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America's inequality worse now than during slavery
Apologies if this has been discussed before, but I find it very interesting.
http://www.nytimes.com/2012/05/04/us/04iht-letter04.html?_r=1&pagewanted=all
America, Land of the Equals
By CHRYSTIA FREELAND | REUTERS
Published: May 3, 2012
NEW YORK ? America used to be Sweden: According to new research, the America of the Founding Fathers was ?more egalitarian than anywhere else in the measurable world.?
That?s an important finding, and one that will surprise most Americans today. Both inequality and American exceptionalism are high on the national political agenda. One idea that brings those issues together is the belief that Americans have an exceptional cultural tolerance for income inequality. Unlike Europeans, the thinking goes, most Americans are confident that they are ?soon to be rich.? As a result, the conventional wisdom has it, Americans in the middle look up to their 1 percent and are loath to tax them.
But historical research by the economists Peter H. Lindert and Jeffrey G. Williamson shows that when it comes to inequality, this American exceptionalism is an inversion of the conditions that prevailed at the time of American Revolution. In that era, which is so often invoked in today?s political and social battles, the United States was the world?s most egalitarian society ? and proud to be so.
?There has been an absolute reversal,? Dr. Lindert told me. ?Compared to any other country from which we have data, America in that era was more equal. Today, the Americans are the outliers in the other direction.?
Nowadays, we think of the postwar era as a halcyon time for the U.S. middle class. But it turns out that, in relative terms, colonial America, too, was a great country for the 99 percent, particularly when compared with the folks back in the old country.
?Americans who were free were very well-off, and better off than their counterparts in the mother country,? Dr. Lindert said. ?Every kind of person by occupation was better off than their counterpart by occupation. The carpenters, the shopkeepers and so forth all had a slightly better income than in the mother country.?
Slavery is America?s original sin and was the great global injustice of that age. But on a purely economic basis, even when slaves are included in the calculation of inequality, America comes out as the most egalitarian.
?If one includes slaves in the overall income distribution, the American colonies in 1774 were still the most equal in their distribution of income among households, though by a finer margin,? Dr. Lindert said.
Members of only one group fared better in Europe than their peers in the colonies ? the people at the very top.
?The Duke of Bedford had no counterpart in America,? Dr. Lindert said. ?Even the richest Charleston slave owner could not match the wealth of the landed aristocracy.? Indeed, England?s 1 percent were so rich that the country?s average national income was nearly as high as that of the colonies, despite the markedly greater prosperity of what today we might call the American middle class.
Today, the opposite is true, Dr. Lindert said: ?The rest of the world can?t come close to the 1 percent in America.?
This portrait of colonial America as the world?s great egalitarian exception would probably come as a surprise to most Yanks today. But, though Dr. Lindert and Dr. Williamson?s data are new, the portrait they paint fits with contemporary accounts.
In a letter he wrote from Monticello in 1814, Thomas Jefferson applauded America?s economic equality. ?We have no paupers,? he wrote to Dr. Thomas Cooper, an Anglo-American polymath and frequent Jefferson correspondent. ?The great mass of our population is of laborers; our rich, who can live without labor, either manual or professional, being few, and of moderate wealth. Most of the laboring class possess property, cultivate their own lands, have families, and from the demand for their labor are enabled to exact from the rich and the competent such prices as enable them to be fed abundantly, clothed above mere decency, to labor moderately and raise their families.?
By contrast, Jefferson believed, as the Lindert and Williamson research confirms, that members of America?s 1 percent were worse off than their European counterparts:
?The wealthy, on the other hand, and those at their ease, know nothing of what the Europeans call luxury. They have only somewhat more of the comforts and decencies of life than those who furnish them.?
Interestingly, particularly in view of today?s inequality wars, Jefferson didn?t pull his punches about which social order was preferable. ?Can any condition of society be more desirable than this?? he opined about egalitarian America, and then did a little calculation showing that the overall happiness of Americans far outweighed that of the English, for whom ?happiness is the lot of the aristocracy only.?
It wasn?t just the Americans who perceived their society to be more economically equal than the Old World. Foreign visitors noticed, too. After his famous journey to America in the 19th century, Alexis de Tocqueville returned home to France to report that ?nothing struck me more forcibly than the general equality of conditions among people.?
