If we can solve the problem of wealth inequality, America’s decline is not a foregone conclusion
Glen Olives Thompson
With the cascade of problems we face as a nation – arguably more than at any other time in history – I often ask myself a simple question: If we could change one major crisis that would have a positive domino effect on other problems, and that has at least a puncher’s chance at some bipartisan support, what would it be?
The great destroyer of world civilizations has traditionally been wealth inequality (another being natural resource depletion, and not surprisingly the two are closely related). Walter Scheidel in his new book The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century, argues convincingly that calamities and mass violence (by way of war, revolution, natural catastrophe, implosion of the state, or disease) are the only forces that have reversed this general trend toward inequality. When the playing field is leveled though, inequality resumes its slow creep towards unsustainability until the next crisis erupts.
The historical evidence for this thesis is well documented by Scheidel, but I argue that peaceful and prosperous transitions to more equitable societies are not out of the question either.
During the deepest and darkest hours of the Great Depression, during the long interregnum before FDR’s inauguration when inequality was at its apogee in America, we were balancing on the cusp of both violent revolution and ecological disaster, with many calling for the new President to assume a dictatorial role and declare martial law. Instead Roosevelt (with notable political support from both sides of the isle) implemented the New Deal with radical new ideas for a capitalist welfare state. Disaster was avoided, socioeconomic safety nets that we now take for granted put into place, and a half century Risorgimento took root, dramatically reducing wealth inequality. The three billion trees planted by the FDR’s “tree army” also set down roots. The Civilian Conservation Corps employed 3 million men and also developed 800 state parks, protected 20 million acres from erosion, and cleared 125,000 miles of trails.[i] These monumental achievements were accomplished wholly absent a profit motive, and it is hard to imagine how a profit could have been made through private industry doing the same thing. The nation was saved what very well could have been a crisis of epic proportions – a premature end to the great American experiment of democracy and capitalism.
And yet we once again find ourselves in a disturbingly similar situation, only that in many respects it is much worse.
Despite positive economic growth and full employment, the middle class continues its slow march of the cliff of neoliberal economic policy into a cold and sunless sea. As this graph from a working paper authored by Thomas Piketty, et al., indicates, income for the wealthiest .0001 percent of Americans soared 636
percent in the last 34 years, while the bottom 50 percent saw zero gains. A demographic that was once the backbone of America – working class white men – is killing itself softly with opioids and alcohol, or not so softly with self-inflicted pistol rounds through the roofs of their mouths. Higher education shackles young graduates with debt. Our infrastructure is crumbling. Our (the world’s) environment is degrading to a point of no return. A revivified war on drugs that will refill our private for profit prisons for people accused of possessing certain plants, and a concerted roll back of established civil rights policies will foment further discontent among minorities. Our President is a cognitively compromised laughingstock of the world, a perfect case study for the Dunning-Kruger effect.
People are nervous, unhappy, agitated, lashing out. Hate crimes are on the rise, and it’s becoming increasingly common to publicly berate (or kill) people for speaking a language other than English, or looking not quite white enough.
Yes, that’s the overall pulse of the nation — lashing out. And lashing out also means electing an obvious moron and purblind, preening real estate broker pretending to be a potentate, who promised everything at the cost of nothing, but most of all to shake things up in Washington. Well, he’s done that. And the chickens have come home to roost. The people who voted for Trump were hopelessly ignorant, misguided, racist, mentally ill, and misdirecting their animosities by shadowboxing ghost villains for problems they had nothing to do with, or some combination of the above. Sorry, but fuck them. They will suffer more than anyone in post-apocalyptic America while Trump laughs himself into the foggy retirement of senility, farting through silk pajamas poolside at Mar-a-Lago with a non-alcoholic Pabst Blue Ribbon at arm’s reach.
But enough with schadenfreude (not unlike crack cocaine, it gives an intense high but fades quickly).
Yes, lashing out, but it’s not just the ocean of unwashed and undereducated illiterati, marooned in a recursive cycle of poverty, in a perpetual winter of discontent, victims of the happenstance of their birth. The Left is having its fun too: protests, sit ins, marches, pussy hats, unprecedented fund raising for progressive candidates. And the state of America’s malaise is making liberal late night satirists millions.
