Income Inequality Today

The news last week was disturbing for many reasons. As I sit and reflect on my life to this point, nothing in my history can compare with the agonizing and frustrating experiences of so many millions of Americans. As I sit and attempt to digest the pain experienced by others, I’m frustrated by my inability to do anything meaningful to try and effect a change. All I can do is write and hope it makes a difference, no matter how small.

My frame of reference started sixty years ago when I started my academic life. It resulted in a working knowledge of economics, as opposed to one of the social sciences, or journalism, or engineering, or any number of other disciplines.

For the past several years, I’ve posted on this forum thoughts about income inequality in this country, that if left unchecked, would result in rioting in the streets. The purported reason for the recent rioting was to protest the death of a black man by a white police officer who, if the visual evidence is to be believed, is guilty of murder. I believe it’s far more than that.

Long term and partially remedied cultural biases are to blame, so they say. All well and good, I say, but how do we effect a long term and fully remedied solution? What fundamental forces are at work that stand in the way such that what we observed last week becomes a rarity, and not a common event?

Given my bias towards economics, I believe a lot of it comes back to income inequality. There are no short term solutions that will undo cultural biases that go back centuries, if not longer. It transcends generations and for many, it is wired into their DNA. But then I’m not a scientist either. As we come out of this pandemic, I hope we are forced to make some fundamental changes that reflect a re-prioritization of the values we hold dear as members of this society.

So my post today is to share my comments from five of my posts going back several years. I include the title and what I had to say, and a link to the actual post. I wish I could do more but it’s all I can manage right now.

What Nobody’s Telling American Workers \ 6 JUN 2012

My Comments: With voter rejection of the repeal effort in Wisconsin yesterday, we can now look forward to greater income inequality in this country. Apparently a sufficient number of voters there decided that in spite of their declining middle class status, they would rather see their income opportunities shrink going forward than allow those below them economically a better chance to move upward.

As one of those in the middle class who feels threatened by the efforts of a small percentage of citizens to relegate me to further insignificance, I’m essentially reduced to speaking louder and longer in an effort to try and wake up my fellow Americans who will be sliding down the tube with me. Do you really think our Gov. Scott is trying to benefit ALL the citizens of this state, or just those who think like him and enjoy his financial status?

I’m one of the ordinary people, one who has tried to live up to the standards of a consummate professional all his adult life. I’d love to work harder than I do; I enjoy it and simply don’t want to stop yet. But I’m coming to the conclusion it has to get a lot worse than it is now before enough people raise up and say “Enough!” and then be willing to do something about it.

The Typical Household, Now Worth a Third Less \ 12 AUG 2014

My Comments: You have read my posts before where I talk about income inequality  (the HAVES vs. the HAVE NOTS) and how if left unchecked, could result in social chaos in this country. Probably not in my lifetime, but definitely affecting the lives of my grandchildren. It’s an issue that demands discussion among ourselves and those who profess to be politically motivated.
Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.

The inflation-adjusted net worth for the typical household in 2003 was $87,992. Ten years later, in 2013, it was $56,335. This is a 36 percent decline in very few years, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.

The Russell Sage study also examined net worth at the 95th percentile. (For households at that level, 94 percent of the population had less wealth and 4 percent had more.) It found that for this well-do-do slice of the population, household net worth increased 14 percent over the same 10 years. Other research, by economists like Edward Wolff at New York University, has shown even greater gains in wealth for the richest 1 percent of households.

For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.

“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001,” said Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.

The reasons for these declines are complex and controversial, but one point seems clear: When only a few people are winning and more than half the population is losing, surely something is amiss

“…the Nature of Capitalism” \ 16 NOV 2016

My Comments: There are changes afoot, and our President Elect seems to have no clue but then Hillary missed it too. In all fairness I didn’t see it either until I read this and it served to crystalize some thoughts I’ve had related to the income inequality so many of us are worried about.

Income inequality is the disparity between what those at the top of the economic food chain get paid every year, and the rest of us get paid who are not at the top.

It’s linked to the anemic job growth numbers across the nation, to the rise in disaffected people who showed up at the Trump rallies, to the tension in so many communities between law enforcement and the people they are supposed to be protecting, the tension between rural and urban populations, and on and on. Sometimes it is racism, but at a fundamental level, it’s the threat posed by the absence of economic opportunity.

