Opinion

America’s dire state of economic inequality

By Mark Parker-Magyar ’15

February 10, 2015

Income inequality and the sharing of power, privilege and opportunity in the United States should be at the center of almost every debate about the state of the country in 2015. America is at its greatest level of economic inequality since the Great Depression. Wages for the average American and domestic GDP growth have historically been linked. If the economy grew and the American worker became more productive, they would be compensated to reflect that improvement, but that is no longer true. Despite rising levels of productivity and GDP growth since 1980, the American worker’s wage has stagnated. In terms of purchasing power (which accounts for inflation and the cost of goods and services), the American worker has barely seen a pay raise in nearly forty years.

Where has all the money and wealth generated by thirty years of economic growth gone? Who is reaping the lion’s share of benefits from the American economy? According to the Congressional Budget Office (a nonpartisan federal agency), it is the top one percent of Americans. While millions remain under the poverty line, and most Americans fall into astounding levels of household or student debt, the fabulously rich become even wealthier. Homes are foreclosed upon, and Goldman executives receive bailouts and benefits. Henry Paulson, the former Secretary of the Treasury responsible for the bailout, was also rather conveniently a former Goldman Sachs employee for. If all this sounds similar to Occupy Wall Street, that is because they got this right. Since the Great Recession, the majority of post-recession economic growth has accumulated once again amongst the one percent. And to make this system even more unjust and unethical, the current system of economic injustice is particularly affecting female, Hispanic, black  and Native American citizens.

I hesitate to put the issue of economic inequality in terms of the political power of socioeconomic classes, but there is no other way to approach this issue; with great money comes great power. A by-product of America’s increasingly unequal society, combined with a weak labor movement and fewer restrictions on campaign financing, is more political power being wielded exclusively by the very affluent. A 2014 peer-reviewed study published by Princeton and Northwestern universities shows that policy-makers disproportionately respond to and create policy for the most affluent in America, going so far as to label America an oligarchy. According to a Business Insider  report on the study, those findings are now being taught at Princeton and Northwestern—and Hamilton should do the same. The recent news that Wall Street was partially deregulated in the most recent Congressional spending bill, and that the organization of industrial magnates, the Koch Brothers, plans to spend 800 million dollars in the upcoming presidential election, shows the state of American politics. America got very concerned about looting during the political protests in Ferguson; What about the looting that occurs when Wall Street deregulates itself in search of greater profits through Congressional legislation? Just six years after an under-regulated Wall Street gambled incorrectly on the economic security of the housing bubble, which led to one of the greatest recessions in modern American history, and then got bailed out by taxpayer money, the most recent spending bill loosened the already light regulation of Dodd-Frank. FDR’s quote at the top of this piece rings true.

Read FDR’s quote again. That is the President of the United States on the night before his reelection. He would be elected twice more after that, but America would collectively dismiss that man as a radical if he said those same things today. Those statements were not radical then, and they should not be radical now. The United States was wrestling with an economic landscape incredibly similar to the one today, complete with an under-regulated financial sector causing havoc. Though collectively America is more affluent and economically secure, we have gone from millions in soup lines and sharecropping, to foreclosures and mass incarceration today. I am not advocating for class warfare any more than FDR was, and that pejorative term distracts from the meaningful conversation we should have today about economic justice. Simply put, the richest Americans are benefiting too much from the system, and the rest of Americans are benefiting too little. Let’s change the system. Perhaps re-regulate Wall Street, enact Glass-Steagall to limit the power of our financial services sector and create legislation to encourage the formation of unions (especially in the service sector) that compromise on problems of previous unions such as termination agreements. We should use the importance of the American consumer market to negotiate fair wage and labor deals with companies that exploit its workforce, and then rely on it to buy their products. Let us expand the social welfare system and pay for it by returning tax rates to pre-Reagan levels. These solutions aren’t radical; almost all of them were legally enshrined before the New Right began to dominate our country.

FDR relied on a broad base of support to enact his economic populist goals. That broad base, including a coalition of labor and poor white Americans in both the North and South, has not existed since the Civil Rights Act. But a new coalition can be created, and this time it cannot and should not be separated along racial, or gendered, lines. Hopefully, the United States reinvigorated protest/social movement culture along with Elizabeth Warren’s economic populism are signs of the beginning of that coalition. As Hamilton students, we are some of the most expensively, and perhaps well, educated students in the country. Many will go on to work in the financial sector or in other positions of power. For all of us going forward, let us remember the importance of economic issues and supporting policies that empower people rather than cementing them in their place. Let us apply our principles in every aspect of our lives including, perhaps most importantly, our offices. America is an ideologically democratic nation: contribute to the fulfillment of that dream.

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