Thursday, March 7, 2013

The Power of Inequality

Below is a graph I've seen previously and it was re-aired on The Rachel Maddow Show (embedded below) this week showing the difference between actual, estimated, and ideal wealth distribution.

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The lower two estimated and ideal bars were derived based on polling the American people on what they perceived wealth distribution was and what they would like it to be. All these numbers were as of 2010 (so it's likely gotten slightly more lopsided since then).

As you can see, the difference between what was estimated and the ideal is still pretty far apart. But if that was the actual, the problem of income inequality would be greatly diminished. The problem is the top bar is reality. The top 20% owns about 85% of the wealth and the top 40% owns about 95% of the wealth. The bottom 40% basically has no wealth. And this disparity grows every year.

This also highlights the real class warfare that has been occurring right in front of our eyes. Every time additional tax revenues are asked of the richest 5% or the largest corporations, they claim class warfare. But yet much of our politics of the last 40 years can be understood through the prism of dividing the bottom 80% of the wage earners into fighting over the remaining scraps. The middle class is pitted against the poor when it comes to paying taxes or receiving government benefits, while the top 1-5% just glide along above the fray.

Perhaps if Americans were reminded daily of what the actual wealth distribution is, they'd be more supportive of policies that were rooted in redistribution or at least in higher taxation on the wealthy and more investment in the programs that could help provide more opportunities for the bottom 60% to ascend into the top 20%.

Deficit reduction is often framed in moral terms about living within our means and leaving behind a debt-free nation to our grandchildren. If the numbers above don't stir up a moral crisis within you, then the deficit never should.

Update: Here's a great post on Mother Jones from two years ago if you would like to see more graphs on this topic.

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