There are huge implication for people with years of retirement left to navigate. These thoughts below come from a highly credible source are critical in my judgement in our preparations for the future.

The American Dream is Fading, and May Be Very Hard To Revive

24 FEB 2017

My Comments: From age 10, I grew up in middle America with an educated father, a full time mother and a dog. It was assumed I would go to college, get a job, be self sufficient, and at the very least maintain the same standard of living as my parents.

I achieved that goal but that expectation is fading. The economic threshold promised by higher education is lower than it was when I was in college. We can argue ‘till the cows come home why this is so, but the reality is causing young people to struggle where I did not.

Economic inequality in this country is increasingly dramatic, and in my opinion, the cause of much of the tension we experience and describe as racial, as urban vs rural, as educated vs uneducated, and so on.

If there is a reason to try and preserve the integrity and opportunity for greatness in this country, then our political leaders have to address income inequality or we can kiss our ass goodbye.

Can the Country Survive Without a Strong Middle Class?  26 FEB 2018

My Comments: Most of the recent talk about the Constitution comes in the wake of the tragedy in Parkland, Florida, for obvious reasons. The attention is well deserved but I’d have you think about more than just the 2nd Amendment.

At the national level, if not across the globe, society is re-evaluating itself. Are the values we hold dearly still valid? Are the roles played by the various participants serving our best interests? Are you willing to let the so called ‘elite’ change the economic and social landscape that most of us enjoy without allowing us to express our thoughts? Have we given them so much power that it now makes no difference?

If you’ve followed me for long, you’ve heard me talk about income inequality and the subtle effects it has on not just our society, but in virtually every society on the planet. I hope you will read this, regardless of your political leanings, as it will influence every aspect of the lives of your children and grandchildren. And the clowns in Washington, DC are not helping matters.

What Kind of World Will Our Grandchildren Be Tasked With Running?

I was recently asked a question by a friend whose grandchildren’s ages are similar to mine. He asked me to name two things they might encounter in the world after he and I were long gone. What two things would make it hard for them to live the lives we hope for them.

To which I replied ‘climate change’ and ‘income inequality”.

As someone normally unafraid of change, I realized that sooner or later we were going to have to elect people to leadership roles in the government that were OK with scientific research and with democratic principals upon which to make far reaching decisions.

My inspiration for expressing these thoughts in this blog post is an article that appeared in the Weekly Standard last November 14th. My memory of this publication is that it comes from the United Kingdom and has a long history. But I could be mistaken.

It was titled The Vaporware Presidency. It was not hard to realize it was probably about our current President here in the US. It’s a 3 minute read and can be found here:

The term ‘vaporware’ has a specific origin which is described in the article. To my mind, however, it brought up images of smoke and dust which make life hard to interpret.

I’m of two minds about our current resident of the White House. On one hand, I have no doubt he’s intelligent and rarely opens his mouth without a clear idea of the message he’s sending. On the other hand, I think his fundamental values about how life should be lived by each of us in society are heavily skewed toward what I think of as dishonorable behavior.

Among other things, the telling of deliberate falsehoods to create chaos and confusion among those he is supposed to represent. That’s shameful. But that also presumes he has the capacity to experience shame, which I’ve come to doubt.

The recent reaction to Iran and the shoot down of an armed drone carried this deliberate pattern to an extreme that had, and perhaps still has, the potential to create World War III. Will our grandchildren have a world to live in with any degree of hope?

In the space of less than an day, he authorized an armed response to the shoot down of our drone to a reversal of that command that makes little sense. Was the command to attack vaporware? Was it done deliberately or was it incompetence? I’m not sure.

I’ve written in the past about how this presidency offers the country an opportunity to explore our values as a society and how those values should be expressed in our rules and regulations. That’s what we use to apply boundaries to personal and corporate behavior. In the near term, what we’ve arrived at over the past several decades is being rapidly eroded.

Is that a good thing? Does it conform to the will of the people? We pretend to be a democracy where those of us who live here as certified citizens can express our wishes about the breadth and extent of those aforementioned rules and regulations. Some of us want to limit that expression, something I reject as wrong.

Virtually all of us want to live with structure in our lives and the means by which we create that structure is by our collective will. Chaos and uncertainty do not lend themselves to productive behavior with an expectation there will be cake to eat tomorrow.

Vaporware indeed. Time to focus on a remedy.

Tony Kendzior \ June 27, 2019