Everybody is pulling their hair out in the final stages of a Nietzsche-like insanity, or aimlessly wondering around Borges’ “Library of Babel,” trying to decode ancient conservative wisdom that is nothing more than gibberish, reminding me of the last stanza of Donald Hall’s poem, “The Times are Propitious”:
But from A.D. 300, for a millennium, every daughter knew less than her mother, every son less than his father. Now, as we dispute over the exact moment when we engaged this autobahn downward again – hurtling in a tinny Cadillac fueled by idleness, greed and superstitions – our great-grandfathers (the ones who could read and write) drape themselves white to hear our diminished chicken-cackle language in the parliament of fools.[ii]
We’re in a bad way, to be sure, but what to do? As luck would have it, everybody seems to have an answer; we’re spoiled for choices. Paul Ryan believes that the nostrum of cutting taxes for the richest of us will unleash a “trickle down”
economic boom, the incoming tide raising all ships, despite the fact that this has never actually happened when tried. (So much for unrequited love affairs with Ayn Rand.) Mick Mulvaney thinks that feeding hungry children doesn’t show results. Betsy DeVos thinks that private for profit charter schools and private for profit private universities are good ideas, despite their historic failures. The Trump administration thinks that any eventual infrastructure spending should be farmed out to the more efficient private sector by way of government contracts and public-private partnerships, and that social welfare programs only make people dependent and lazy, paying homage to the shibboleth that the only thing that can save us from ourselves is laisse faire capitalism (preferably in its most radical hyper-capitalist form) and neoliberal economic policy.
Of course only Ben Carson can reach the upper limits of asinine unintelligibility normally claimed as the untrammeled terrain of his boss, by positing that being poor is just a state of mind. (I make the controversial claim that neither hunger, nor violent crime, nor lack of access to education nor employment opportunities, much less adequate housing, are mental states.)
The man responsible for running the Environmental Protection Agency, Scott Pruitt, still won’t contradict Trump’s assertion that climate change is a hoax, and not surprisingly he doesn’t want to spend any money trying to combat it. The list of bad ideas is long and ghoulish, as are the “solutions,” but if you’re a liberal, you should poor yourself another Boulevardier before reading further.
Yes, the Trump administration is doing its best to turn a once flourishing democracy into a third world kakistrocracy/kleptoracy/plutocracy trifecta of bad government. But as it turns out, liberals can be pretty stupid too. People who think that vaccines cause autism? Mostly liberals. GMO’s cause cancer? Mostly liberals. It’s perfectly acceptable to exclude (viz. censor) people from speaking at your university because you disagree with their ideas? Exclusively liberals. It’s racist to celebrate Cinco de Mayo if you’re white? Exclusively liberals.
But while liberal sociopolitical ideas are often captious in the extreme, they are not largely calved from the umbilicus of ideology; indeed, liberals tend to be more pragmatic on policy positions, often building special interest coalitions, and rely heavily on social science data. Conservatives lend their fealty almost exclusively on ideological purity and “common sense,” (despite the fact that common sense policy solutions are almost always completely wrong) and deride their fellow conservative travelers who deviate even slightly from the party line. Any conservative leaning toward reasonableness is cock-blocked by the alt-right guardians of the holy conservative ideological virgin of cupidity. Their policies are palliative salves to soothe the wounds of a failed idea in order to save an idealized halcyon Norman Rockwell America from an ever changing world, but they are no cures.
