Friday, October 28, 2011

Democracy and redistribution of wealth. The real (State-sanctioned) class warfare

A good piece by Eugene Robinson in the Washington Post, a timely reflection on the current debate on tax rebates and spending cuts. Added cartoon, hyperlinks and some context material regarding budgetary issues and the Occupy Wall Street movement.

Pearls Before Swine by Stephan Pastis at Gocomic

The study that shows why Occupy Wall Street struck a nerve

Trends in the Distribution of Household Income Between 1979 and 2007

Eugene Robinson

The hard-right conservatives who dominate the Republican Party claim to despise the redistribution of wealth, but secretly they love it — as long as the process involves depriving the poor and middle class to benefit the rich, not the other way around.

That is precisely what has been happening, as a jaw-dropping new report by the nonpartisan Congressional Budget Office demonstrates. Three decades of trickle-down economic theory, see-no-evil deregulation and tax-cutting fervor have led to massive redistribution. Another word for what’s been happening might be theft.

The gist of the CBO study, titled “Trends in the Distribution of Household Income Between 1979 and 2007,” is that while we’ve become wealthier overall, these new riches have largely bypassed many Americans and instead flowed mostly to the affluent. Perhaps my memory is faulty, but I don’t remember voting to turn the United States into a nation starkly divided between haves and have-nots. Yet that’s where we’ve been led.

Overall, in inflation-adjusted dollars, average after-tax household income grew by 62 percent during the period under study, according to the CBO. This sounds great — but only until you look a little closer.

For those at the bottom — the one-fifth of households with the lowest incomes — the increase was just 18 percent. For the middle three-fifths, the average increase was 40 percent. Spread over nearly 30 years, these gains are modest, not meteoric.

By contrast, look at the top 1 percent of earners. Their after-tax household income increased by an astonishing 275 percent. For those keeping track, this means it nearly quadrupled. Nice work, if you can get it.

This is not what Republicans want you to think of when you hear the word redistribution. You’re supposed to imagine the evil masterminds as Bolsheviks, not bankers. You’re supposed to envision the lazy free-riders who benefit from redistribution as the “poor,” and the industrious job-creators who get robbed as the “wealthy” — not the other way around.

If Americans were to realize they’ve been the victims of Republican-style redistribution — stealing from the poor to give to the rich — the whole political atmosphere might change. I believe that’s one reason why the Occupy Wall Street protests have struck such a nerve. The far-right and its media mouthpieces have worked themselves into a frenzy trying to disregard, dismiss or discredit the demonstrations. Thus far, fortunately, all this effort has been to no avail.

The right maintains that inequality is the wrong measure. To argue about how the income pie should be sliced is “class warfare,” and what we should do instead is give the private sector the right incentives to make the pie bigger. This way, according to conservative doctrine, everyone’s slice gets bigger — even if some slices grow faster than others.

Indeed, the CBO report says that even the poorest households saw at least a little income growth. Why is it any of their business that the high-earners in the top 1 percent saw astronomical income growth? Isn’t this just sour grapes?

No, for two reasons. First, the system is rigged. Wealthy individuals and corporations have disproportionate influence over public policy because of the often decisive role that money plays in elections. If the rich and powerful act in their self-interest, as conservative ideologues believe we all should do, then the rich and powerful’s share of income will continue to soar.

Second, and more broadly, the real issue is what kind of nation we want to be. Thomas Jefferson’s “All men are created equal” is properly understood as calling for equality of opportunity, not equality of outcomes. But the more we become a nation of rich and poor, the less we can pretend to be offering the same opportunities to every American. As polarization increases, mobility declines. The whole point of the American Dream is that it is available to everyone, not just those who awaken from their slumbers on down-filled pillows and 800-thread-count sheets.

So it does matter that as the pie grows, the various slices do not grow in proportion. We’re not characters in one of those lumbering, interminable, nonsensical Ayn Rand novels. We believe in individual initiative and the free market, but we also believe that nationhood necessarily involves a commitment to our fellow citizens, an acknowledgment that we’re engaged in a common enterprise. We believe that opportunity should be more than just an empty word.

More on the issue