Inequality is bad for (almost) everyone

Yves Smith, whose Naked Capitalism blog is essential reading, is guestblogging for Glenn Greenwald this week. Her latest post sums up a lot of evidence on the adverse effects of inequality, and includes a reference to a post of mine. In summary, the huge growth of inequality in the US has harmed everyone below the 90th percentile of the income distribution in the obvious way – they get a smaller share of a cake that isn’t growing very fast, and has been shrinking since the crisis began

But even people above that level, but outside the top 1 per cent are worse off in important ways. They’ve maintained or increased their share of national income, but they aren’t rich enough to insulate themselves fully from the adverse consequences of living in a highly unequal society. Yves sums up a bunch of the evidence on thsi.

Finally, there are those in the top 1 per cent of the income distribution, now pulling in 25 per cent of all income. Members of this group can, if they choose, ignore the collapse of the society outside their gated communities, and focus on enjoying the wealth they extract from it. On recent evidence, that’s what they (or at least their political representatives) are doing, while also managing a very effective set of divide and rule tactics for the rest of the population.

30 thoughts on “Inequality is bad for (almost) everyone

  1. Curt Doolittle :
    No one disagrees that equality is superior to inequality. They disagree over the means of achieving it.

    This is a platitude that blurs the real issue. Workers will naturally have different abilities and experiences, and different land will have different fertility. These inequalities are superior to any artificially imposed equality.

    The inequality that is increasing now is what happens when one class in society accumulates the wealth others have produced. This is a different form of inequality.

    There is no problem with inequality if each factor receives remuneration according to their productivity. But if this were the case the Commonwealth Bank would not be rolling in 6.394 billions worth of capitalist profit, plus obscene executive and management remunerations.

    For the Left (away from the anarchists and hippies) there will always exist a certain inequality in the conditions of life.

  2. Zero Hedge has an excellent post carving up the numbers on who holds stock in the US:

    It includes the amazing statistic that the top ten percent of Americans are responsible for fourty percent of all retail spending. With a huge chunk of US jobs in retail it would appear that most Americans have a client relationship to the uber-wealthy. i.e. they are serfs.

    I like this quote from one of the bad characters in David Ireland’s excellent Australian Novel ‘The Unknown Industrial Prisoner’: “There is in all civilisations a colour bar of the mind. The people you take so much though for are beyond education, they lack basic intelligence. Throughout the Greek and Roman civilisations it was universally assumed that a large slave population was required to perform services unworthy to engage the activities of a civilised man. In other words, a civilised society could not be self-sustaining. A comparatively barbarous substratum had to be interwoven into the social structure to sustain the civilised apex. Nothing has changed. The substratum is still required; a slave population is needed for supplying the mechanized manpower for the continual building and repetitive work. The submerged population is still submerged, modern conditions of industrial employment are not significantly different from those of ancient slavery. Why? Because the history we know is the history of kings and wars and movements of nations. Those slaves had a good life and engaged in diversions and were protected by the state. Bread and circuses the same as now. Show me the difference. The only efficient way to govern them is to actually reduce them to the status of a lower species. The ultimate aim is to make them animals – then ruling them is easy.”

  3. Freelander, ‘The birth of self-love is the beginning of a life-long romance’ (with apologies to O.W).

  4. Chris Warren, I’m all for the equality of ‘From each according to their abilities, to all according to their needs’. Greed is the poison.

  5. So what is the answer?

    I’d love to say it is to go back to the policies of the 1950s and 60s, tariffs, regulation, fixed exchange rates, higher marginal tax rates and the rest of them; but I fear I’d be laughed at.

    So what else is the answer?

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