The L-Curve (Part II)
By David Chandler
http://www.lcurve.org/TRTPart2.htm
Most people in this country, most middle class people at least, feel that inequality of wealth is both fair and natural. They worked hard for what they have and they deserve their reward. They feel the pinch of taxes. Seeing their tax dollars go to people they perceive as unwilling to work makes them angry. They believe giving handouts destroys character. On the other hand, getting rich is part of the "American Dream." It is the open-ended rags-to-riches potential of a capitalistic economy that motivates people to take risks, to innovate, to go out on a limb and, in benefiting themselves, to benefit all of society. Why be jealous of someone who had a good idea and turned it into a fortune? "Go for it!" It is seen as a basic self-evident principle.
There are other dimensions to the question, however. If you read last week's column you will recognize that there is a quantitative issue. The maldistribution of income and wealth is absurdly exaggerated. (See the graph.) It is not a matter of working hard and getting ahead. It is a matter of some people being able to exploit the system to channel the wealth produced by large numbers of people into the hands of very few at the top of the "feeding chain."
Is this system "fair" or "natural" or "unavoidable"? Under pure capitalism the function of a corporation is to work in the best interests of the stockholders. Anyone, in theory, can hold stock, but in reality the overwhelming majority of investment capital comes from the top 1/2% of the population and the return on the investment goes right back to them. Corporations, however, affect us all. The rules governing corporations should be designed to protect four different constituencies: the stockholders, the employees, the consumers, and the environment.
Pure unregulated capitalism is a brutal system that tramples on the interests of employees, consumers, and the environment. We saw the excesses of unregulated capitalism during the industrial revolution over a century ago. The same conditions (poverty wages, child labor, dangerous workplace environment, etc.) prevail today in third world sweat shops, both here and abroad. The answer, until someone comes up with a better solution, is strong unions and government regulation for consumer and environmental protection. But ever since Reagan came into office the byword has been deregulation.
Our economic system is not a given: in a democracy we vote to make the rules. We can make it function however we think best! Slavery was once taken as an economic necessity. It took an incredible struggle, but we changed the rules. We must look at the rules of our economic system and ask if they work for the benefit of the country as a whole or if they are flawed.
Are the poor in the state they are in because of their own failings, or does the system lock large numbers of people into a state of poverty? A minimum wage job today places a full time worker well below the poverty line. Workers who make less than a living wage contribute to the wealth of their employers, but do not share in the fruits of their labor. Poverty impacts the self-esteem of fathers unable to provide for their families. Chronic financial stress increases family interpersonal stress, leading to increased rates of spousal and child abuse. It breeds hopelessness, which can lead to cycles of crime, drug abuse, violence, and community disintegration. If one person can't hold a job and ends up on the street it may be for a lack of moral fiber. If massive numbers of people in every major city, from every ethnic group, year after year fall into this condition, it is not reasonable to look for explanations in purely individual terms. If this is occurring in the world's most prosperous economy, one has to ask whether there is something fundamentally wrong with the way the economic system works.
At the other end of the scale we must ask, "Is the unlimited accumulation of wealth a benign fact of life in a capitalistic economy?" Those who perceive an unlimited ocean of potential wealth to be "created" by those with the initiative to do so would argue that we should not place restraints in the way of those with the entrepreneurial spirit. On the other hand we are living in a booming economy today where virtually all of the newly generated wealth is going into the hands of the top few percent. They say a rising tide raises all boats, but does that maxim really describe the current situation? Today the wealth does not go around like a tide. A more apt picture of the current situation is the diversion of a river to water the land of a few at the expense of the many.
The concentration of wealth adversely impacts our political system. We live in a society that in theory operates on one person, one vote, but in reality comes closer to one dollar, one vote. Major electoral campaigns operate on huge budgets supported by the very rich, making office holders beholden to the interests of the very rich, regardless of how many poor people vote for them. Concentrating the wealth of the country into the hands of very few can distort, if not destroy, the foundation for democratic government.
The concentration of wealth has also lead to the "corporatization" of the media, which impacts our access to information and our ability to conduct free public dialog on controversial issues. Almost all of the mainstream media has been bought up and concentrated into very few corporate hands. (The internet is currently the most open democratic forum for expression, but even that is in danger of corporate domination.) Even though the media is officially free of government censorship, it is not protected from corporate censorship. The news and opinions expressed in the mainstream media are whitewashed to protect the interests of its corporate owners and sponsors. The range of opinion you hear is artificially narrowed and the same boring talking heads put the corporate spin on every issue that comes up. The TV is a dream-machine for those who want to mold public opinion.
It doesn't have to be this way. There are ways to run the economy where those who work full time will be guaranteed a decent living wage. (In Australia, for instance, the minimum wage is over $10 per hour!) Tax laws can be written to shift the greatest burden back onto those who have benefited the most from the economy. Today, in this country, medical benefits are tied to employment, and the rules are lax enough that a large fraction of the population goes uninsured. It doesn't have to be this way, and in most of the developed world it isn't this way.