unable to adopt measures to reduce it, the numbers might seem to suggest that the problem doesn’t lie with how Americans treat one another’s kids, as lousy as that is. It lies with Congress.
http://www.newyorker.com/magazine/2015/03/16/richer-and-poorer
This article is problematic in arriving at the extent of income inequality because the measurement is a apples and orange comparative scenario. The figures are based on income tax reporting without any distinction as to the source of the income earned. Prior to the 1980s, the United States was founded as an agrarian, labor-intensive nation, which steadily progressed with evermore economic value contributed by the non-human means of production, but still largely labor-intensive. But since the 1980s there has been a tectonic shift in the technologies of production, which has resulted in greater economic value significantly and increasingly the result of the non-human factor, which has result in far-reaching technological invention and innovation in every field of endeavor.
Income measurement, to be accurate, should be separated as to that produced by labor in the form of wages, salaries, bonuses, etc., and that produced by dividend and capital gains income paid to those who OWN non-human capital assets. Measured by this distinction will show that at least 90 percent (the Rand Corporation statistic was 98 percent) of the productive input involved in creating products and services is represented by the productive capital factor input. As such, the income inequality is far greater than what is being discussed as the wealthy ownership class has rigged the system through political influence and power to ensure that ALL future wealth-creating, income-producing capital asset formation will be OWNED by them, leaving the vast majority to fend for limited job opportunities or low-paying service jobs as they struggle as wage slaves or as dreaded welfare slaves, charity slaves, and debt slaves.
It is true that the “government can influence the path taken,” but the economists and social scientists, as well as “progressives” all tend to embrace as solutions the familiar unemployment programs, minimum wag legislative action, progressive tax structures, make-work government job creation, a “minimum inheritance” derived from a global wealth tax, a minimum tax on corporations, etc.––basically solutions that are redistributive by definition, rather than focused on new productive capacity and growth while simultaneously creating new capital owners, which would include EVERY child, woman, and man who would financially benefit from a new source of income, the same income source that enables people to become rich.
It is absolutely unbelievable that the academics who research and study and receive Nobel Prizes, as well as the politicians, are stumped as to how it is possible that with 5.5 percent (statistical rather than actual) unemployment in the United States there is virtually no wage growth, yet there is ever more income inequality.
Those in production and non-supervisory jobs, which represent 80 percent or four-fifts of the total population employed in the private sector have seen their wages stagnate ever since the Great Repression, while those employed primarily to direct, supervise, or plan the work of others has increased. The conclusion that most arrive at is that “soaring wage growth” is limited to “those lucky 20 percent of America’s workers who are there to give orders, to wear business suits, and to sound important.”
This is certainly a simplistic and shallow conclusion. Put into another context, which represents the economics of reality, the worth of labor is constantly being devalued along with displacing labor workers entirely as a result of tectonic shifts in the technologies of production that is shifting production from a labor-intensive state to a non-human-intensive state. This means that technological invention and innovation is constantly functioning to create “tools” to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive. At the helm of this transformation are the workers who are employed primarily to invent and innovate, as well as direct, supervise, or plan the work of others. Unfortunately no one is looking at the “invisible ownership” of the “tools” and “machines” that are being created and that represent the core of this transformation.
Our scientists, engineers, and executive managers (those in the 20 percent category) who are not owners themselves of otherwise narrowly owned corporations growing the economy, except for those in the highest employed positions, are encouraged by the ownership class to work to destroy employment by making the capital “worker” owner more productive by employing evermore productive “tools” and “machines.” How much employment can be destroyed by substituting “machines” for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks.
With more people in search of fewer jobs that pay well, or without the necessary skills, there is no market necessity to raise wages. Yet the 1 percent, who are the employers, are not the people who do the overwhelming consuming. The result is the consumer populous is not able to get the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.” It is the exponential disassociation of production and consumption that is the problem in the United States economy (as well as all other economies), and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.