Which brings me to the central problem of increasing wealth inequality in America. One thing that both liberal and conservative leaders have largely agreed upon for the last three and a half decades is neoliberal economic policy and its cognate of globalism – the idea that the tide of unfettered markets, free trade, low taxes for “job creators” and a minimalist welfare state – will benefit all participants within the political economy. Despite being cloaked in the raiment of academic language by the likes of one of its founders, Milton Friedman (among others), it isn’t science; it’s simply blind troth in a failed dogma. It’s intuitive, I’ll give it that (which is perhaps why so many poor conservatives have until recently supported it) but it has no basis in reality, which is why it isn’t even good enough to be labelled social pseudoscience. Not surprisingly, it has never worked. It didn’t work in the Gilded Age. It didn’t work when Reagan tried it, or Bush the Smarter, or Clinton, or Bush the Dumber, or Obama. Nothing trickled down. It never even dribbled. The middle class continued its downward trajectory on the autobahn of idiocy through Republican and Democrat presidents alike, and the rich simply moved their money overseas or lobbied for loopholes to avoid paying taxes instead of creating jobs; after all, the wealthy may be myopic assholes, but they’re not dumb (or at least not most of them). Thomas Piketty’s meticulously researched work showed us that the richest 1 percent of households in the US received less than a tenth of all income in the 1980s, compared to more than a fifth in the 2013. Professor Steven Pressman of Colorado State University has mined the comparative economic data from 9 countries, and has made some startling conclusions. Namely, during the same time, the middle class in socialist counties such as Norway and France, routinely derided by Conservatives as stagnant remnants of “old Europe,” have been steadily gaining ground.
Simply put, we made a mistake. We were almost compelled to, because the argument was so irresistible, so intuitive, so elegant. Of course it’s also compelling that the Earth is the center of the universe and the sun revolves around us, after all we can see the sun rise and set every day, but we know this not to be true, and have no trouble rejecting geocentrism because it is so easily divorced from political dogma.
The best economists and public policy experts get it. Joseph Stiglitz gets it, as does Robert Reich, Paul Krugman, Bernie Sanders, among others. Conservative political and business leaders by and large do not, nor do most of the 1 percent. They, presumably, have been gavaged the fiction of the free market for so long that it has become part of their permanent mental furniture. Or they just don’t care and have bought into the get-what-you-can-when-can-by-any-means-you-can ethos, the world be damned.
Whether it’s the former or the latter, it doesn’t really matter. It’s the perfect policy prescription for creating a failed civilization. We know that neoliberalism is sending the middle class the way of the Dodo, while the poor are already living a daily reality devoid of the hope in a better future. But the real life policy implications are not limited to economics.
Often the privatization of formerly public services means raising prices to consumers while providing poorer services – as long as a profit is made, and they have a very powerful bipartisan lobby.
As Anis Shivani wrote recently:
Neoliberalism believes that markets are self-sufficient unto themselves, that they do not need regulation, and that they are the best guarantors of human welfare. Everything that promotes the market, i.e., privatization, deregulation, mobility of finance and capital, abandonment of government-provided social welfare, and the reconception of human beings as human capital, needs to be encouraged, while everything that supposedly diminishes the market, i.e., government services, regulation, restrictions on finance and capital, and conceptualization of human beings in transcendent terms, is to be discouraged.
One way to sum up neoliberalism is to say that everything—everything—is to be made over in the image of the market, including the state, civil society, and of course human beings. Democracy becomes reinterpreted as the market, and politics succumbs to neoliberal economic theory, so we are speaking of the end of democratic politics as we have known it for two and a half centuries. As the market becomes an abstraction, so does democracy, but the real playing field is somewhere else, in the realm of actual economic exchange—which is not, however, the market. We may say that all exchange takes place on the neoliberal surface.
Shivani goes on to recite examples of neoliberalism’s insidious results:
And this explains why the 1990s saw the simultaneous and absolutely parallel rise, under the Clintons, of both neoliberal globalization and various regimes of neoliberal disciplining, such as the shaming and exclusion of former welfare recipients (every able-bodied person should be able to find work, therefore under TANF welfare was converted to a performance management system designed to enroll everyone in the workforce, even if it meant below-subsistence wages or the loss of parental responsibilities, all of it couched in the jargon of marketplace incentives).
The actual cost to the state of the AFDC program was minimal, but its symbolism was incalculable. The end of welfare went hand in hand with the disciplinary “crime bill” pushed by the Clintons, leading to an epidemic of mass incarceration. Neoliberalism, unlike classical liberalism, does not permit a fluidity of self-expression as an occasional participant in the market, and posits prison as the only available alternative for anyone not willing to conceive of themselves as being present fully and always in the market.