But what was obvious just before the Revolution has been largely forgotten today. ?It was known by them at the time,? Dr. Lindert said. ?Now we as a society may have lost sight of that, because we didn?t have the numbers to remind us.?
Thanks to Dr. Lindert and Dr. Williamson, we now do. Their historical work makes a particularly important contribution to the current debate because, as chance would have it, those who argue that inequality is as American as apple pie tend also to hold the views of the Founders in particularly high regard.
?I see it as a puzzle,? Dr. Lindert said. ?Those of us who insist that inequality is fine would also invoke a Founding Fathers? society for which it was not true.?
Equality, not just of opportunity but also of outcome, turns out to be one of the features that really did make the United States exceptional in the age when the country was born. That startling fact is worth bearing in mind as Americans struggle to figure out how to remain exceptional in an altogether more complicated era.
Chrystia Freeland is global editor at large at Reuters.
Re: America's inequality worse now than during slavery
If I'm understanding correctly, its because our rich are just that rich, and it skews the inequity. Not because our poor are that poor.
ok yeah, I should have said "makes the inequity worse". I'm saying, the gap is so huge because our rich are that rich, not because our poor are living like actual slaves.
The idea of American exceptionalism was wrought on the backs of disenfranchised groups, notably the black slave. There can be no fair comparison of a slave holding rights denying society and a rampant capitalist economy.
Apples to oranges.
Interesting fun fact about arborgold?
She actually wrote a chapter of a book for UN delegates on income inequality and it's cyclical relationship to conflict. Results of the billion plus page literature review I conducted, as I'm applying them now to the US situation?
Based on all the research I did, conflict (i.e. CHANGE) doesn't happen when levels of inequity are extremely high (because the have-nots don't have the means to do anything about it) and it doesn't happen when it's relatively low (because who cares if the Jones have just a little more money than you). It happens at mid levels of inequity (and the US is currently teetering on the edge between mid and high) because that's when the inequality is noticeable AND the have-nots have the means at their disposal to do something about it.
If I was going to be all doom and gloom / conspiracy theorist, I'd say the US better do something, and soon, about these ridiculous levels of inequality if they don't want another civil war on their hands.
"You don't get to be all puke-face about your kid shooting your undead baby daddy when all you had to do was KEEP HIM IN THE FLUCKING HOUSE, LORI!" - doctorwho
"Worse" meaning the gap is bigger; it's not meant to be a statement on comparing the poor of today to the slaves of back then.
I found it interesting that Jefferson liked the idea of there being a small gap - if he said that today he'd be accused of being a dirty socialist and that these values are not what America was founded on, etc.
Why can't you compare them? I think it's pretty telling that even when the richest Americans literally owned the poorest Americans, there still wasn't the incredible gap in wealth that there is today.
What do you propose? (...and leaving to take kiddo to preschool, but will be back)
Zeus and Bubba
This made me LOL
because the articles refers to both inequity aka wealth gap and inequality which it's trying to make be the wealth gap and it's a different thing.
That is super interesting. What other places did you look at and how far back did you go? I wonder if the baseline of the have-nots matters. Because the have-nots in America are not the have-nots in Zimbabwe or Brazil, so perhaps they would be too apathetic to do anything about it. Did you look into that at all?
The author mentioned over and over again that it was about economic or income inequality, so I'm not sure where you're getting this.
The idea of American exceptionalism the author refers to is not economic it's philosophical; I believe the author is conflating many issues and trying to claim an economic theory out of a political idea; sure economics is political but not int this sense
Honestly?
Super socialist nearing pinko commie bastard liberal me proposes LOTS of progressive taxation to take better care of the "have nots." Because jealousy about Bill Gates' 12 yachts doesn't lead to civil war. Jealousy over Bill Gates' 12 yachts when you can't afford your rent, you can't afford good food for your family, your kids go to crappy schools, and you don't have decent health care DOES lead to conflict.
Fixing the taxation system to provide the basics for American citizens is what's necessary.
But, again, that's just socialist pinko commie liberal me saying what I've been saying all along:
A government should want 5 things for it's citizens, and it should tax as necessary to make sure those things happens.
It should want it it's population to be healthy, to be housed, to be clothed, to be fed, and to be educated.
