Yes, there is Growing Inequality; But Why Do the People not Revolt?

A Paper by Steve Szeghi, Professor of Economics, Wilmington College, submitted for the Rhodes Forum Scientific Marathon - 2015

In recent years both in academic journals and the mass media, the reality of increasing income and wealth inequality has been well documented and commented upon.  Inequality is increasing within counties across the globe, even as social safety nets that once existed are compromised or in tatters. The evidence is abundant thanks to the work of Piketty and Saez, Krugman and Reich, and even earlier the work of Kuttner, Phillips, and Hartmann. While the facts of increasing inequality are beyond question, there is a vexing question remaining. Why do the people not revolt? Or better: particularly in the Western Democracies why do the people not vote for real change? In the western democracies the people don’t have to risk jail or death by engaging in revolution, all they have to do is vote. So why is this vexing inequality tolerated? Why do people not vote for real change?

The reasons are both varied and multi-layered. While some are discussed by Reich in his movie ‘Inequality for All,’ and Michael Moore in his movie ‘Capitalism’, none have been adequately and exhaustively addressed. The purpose of this paper is to lay out the myriad of reasons why rising inequality is tolerated by people across the globe but particularly in the western democracies. What can be done ultimately to lead to real change is beyond the scope of this paper, but a greater understanding of the reasons for acceptance or inaction is a necessary first step on that path. More documentation of growing inequality is not needed. What is needed is to understand why the people do not revolt as a result of this reality.

Delusion

Perhaps the foremost reason people do not resort to revolution is the power of delusional thinking. They may realize they are poor, or struggling, or barely middle class but they are convinced that it will not always be so for them. Through hard work, or good fortune, or some combination of both, one day they will become rich. Or so they are convinced. Perhaps their god will bless them for their hard work, desire, or maybe their positive thinking.  Perhaps they will win the lottery. It would therefore be a mistake, they think, for them to identify too readily with the struggling masses. And so they strongly oppose tax increases on the very wealthy for they must protect their future delusional income from taxes.

Another delusion is the grand delusion of one’s own self-importance, status, or wealth.  People have a tremendous capacity to make themselves out to be much more important or wealthy, not just to others, but even to themselves, than they really are.  In the age of social media, from Facebook to personal blogs, it is all the easier to inflate one’s sense of fame, social status, and well-being.  Social Media in addition to enflaming ones sense of current self-importance also helps to fuel the notion that soon it will be possible for any individual to become rich.

Another delusion occurs when working people realize they are struggling and falling behind; but convince themselves there are good reasons for their plight. This delusion comes in slightly different versions and varieties, perhaps the rich deserve it, perhaps they work harder or perhaps they are being blessed by a god or God.  No matter the version it takes, life is fair, things are as they should be.  The distribution of income makes sense.  It is quite painful actually to think that life is unfair, that there is no reason for your poverty or for your struggling condition.  Ignorance is bliss. Therefore many people actually choose the delusion that life is fair in order to escape the greater pain that may occur with the realization that great economic injustice not only exists but is getting worse.  The myth that the rich work harder than the middle class or the poor is actually quite strongly entrenched in the minds and hearts of the working class.  The reality that most of the income of the wealthy comes not from any labor at all, but rather from income derived from what they own, and from what they buy and what they sell does not penetrate.  This notion that the rich work harder, that that is why they are rich, persists and is amazingly resilient. Therefore the masses come to the delusion that life is fair after all, even in the face of growing inequality, because to think otherwise is actually quite painful.

Decadence

The masses of people are teased into High Mass Consumption. On countless entertainment channels be it in sit-coms, dramas, movies, or reality TV, the lifestyles of the obscenely wealthy are dangled.  They mesmerize and tease and the masses pine. When people realize that the lifestyles paraded before them are out of reach, they seek substitutes.  Some occasionally buy something lavish out of their meager personal savings or on credit, and in their fantasy lives for a day or a week, a month, however long they can indulge the fantasy they have a piece of it.  Others substitute massive quantities of cheap plastic stuff from Walmart. People are made to feel lacking because they don’t possess the goods and services that they wealthy have, so they make up for it by consuming a lot of “cheap products” or “cheap entertainment”. Quantity substitutes for quality and this is the decadence of High Mass Consumption.  It feeds the delusion of being better off.

