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(DV) Petersen: Inequality Matters







The Fruits of Capitalism
Inequality Matters

by Kim Petersen
May 3, 2006

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Inequality Matters: The Growing Economic Divide in America and Its Poisonous Consequences  
James Lardner and David Smith (Editors)
(The New Press, 2005)
Hardcover: 328 pages
ISBN: 1-56584-995-7

Capitalism is a system that has untoward repercussions for the masses of society. Capitalism may create wealth, but it also, by dint of its nature, creates gross inequalities that belie Adam Smith’s faith in an invisible hand.

Editors James Lardner and David Smith have compiled a book of essays, Inequality Matters: The Growing Economic Divide in America and Its Poisonous Consequences, that elaborates on how inequality permeates society and affects the masses of people adversely.

The book describes a link between some “elites” and the religious Right in an assault on middle and working classes. The result has been $2 trillion in tax cuts mainly benefiting ultra wealthy.

The inequalities are woven into the American workplace where workers face an uphill battle to gain equality. Lardner writes, “In American workplaces today workers can be compelled to listen to presentations on the evils of unions but be forbidden to meet for the purpose of forming one.”

Heather Boushey and Christian Weller detail an ever-rising inequality. The odds of escaping this growing disparity are daunting. Citing the economist Thomas Hertz, it was estimated that a child born to parents in the bottom-earning quintile had approximately a 7 percent chance to make it to the top quintile as an adult; a child in the top quintile has a 42 percent chance of winding up there.

In 2001, the richest 5 percent of households in US held 59 percent of the wealth while the bottom 40 percent scrimped by with a measly 0.3 percent. The top one percent had 1500 times the wealth of the bottom 40 percent!

Barbara Ehrenreich claims the US is a “morally polarized society.” Corporate USA is complicit in the entrenchment of inequality. An example: “at some Wal-Mart stores, employee orientation is partly about applying for food stamps and welfare benefits”

Inequality is also established in academic institutions. Race and class are both factors, but class appears to be the important factor.

Students are faced with higher tuitions and reduced choice. At the other end of the lifespan, seniors find themselves stressed by disappearing pensions and increasing drug prices.

The crony capitalism of the system is most prominently manifested at the top. Charles Lewis deplores the lack of democracy that shuts out poorly financed political candidates: “The fact is that it is impossible for a candidate with no money to beat an incumbent, but impossible to raise money if you’re not an incumbent, is the catch-22 that keeps the congressional reelection rate safely above 90 percent.”

“At today’s prices only two kinds of people can run for federal office: millionaires and those able to tap the fortunes of millionaires. … In fact, 40 percent of U.S. senators are millionaires.”

The result is a plutocracy. Lewis sees US “democracy” as caught in a “vicious cycle” where people don’t participate in the process because politicians ignore their concerns, and politicians feel free to ignore their concerns because they don’t participate in the process.”

Christopher Jencks rails against the market and calls for government oversight to correct for imbalances. He notes, “Economic inequality is less pronounced in countries where the constitutional system has few veto points, allowing the government of the day to make fundamental changes. Rules that favor a multiparty system rather than a two-party system also produce more equal economic outcomes. So does proportional representation.”

Jonathan Rowe contends, “We will never bridge the wealth gap in real -- as opposed to statistical -- terms until we begin to address the enclosure of the commons.”

“No person created them, and no one should be able to monopolize them or their fruits. … If the commons belong to all of us, which it does, then the financial returns should come to all of us as well.”

Rowe envisions a system where people are taxed for what they take from the commons which would then be redistributed among the people.

David Cay Johnston agrees that the tax system needs reform. He finds the system riddled with loopholes exploited by the rich. He provides one stultifying example of tax system inequality:

And here is what is truly awful: if you or a loved one gets sick or injured and you spend more than 7.5 percent of your income on medical bills, your income taxes go up -- and the money is explicitly used to help finance tax cuts for the rich.

The book discusses ways to bring about greater equality, such as through a mass movement, to which “the biggest obstacle … is one of cynicism and hopelessness … Just as bread won’t rise without yeast, a movement cannot rise without hope.”

Robert Kuttner maintains government is necessary to manage a social contract -- to tax the wealthy and redistribute the wealth. There is a call to minimize the preponderant influence of money in the political system, to reframe the progressivist message in a “catchy, compelling way, and to maximize democratic participation among citizens in middle and low socioeconomic strata.

Robert M. Franklin says, “When people no longer believe that it is okay to live in a society where the Bill Gateses, Donald Trumps, the Ted Turners, and the Waltons (I am referring to the Wal-Mart Waltons, not the TV show family) ostentatiously display their power while families are living in motel rooms and automobiles or begging for quarters on the street, things can happen.”

Inequality Matters represents the contributions of 26 contributors in painting a vivid and disturbing picture of what inequality means, the dynamics of inequality, and what can and should be done to address the inequality. Progressives should arm themselves with the information presented in Inequality Matters and act.

Kim Petersen, Co-Editor of Dissident Voice, lives in the traditional Mi’kmaq homeland colonially designated Nova Scotia, Canada. He can be reached at: kim@dissidentvoice.org.

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