And once all of those things are true for ALL Americans, THEN, if Bill Gates wants to own a bazillion yachts, who gives a flyingfuuck. Until then, nobody should get to be uber wealthy while we have people starving in our streets, dying of preventable, treatable diseases, and our kids can't find Africa on a map.
Signed - former member of the 2%.
"You don't get to be all puke-face about your kid shooting your undead baby daddy when all you had to do was KEEP HIM IN THE FLUCKING HOUSE, LORI!" - doctorwho
I'd have to go dig up the chapter / research again, but it was a worldwide literature review. And, sadly, because a lot of conflict happens in the global south, there WAS a lot of data from there. When I find it though, I'm happy to share it.
In re: your second question, I originally started researching POVERTY and conflict. But soon realized that it wasn't that poverty that was so closely tied to conflict, it was inequality. poverty is only tied to conflict in so much as when people are SO impoverished, they generally don't have the means to rise up to do something about the inequality.
"You don't get to be all puke-face about your kid shooting your undead baby daddy when all you had to do was KEEP HIM IN THE FLUCKING HOUSE, LORI!" - doctorwho
What are those dudes on the heart cake?
I totally wanna do a Marie Antoinette styled birthday party one day. Hilarious!
Thanks for the honest answer. The formerly pinko commie liberal me nods in agreement. It makes basic sense -- it's not fair for this person to have all that when this person doesn't have enough to get by.
One of the things that has changed my opinions about all of this is the understanding that wealth is NOT a zero sum game. As person A's wealth grows it doesn't require a decrease in person B's wealth. Something I just did not get when I was younger and my understanding of America's wealthy was akin to 80's movie bad guys -- silver haired white men with toothy smiles crushing the little guy for their own personal gain.
It's interesting that this article's basic tenet is that the economic inequality was less severe at the time of our founding fathers. Because when you contrast that with what you see as the solution -- meeting those 5 needs for all citizens through taxation -- that's dramatically different from the type of governmental structure we had during this more egalitarian time the article recalls. What tax-funded entitlements existed then? A fraction of those that exist today.
Granted, I know it's not so simple. There are countless other dynamics at play. And I'm not hardcore, I'm not heartless. I don't want people to be sick, starving and homeless in our streets (not that anyone really does) and I'm for a safety net to prevent such outcomes, as well as encouragement of domestic NGOs to support those goals. And I'm certainly with you on the sad state of our education system.
I admit my opinion about entitlements rests on shaky ground. It's a heart vs. head battle for me. I know there are people who can't help themselves, and I think we should help them. Having a special needs child has been a gift to me in that regard because my compassion for others has grown. (Not that I think I was a cold-hearted biitch before...)
But then I know that there are people who could help themselves, but have lost confidence because the system insists they couldn't possibly overcome their circumstances and makes it easier for them to stay where they are.
*Anecdote alert*
If born today, my stepdad would probably have been born into an entitlement-rich situation. He's 65. He was dirt poor and the first of his family to graduate high school, let alone go to college. Not only was he not supported in this endeavor financially, but he was mocked and pressured to NOT go. He was offered a delivery route by his stepfather and was considered a "fool" not to take it. He is also 1/4 Cherokee and I'm not sure whether funds were available then, but he didn't know of them or take advantage. He payed for every scrap of his education and housing through multiple jobs -- and kept going despite an unplanned pregnancy and marriage at age 21. He had no foodstamps or Medicaid or tuition assistance.
Though he had no inherited connections and was from the poorest part of town -- he worked hard and eventually worked for a bank then the city's top ad agency, then he opened his own business and was successfully self-employed until he retired.
So even though "bootstraps" have become such a joke on this board, growing up and really understanding what this man accomplished was part of the reason for my political shift. ETA: (Which is kind of hilarious -- my parents have no idea I've turned all Alex P. Keaton and would die if they knew I didn't vote for Obama.
But I don't think all entitlements are a bad thing. It's hard to know where to draw the line, because I wonder whether my stepdad would have plowed through to rise to his current economic situation had the establishment subtly told him all along the way that "he couldn't possibly." It's kind of like the few kids I knew in college that never went to class -- typically their parents paid for it (nothing against that -- my parents picked up what my academic scholarships did not). Contrasted with my friends who were putting themselves through school, they were a bit more responsible. And having to do it themselves shaped their personality a bit -- in ways that I suspect are serving them well today, 15+ years later.
