Our Opinion: Whose invisible hand?
As Robert Reich recently noted, "The basketball star Shaquille O'Neal and I have an average height of six feet and one inch."
The diminutive former secretary of the U.S. Department of Labor used that as an example to point out the absurdity of the government's recent announcement that per-person disposable personal income has risen over 4 percent since the recovery began in 2009.
"In an economy becoming ever more unequal, those at the top bring up the average higher than the typical person experiences," wrote Reich. "The fact is, median family income (that is, the income of the family smack in the middle) is now lower than it was when the recovery started. Five years ago it was $55,589. Now, adjusted for inflation, it's $53,891."
And perhaps a better way to look at the predicament most Americans find themselves in is to consider this, from the New York Times: "The top 10 percent took more than half of the country's overall income in 2012, the highest proportion recorded in a century of government record keeping."
And it's not just economists such as Thomas Piketty and Paul Krugman who are worried about the effect income inequality is having on the economy.
"(A) new Standard 7 Poor report is a sign of how worries that income inequality is a factor behind subpar economic growth over the last five years (and really the last 15 years) is going from an idiosyncratic argument made mainly by left-of center economists to something that even the tribe of business forecasters needs to wrestle with," noted Neil Irwin for the New York Times.
"Our review of the data, as well as a wealth of research on this matter, leads us to conclude that the current level of income inequality in the U.S. is dampening G.D.P. growth at a time when the world's biggest economy is struggling to recover from the Great Recession and the government is in need of funds to support an aging population," wrote the researchers from S&P.
Beth Ann Bovino, the chief U.S. economist at S.&P., told Irwin "One of the reasons that could explain this pace of very slow growth is higher income inequality. And that also might also explain what happened that led up to the great recession. From my research and some of the analysis I saw from others, when you have extreme levels of inequality, it can hurt the economy."
But don't expect those economists to make any suggestions that ignite "politically explosive debates over marginal tax rates and the scale of the social welfare system," wrote Irwin. "They instead emphasize the usefulness of investing more heavily in education."
While most everyone can agree that income inequality is a problem that needs addressing, there is no common ground on how to insure a fair distribution of wealth, or even if it's possible. On one side are those who argue that the government should be in charge of income redistribution while on the other side are those who contend unfettered and unregulated free market capitalism is the most effective way to guarantee all receive a square deal on the economic playing field. Then there is everyone in between the two extremes, with opinions as varied as the people who hold them.
Looking at the tax code and the bloated federal bureaucracy, there's a fairly good argument there that the government should in no way be involved in income redistribution, but an expansion of the Earned Income Tax Credit is popular in almost all corners of the political spectrum. And considering the Citizens United decision and the heavy handed tactics of the monied elite, we doubt unfettered capitalism is the answer either, but, as the Market Basket fiasco illustrates, a coordinated effort between employees, suppliers and customers can bring a business to its knees.
A deep reading of the Constitution and the debate that led up to it will reveal that the United States was not founded as an official Christian nation or to espouse any official religion, but the truth of the matter is, the majority of us profess to be Christians. Perhaps the solution to income inequality can be found if we look into our hearts and consider the teachings of Jesus.
Jay Parini, a writer and teacher at Middlebury College, noted in a column for CNN that despite Jesus' admission that "You will always have the poor among you," he is also known for that famous saying about camel's eyes of needles.
"Jesus discouraged the accumulation of wealth, worried about its effects on those who had it, and took special pleasure in helping the poor, dedicating his efforts to them. He must have shaken his head at the large gaps between rich and poor throughout ancient Palestine in the first century."
We can only wonder what Christ would think about today's disparities in wealth.
Can you be a true Christian and a free-market capitalist? Alan Bean, the executive director of Friends of Justice, doesn't believe so.
"The American marriage between market capitalism and American evangelical piety makes Jesus impossible. His words are inconvenient at best and heretical at worst."
And there is also research that seems to indicate the wealthier you are, the less empathy you have for the most vulnerable in the community.
"As the research now suggests, the richer and more powerful we feel, the deader will be that area of our brain where this crucial activity, which generates empathy, occurs," noted Parini. "In fact, power fundamentally changes the way we respond to those around us."
In other words, don't expect the richest of the rich to give two cents about the rest of us. Perhaps that is why we ask the federal government to do more to even out the playing field. Unfortunately, as Mancur Olson noted, wealth gives rise to special interest groups that wield more and more power over the institutions we call upon for justice, eventually tipping the scales in favor of those with the most gold in their pockets. And when the system is rigged to benefit those who can afford to purchase favor, it hurts everyone. Even the folks at Standard & Poor agree.
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