How to Remedy Inequality

In a previous posting, I presented a brief summary of the incontestable evidence from The Spirit Level, by Richard Wilkinson and Kate Pickett, that a weak society accompanies inequality. Moreover, the fact is that inequality causes a weak society. Every social ill, from obesity to murder, is worse with social inequality, and is improved with greater equality.

We can all agree that we prefer a society that is safer and healthier and all the rest that comes with equality. Nobody loses with greater equality. It is only the means by which we get there that is cause for disagreement.

Nobody loses with greater equality.

About this time some far-right person will say that equality is socialism, or communism, with everybody getting the same money. No, it is nothing of the sort. Equality, simply put, means fairness in pay. And if pay is fair, all social ills will diminish. But right now, pay is not fair. One cannot buy even the minimum requirements of life with the low wages earned by those at the bottom of the pay scale. Even those halfway up the scale are finding life difficult. The last time inequality was this great was 1929. There is no doubt that inequality is worse in the US now than at any time since the Gilded Age. And there is no doubt that this must change if our country is to remain a power for democracy.

But, how do we fix inequality?

As The Spirit Level noted, greater equality can be achieved before taxes, by a more reasonable income spread, as in Japan, or it can be achieved with taxes, as it was in the US after WWII, one of our most productive and wealthy national periods. Or by a combination of the two. What matters most is the end result, and it will not look like it does today.

Today’s ultra-rich will object regardless, and try to claim that they earned every penny of their unusable billions, which is nonsense. But the fact is, they too are negatively affected by inequality. No one is safer because we spend more on prisons than we do on education. Life isn’t improved by our shorter lifespans. Underpaid and disrespected workers do not create high productivity or company loyalty. Poor health and crime are paid for by all, the wealthy included.

Political will is what is required for significant change. Those nations who purposely improved equality did so because their governments faced a crisis of legitimacy. By lessening inequality, they gave their citizens a voice, pride of citizenship, and reasons for loyalty. We in the US face something similar, as realized by the millions who have become involved with the Occupy movement in greater or lesser degree. As one Occupy poster noted, “You know something is wrong when the librarians protest”. Political will comes when it is widely recognized that greater equality will be an improvement.

Poor health and crime are paid for by all,
the wealthy included.

Greater equality does not mean big government, as conservatives are sure to claim. It means political will to improve equality. Our government faces a crisis of legitimacy, with approval of Congress in single digits, half of them being millionaires, very few of them having experienced what the rest of us do. We are well aware that the huge money gifts given to the ultra-wealthy, after the $400,000 they spend on lobbyists every day, have made the rest of us less well off in many ways.

Grossly overpaid executives are not a result of the market. Success and profit are unrelated to these gross payments. Overpaid executives are strongly resented, a potent symbol of inequality affecting all the rest of us, the 99%. Top salaries in Japan and elsewhere are 75% smaller, achievement is equal or better, and national equality is much greater. This translates into longer lifespans, less crime, greater satisfaction, better schooling, and so on, all areas where the US is falling further and further behind.

So the ultra-wealthy should favor greater equality, because they would benefit along with everyone else. But they will probably fight it tooth and nail, every step of the way. I find this perplexing, because beyond a certain amount of wealth, more money has no real meaning. It’s not related to improved health or greater happiness or much of anything else. Sickening excess does not improve one’s reputation or one’s life. Equality does.

But no matter how it is achieved, greater equality will be achieved when the government eliminates the tax loopholes the rich and their lobbyists have so assiduously inserted into our laws all these years. It will be achieved when it becomes possible, with Living Wage standards, to live a decent life by working full time in humble occupations. Perhaps it will become necessary to mandate a maximum executive income as a multiple of the lowest wage. Perhaps we could do as the Germans do, with mandated production teams consisting of managers and workers in every corporation, with which they achieve very high production and low cost.

Sickening excess does not improve
one’s reputation or one’s life.
Equality does.

As the economist Gar Alperovitz notes, our huge non-profit sector functions as well or better than for-profit businesses, at far less cost, with greater equality. Few, if any, chief executives of educational, public medical, public power, co-ops, credit unions, and so on, earn the outsized income of for-profit CEOs, yet they could hardly be considered underpaid. The only difference in this inequality vs. equality lies in whether the company’s purpose is to make money or to provide service.

As I have stressed repeatedly, worker-ownership is probably the best way for any worker to place herself in a position of equality, because, as an owner of the company, she gets a share of the profit. There are no ultra-rich owners who take it all. Worker-ownership is more widespread than generally believed. The Mondragon Corp., which is in Basque Spain, has 120 co-ops, 40,000 workers, sales of $4.8B. It’s profitability is double that of for-profit companies in the same region. Similar groups function in several countries, and there are more employee-owned businesses in the US than most people think. A quick Googling will tell you much more.

But, outside of worker-ownership, the greatest force for equality is labor unions. Unions were strongest during our period of greatest productivity and greatest equality. Yet we find them attacked from all quarters by conservatives, who somehow fail to understand that without them, equality suffers, making everyone worse off.

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3 CommentsLeave a comment

  1. I totally agree that we need to get rid of all the tax loopholes and other facets of crony capitalism. I agree that unions should be able to exist, but believe unions are just as apt to become corrupt as anything else. They can cause as much harm as they prevent. I’m all for co-ops or any other types of businesses that want to compete. I see nothing wrong with making money, though. The ills the USA faces is largely due to the federal government.

    Anyway, I find your blog interesting and appreciate your views. I think you make some interesting points, although I don’t agree with all of them. Please check out my blog if you get a chance to further see my take on things. Thanks.

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  2. Thank you. I did enjoy your blog (http://landofthetea.wordpress.com). It’s a pleasure to read conservative writing that doesn’t begin by calling all liberals names. Like you, I find things much to agree with and some I don’t agree with, but that’s a matter for discussion.
    Re your comments, my sense is that unions are less corrupt than in Hoffa days. The internet has helped, and there are several sites that monitor union corruption, http://nlpc.org/union-corruption-update, for example. Profit is certainly not a dirty word, but a problem arises when corporations treat people like disposable machinery. Our biggest disagreement is whether government is the problem, as Reagan said. Government starting vastly expensive and amoral wars, as we so often do, is decidedly a problem, and there are certainly bureaucratic inefficiencies, but much of the national problem in recent decades comes from loss of control, not too much of it. Conservative proposals to dissolve major government functions sound like disaster in the making.

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  3. Thanks for the link.

    I agree that a problem arises when companies do not treat employees well, and I agree that government plays a small role in regulating this. Unfortunately, they over regulate it. If a company treats employees poorly, they will lose their best employees and eventually need to change or they will go out of business. That is capitalism working.

    Whether one agrees or disagrees with the wars, for as much as they cost, they are a very small portion of the federal spending. Our Overseas Contingency Operations only amounted to 4.3% of federal spending in 2011.

    Government constantly attempts to subsidize results they want and then get loads of unintended consequences because of it, like the recent housing bubble and the looming education bubble. Thanks!

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