Shivani’s depiction of neoliberalism might seem a bit too Orwellian, but when one takes a very close look at the economic lives of average Americans, it turns out to be pretty much spot-on, if not even slightly understated, especially if you consider that increasingly, even active participants in the economic life of the country don’t have it much better. Because of neoliberalism and its natural corollary effects of corporatism, hyper-capitalism and the worship of efficiency, wage growth has been decoupled from economic growth, meaning that the long term trend is for the economy to continue to grow while wages continue to fall, adding millions more people to the ranks of the dystopiate underclass: people who are no longer employable or needed by the economy, or if needed only marginally so, a precariat population surviving hand-to-mouth, or in the case of private prison labor, reduced to peonage.
The exponential growth of technology, especially automation and artificial intelligence (47 percent of current occupations will be gone in 20 years according to the now-famous Oxford study), is accelerating the problem into a full blown and very real civilizational crisis. Remaining jobs are increasingly being crowdsourced to contractors on a per-project basis, saving corporations billions of dollars in labor costs.
There is no colorable argument that the current economic policy of the country could possibly result in the reversal of the incontrovertible trend of growing wealth inequality, notwithstanding the “chicken-cackle” ruminations of Ryan and Mulvaney. Been there and done that, and that dog just won’t hunt.
In 1930 John Maynard Keynes predicted that advances in productivity would continue to such an extent that in 100 years most of humanity would no longer have to work.[iii] I suspect that he was right, leaving us, though, with a troubling question: What are all of these idle or semi-idle people to do to sustain themselves, to live meaningful lives, to prosper within an economic system that does not need them, and indeed sees them as a burden rather than a resource? What products can people purchase who have no money? How will companies sell their products? Envision of world of super-managers, who supervise the assignment of tasks to machines or, decreasingly, to a few lucky humans. It’s difficult to envision this world as a good one, a just one, or a world in which life is worth living. I worry for my children.
Weary of being ignored by a global hyper-capitalist economic system that has promised everything and produced nothing for its average population, political populism is on the rise across the globe – from Trump in America, Duterte in the Philippines, to Britain’s Brexit vote. If history is any guide, things will get worse by an order of magnitude before serious change occurs. History is whispering in our collective ears, but it seems few are listening.
You Say You Want a Revolution? What About Universal Basic Income Instead?
The Republican party is the party of corporate America, and has been for a century. But its power using simple slogans, platitudes and tropes – the effective application of mass corporate advertising for political purposes – to convince the poor and middle class to vote against their own interests, and the purchasing of politicians like so much chattel, cannot last forever. At some point even the dumbest of the dumb will call bullshit on this longest of long cons.
Assuming this will happen (an assumption that is not wholly justifiable), how might we reverse course absent revolution or simple collapse of the state into The Hunger Games writ large? It seems apparent that there only two options. One would be the dismantling, the reverse engineering, of neoliberalism and the global economic system, a triumph of the Luddites, and also a pipe dream. Absent a physical world calamity such as plague, meteor strike, or the increasingly likely collapse of the global ecosystem, this will never happen, for reasons that hardly need articulating: world economic collapse, resistance-to-the-death by world plutocracies, impracticality, chaos. A cure worse than the malady. The preferred option, the option that could lead to unprecedented human flourishing, prosperity, and happiness, would require no more than letting hyper-neoliberal capitalism turn its swag on, and scrapping most of what we know as the welfare state, transitioning to a form of Universal Basic Income (UBI).
The economic and ideological objections from the Right are both easily anticipated and easily refuted. They principle economic objection is that we simply can’t afford to just give people money. The principle ideological objection is that it would rob people of motivation, promoting a culture of sloth, inefficiency, and idleness, killing the human spirit and robbing our civilization of innovation that only the competition of tooth and claw can provide.
The latter objection is the easiest to dispose of, as it is largely based on myth, which is in turn based on political and economic ideology, which almost always bound to be wrong because it a false representation of reality – the map is not the territory, as they say. The belief against all evidence that man’s natural state, when given minimally sufficient resources to survive, is idleness, is perhaps one of the biggest frauds ever perpetuated on the citizenry of the planet, hardly good enough to be classified as a myth. Even a cursory look at history amply demonstrates this: the vast majority of people born into comfort are not satisfied with their patrimony, but rather strive forward into public service, business, academics, the military, or any other number of productive ventures. Why should the poor be any different? As it turns out, they are not. A notable 2015 Berkeley study found 56 percent of working families were dependent on some form of state and/or federal public assistance. Why are these “welfare dependent” slackers working? Because idleness is uncomfortable and boring (and corporate lobbyists like artificially low wages so taxpayers can pick up the tab for the real costs of labor). If it were in our nature, we would have never gotten off the African savanna. Yet the plutocrats who openly despise the poor complain that either they are to blame for not having the discipline to update their skills or decry that there are not enough work programs for them to take advantage of. But they conveniently ignore two important facts. First, many of them have certain cognitive limitations that cannot be overcome through education, through no fault of their own: not everyone is capable of writing code or operating on brains, no matter what educational opportunities are afforded them. Second, what good is it to update one’s skills if those skills are no longer, or will no longer, be of any economic use to anyone?