Zeus and Bubba
I think this is a really good example of why what happened 50 years ago isn't possible for most people today. He paid for his education and housing through multiple jobs, but how much did his education and housing cost then? Now, when the average cost of tuition at a public university is about $20,000 plus the cost of housing, etc., how is a poor student supposed to study AND work enough jobs to pay that cost? Yes, financial aid exists, but that's exactly the kind of program that the right is working to take away (Pell grants, subsidized loans, etc.).
Our society was also a lot more mobile back then (provided you were male and white, of course). You could get a job in the mailroom and work your way up to the executive level. That's not really possible anymore - you get a job in the mailroom and you'll probably retire in the mailroom, maybe as mailroom supervisor if you're lucky.
At any rate, yes, your grandfather worked hard and achieved what he achieved without public aid. But would having public aid have stopped him from achieving that? Or would he have been that kind of person regardless? It may not have benefited him or given him the push he needed to succeed, but that doesn't mean it wouldn't have done the same for someone else.
You read my mind -- I edited right after posting to address your last question. No one can really know if he his outcomes would have been the same regardless. But I posited that MAYBE it was the having to do every little bit himself that gave him the tenacity he needed to get where he is today. Who's to say?
I'm with you on the disproportionate cost of tuition now, though. That is a huge problem. I don't have the answers, but I'm just saying that I don't think the American dream is dead, as cheesy as that position may be.
ETA: And I drifted way off topic -- I meant mainly to point out that this economic gap is not fundamentally due to an "imbalance" of some finite amount of wealth since it's not a zero sum game.
Zeus and Bubba
Not snarky - why can't you believe that wealth is not a zero sum game, but sitll want the taxation that Arborgold talks about? I get that wealth is not a zero sum game and that not everyone will have the same amount of wealth. Fine.
But that doesn't mean that just because the people at the bottom have increased their wealth by .00001% that it's OK since the rich didn't get their money at the poor's expense. Or that just because their (poor people's) wealth increased that they can afford to be properly housed, fed, clothed, educated and afford adequate healthcare.
I don't care why the rich are so rich - whether or not they earned their money at someone else's expense is not the point to me. It's about whether everyone has enough to have their basic needs met. If they don't, then I think we need to take a bit more from those at the top that can afford to part with some of their money. My goal would not be to bring them down to everyone else's level, but to ensure that those at the bottom have their necessities met. After that, the rich can have what they want and get their money however they want, so long as they are not doing something illegal or grossly unethical.
I may show some naivety here, but don't the very poorest already get their basic needs met? Is it that we should raise the limit on who can get housing, food and cash assistance? Or are we just talking about standing firm to protect existing entitlements? I guess I'm not sure whether the average liberal view (if there is such a thing) wants an expansion or just a protection of current safety nets for people living in poverty.
And the part about where the wealth comes from matters a bit to me because of the tone of the Occupy movement. This notion that "1 % controls x% of the wealth." It does imply greed, ill-gotten gains, and prevention from the lower economic classes from accessing the wealth. And when you buy into that notion, it's much easier to agree with higher taxes, because those people are "bad" and not paying their fair share. And this notion when taken to extremes gets ugly (Roseanne Barr...oh my).
Zeus and Bubba
No.
The Occupy movement doesn't speak for every liberal. Also, I don't agree with higher taxes because anyone is "bad" (although some certainly are), but because some people need help and some have more than enough to help and have benefitted from our system to get their money and continue to use our system ever day. I also think that, as people from one society/group (Americans), we should care for each other and that it says something about us when we are perfectly happy to allow people to live in poverty unnecessarily to protect the riches of a few. The mark of a society is how it treats is less fortunate. I also think that there are costs to having such inequality (how much more do you have to pay for gated communities or otherwise exclusive housing, private education, security, etc. because you don't want your kids mixing with the rest).