An illustration by way of another thought experiment may be in order. Suppose that you were guaranteed a basic tax free income for life. Not enough to afford vacations or new cars, but enough for food, housing, and health care – enough for a minimally dignified life just above the poverty line. Would you simply quit your job if you had one, and content yourself spending your days in your Barcalounger, watching basic cable? I don’t think you would. I know that I would not, and I believe that neither would most people. You would keep your job, or go back to school, or start a business, or do volunteer work, or write that book that’s always been on your mind, or any other number of productive endeavors. Of course one can find lazy, unambitious people within any socioeconomic class, but they are the exceptions, not the rules. Thus, UBI could lead to the flourishing of the human potential, and a win-win for corporatocracy, which would have a guaranteed continuation of consumers to purchase its products and services.
Now to the former objection that we couldn’t afford UBI and it would bankrupt the treasury. A simple look at the numbers dispenses this assumption in rather short order. According to the conservative discoverthenetworks.org, an organization that claims to be “a guide to the political left,” as of 2012, spending on means-tested welfare spending (which doesn’t include programs that workers pay into such as social security and workers compensation among many others), comes to $956 billion per year. This is administered through an enormous (and expensive) bureaucracy, consisting of no less than 80 welfare programs, providing for an average distribution of some $9,500 per family annually among some 100 million people. Why not scrap this bloated bureaucracy altogether and move to UBI? Make no mistake, it would be more expensive, though one must consider what we’d be getting for our money; namely, socioeconomic stability and a continuation of the laissez faire quasi-socialist economic hybrid model we currently operate under, but one that benefits all Americans, not only her wealthiest.
Support for UBI has come from surprisingly diverse political persuasions. Friedman, Friedrich Hayek, Richard Nixon, George McGovern, Martin Luther King, Jr., the conservative Heritage Foundation, and many of the Silicon Valley cognoscenti have endorsed the idea, as have some prominent liberals, although it doesn’t have a prominent spokesperson in either party, undoubtedly because it is not a natural ideological fit for either. Liberals who oppose it are suspicious that Libertarian-leaning conservatives like it, and they’re naturally inclined toward big government paternalism. Conservatives who oppose it do so based almost entirely on ideological reasons – the no free lunch, personal responsibility crowd. But wouldn’t a reduction of welfare state bureaucracy and a dramatic simplification of social welfare programs be a good thing to entice conservative support? Moreover, with regard to the personal responsibility issue, there could be no more whining from the poor about the unfairness of the economic system: spend your money on food and rent, or box wine and meth as you like, but don’t complain that is isn’t enough.
The Devil is, as always, in the details. Some think people from top income brackets should be excluded because, after all, they don’t need it. In my view this would be a mistake. It would only feed the ideologues the ammunition of “I don’t rely on the government, I rely on myself” poppycock. I wish it were a world where we wouldn’t have to anticipate arguments and objections based on ideology, but we must live in the world we have, not the one we wish we had.
The Closing of the Wealth Gap, Bottom Up
There is little question that a real system of UBI would reduce economic inequality. It would also be expensive, some estimates going as high as $3 trillion per year, largely by raising taxes on the rich. There could be no hiding the fact that this would be wealth redistribution. But so what? We already have wealth redistribution, as Piketty and his colleagues have demonstrated, from the working poor to the rich. More importantly, most studies conclude that it would be a boon to the economy through increased spending (this obviously would help wealthy corporations as well as wealthy individual shareholders), increase entrepreneurship, eliminate poverty, and among other positive things, improve health and education, especially among children.