I also think that there is something wrong when super-rich people pay a lower effective tax rate than middle class people - because many of the loopholes don't help the middle class, or the middle class don't have enough money to take advantage of the loopholes. I don't blame the super-rich for taking advantage of the loopholes, but I don't think they should exist (the loopholes, not the super-rich). So, they aren't paying their fair share - but that doesn't make them bad. What does make them bad is seeing this and working to keep this inequality in place to protect their riches.
Sure, I'll admit to being idealistic. But I don't see why that means I must think that wealth is a zero sum game. Or that it means I automatically think all rich people are bad. I do think that some people are so busy trying to get rich that they will turn into a*holes, a la Bernie Madoff, but that is always going to be a part of the system. Just like you can never get poverty down to 0%. I just don't think these are reasons for us to throw up our hands and be like, "oh well!" and continue on with our messed up system.
If you have the time, watch this BBC documentary (it's about 20 minutes long). If you don't have time, just watch the first 3-4 minutes. You might be shocked at the way the very poorest Americans live.
http://www.youtube.com/watch?v=suJCvkazrTc
Curmedgeon, I didn't phrase that well. What I mean is that there are systems in place for the very poorest people. I don't think they operate perfectly, because this very moment, yes, there are Americans starving and going without shelter. Which is why I was curious about the details of liberal solutions. Are people not qualifying? Why not? Are they unaware of how to access services? How can we teach them? Do we need more social workers for community outreach? Are shelters full? Do we need more of them? Do we need a more diverse array of services to serve special segments within the poverty-stricken population?
I am just trying to connect the dots, because if we talk about solutions before defining the specific needs to be met, it seems vaguely punitive. Which is why I've yet to ever hear many people define what percentage is a "fair share," because there will always be a push to tax more.
The top 10 percent of income earners paid 71 percent of all federal income taxes in 2009 though they earned 43 percent of all income. The bottom 50 percent paid 2 percent of income taxes but earned 13 percent of total income. About half of tax filers paid no federal income tax at all. It's already quite progressive. So what would make it more fair?
And Moxie, I agree with a lot of what you wrote. And certain loopholes, yes, agreed. But do you consider charitable deductions loopholes? There is no question that removing these incentives would hurt private giving, which would hurt the people who rely on those charities.
I'm not sure if those are the loopholes you're speaking of, or if you're primarily speaking of corporate tax loopholes. If it's the latter, that's sticky, too, because trying to attract and retain big employers to a community can mean using tax breaks.
Zeus and Bubba
I will watch it. And that statement I made comes off as out of touch. I clarified what I was after a little bit more. I certainly don't mean that they live well, or that they are all able to access the shelter, food and healthcare that are *intended* to be available to them.
Zeus and Bubba
No, I understood what you meant. And I definitely think the questions you posed in the above post are important to answer. The documentary actually highlights a few of those - it's a combination of many factors: shelters being full, program funding being cut, people being unaware of what they're eligible for, or simply there not being any programs available to particular people for particular needs.
One of the loopholes I'm talking about (not really a loophole so much as how it works), is that someone whose main source of income is from investments can pay a lower tax rate than someone whose main source of income is from actually working.
Charitable deductions are another issue. I think that the category of things that counts should be much smaller. It is not really a charitable deduction in that you can deduct for organizations who don't really do acts of charity. There are too many categories that are purely for the benefits of members and serve as social markers of who's who more than actually provide a service to poor people. For instance, the Houston Young People for the Arts is having an event partially sponsored by BMW. Look at what's on their website:
We invite you to be a part of "In-crowd fave" (Houston magazine) Houston Young People for the Arts!
Let's keep it real - this is a forum for yuppies to meet and mingle. I don't think contributions to this organizaiton should get you tax exemptions. People who can afford to pay will pay for the chance to network. If someone really wants the tax exemption they can give to the charities that actually help people.
I also think that corporate tax loopholes need to close. Do you know that if Company A buys Company B and loses it money in 2010 it can claim that as an exemption in 2011. You can carry losses forward and deduct them from income in the future. This could easily lead to poor decision making and it rewards risk too highly. Just like with individuals, whatever the corporate tax rate is, it doesn't mean large corporations are paying that amount. Some companies have entire departments whose purpose it is to find ways to pay less in taxes. There is too much variation. I'd prefer that we had a lower rate that everyone paid (let's say 18%) instead of it varying so wildly from company to company and year to year.