There are other ways to close the income gap from the bottom up as well, such as dramatically raising the minimum wage, which the best studies conclude would benefit the economy without reducing employment. It would also be less expensive – even revenue neutral – but it would not have nearly the comprehensive impact on the economy and society as a whole. Increased automation and out/crowd sourcing naturally results in fewer minimum wage jobs.
Which brings us full circle, back to the ultimate question of how more income and wealth equality, and almost by definition resulting in an expanding rather than retracting middle class, would affect the other major problems America faces. Because there are no studies on point, this of course requires some thoughtful speculation about what would happen if and when we return to the perihelion of prosperity.
Nervous, unhappy, agitated, lashing out. The angst of the precariat is palpable. What if that pressure was released? The following conclusions are, I think, self-evident. In this economically stable world envisioned with UBI, non-college educating working class whites would be less inclined to blame immigrants and minorities for their own perceived and real lack of opportunities. People would be inclined to embrace alternative clean energy instead of making it the bogey man of progress. Hope is the real tide raising all ships, not economic the legerdemain of hyper-capitalism, and the body politic would begin looking to the future as it once did, and not to the imagined past. Race relations would improve, and its roots in tribalism would diminish with the leveling of the playing field. With the lower economic risk of seeking further education or investing in a business, it is hard to imagine individual flourishing not taking place. Other scapegoats for lack of opportunity would fall like brittle trees as well, namely financial and environmental regulation. Conspiracy theories would be less attractive (what’s there to conspire about?). Citizens would be more inclined to vote for leaders really interested in public service and not puppet populists with shit for brains.
UBI would not be a panacea, and it would not lead to utopia, but it very well may keep us from a full blown dystopia, and a violent revolution, going out with a bang, or a whimper, as you please. In short, it would give us some breathing room, allow us the relief that comes from a sense of stability, and with it, the ability to engage in clear thinking, unmolested by our darkest fears.
Civilizations that do not evolve, that rely on the old ways, the old ideologies and dogmas that made them great while resisting change, are gone. Just ask the Sumerians, the Egyptians, the Romans. If it is inevitable that we learn from history that we do not learn from history, as Hegel postulated, then we might as well consign ourselves to being fodder for future generations of archeologists. I’m not quite ready, though.
I like data. Much of the section above is devoid of data because good data on the effects of UBI don’t exist. My armchair musings are not my fault, but rather the fault of the danger of UBI to conservative governments. Forty years ago in Dauphin, Manitoba, the then liberal Canadian government experimented with UBI. When a conservative administration took power, the experiment was ended and the data archived. Only recently have the 1,800 boxes of records began to be studied by social scientists, and the results are striking. People receiving UBI didn’t stop working, hospitalizations for mental health issues dropped precipitously, and people started businesses or went back to school. Currently, five governments from around the world are experimenting with UBI on small population samples. I’ll go out on a limb and predict that when analysis of the data comes in, it will be overwhelmingly positive, both in terms of the socioeconomic wellbeing of the recipients, the cost to taxpayers, and the overall economy. Stay tuned.
But make no mistake, a reversal of the national course of growing wealth inequality will resolve itself eventually even if we do nothing. Professor Scheidel has convincingly shown us that. If human caused global climate disruption does not thin the herd sufficiently, something else will. But we need not rely on natural disasters, plagues or revolutions. We’ve done it before with policy changes, and we can do it again. A big idea is required. An idea that both has a chance at bipartisan support, and to serve as platform for other progressive reforms. The alternative of going down the same road we are on, in that tinny Cadillac into the parliament of fools, chicken-cackling as we deliquesce into oblivion, seems a poorer option.
In short, opposition to UBI is an ideological problem, not an economic one. Adopting it would require a paradigm shift in political thinking, or better yet an abandonment of political ideology altogether. And for that reason I am not hopeful.
[i] Alter, Jonathan, The Defining Moment: FDR’s Hundred Days and the Triumph of Hope (New York: Simon & Schuster), 2006, p. 299.
[ii] Hall, Donald, The Museum of Clear Ideas (New York: Houghton Mifflin), 1993, p. 62.
[iii] Keynes, John Maynard, Essays in Persuasion, New York: W.W. Norton & Co. (1963), pp. 358-73.