Distractions

People may feel economically insecure.  They may realize that they are falling behind even as the super-rich mange to do better and better.  People may well go bankrupt in the United States because of mounting medical bills.  In both the US and in Western Europe as they are approaching retirement, people may well realize that their pensions and other social safety nets are being threatened, but the people have so many and so abundant distractions.  We have cell-phones, the internet, videos, movies, and we can increasingly access all of our favored forms of entertainment on all our devices.

We may not be able to afford an absolutely critical medical procedure, or our children or grandchildren may find higher education increasingly unaffordable.  But we still will have a plethora of distractions.  We might in fact even use our distractions on social media to post a whimper of a protest or two, much along the lines of what Herbert Marcuse, long ago in the 1960’s, referred to as the process of de-sublimation in One Dimensional Man. So now even our protests become forms of entertainment to distract us from real change, from real revolution.

In the days of Ancient Rome the masses were appeased with ‘bread and circuses’ with a pittance of economic security and abundant entertainment. Today the masses are appeased ONLY with entertainment, albeit ever more lavish and abundant, even as the pittance of economic security is gradually whittled away.

Debt

There has been an explosion in Household Debt particularly among people who think of themselves as middle class, people who until recently thought of themselves as having good jobs. This has taken the form of Home Equity Loans and Second Mortgages particularly in the United States.  But increasing household debt is widespread globally and includes various forms of student loan debt, consumer debt, micro-credit, and otherwise.  As more and more individuals find their income increases paltry or even non-existent, or declining, increasing ones debt allows many to better maintain the illusion of being better off than they actually are.

The Financial Crisis of 2008 should be a testament to the fact that increasing household debt in all forms is unsustainable.  Ever increasing debt burdens for families is not an effective long term strategy for dealing with wage stagnation and decline in the face of ever increasing income inequality.  Yet there can be no doubt that these rising debt levels will continue in the near term as hundreds of millions of people try to either cling to or reach a living standard that increasing inequality is putting out of reach. The increasing debt levels will continue until the next bubble bursts.

Drudgery

On July, Candidate Jeb Bush, asserted “Americans need to work longer hours.” This is his path to prosperity.  The simple fact is Americans tend to work longer hours than most workers in the other OECD countries.  Also full-time workers have seen their hours worked per week increase in recent decades.  This has been well documented by Reich and others. Increasing hours worked allows workers to maintain a higher living standard than otherwise in the face of stagnant or falling wages.  That a serious presidential candidate can propose working even more hours bellies that many are only remotely conscious of the fact that more hours of drudgery are being chosen.  Working more hours allows the illusion of being better off. People are either not fully consciously of this choice or are merely accepting of it as a reality of life. The fact that a presidential candidate can suggest working even more hours and not pay a political price means that the American working class is not exactly ripe for revolution, or even significant political change.

De-solidarity

Today there is a tremendous lack of solidarity among working class. Point out to an individual worker that another worker has a better benefit plan or pension, a higher hourly rate, more sick days or more vacation time, instead of that worker demanding the same for himself he is more likely to be riddled with envy to the point of feeling like that other workers is getting something they do not deserve.  A few decades ago a sense of labor solidarity existed.  A greater benefit for a worker anywhere was a stride for workers everywhere.  If a particular worker was without what other workers had gained, it was viewed as being possible to successfully demand it for oneself. Today if some workers have greater security or sick days than others, the media and business interests go to work stirring up resentment?  Why should they have that; becomes the question for the worker who lacks benefits, rather than “I support my worker brothers and sisters, and eventually I will have it too.”  A few years ago a local politician running for office put up a billboard that said, “public school teachers get more sick days than you do”.  The implication was vote for this politician and he will come down hard on teachers and take away their supposed excess benefits. 

Deception

More subtle and sophisticated propaganda exists today than ever before, striking from many alternative directions and angles.  It is found in the media, the news establishment, in entertainment, in social media, and even recreation.  It is promoted by the corporate paymasters and conglomerates.  Not only is there the lack of a working class press, there is a lack of an independent press.

Whatever is good for corporations and business we get, whether the people desire it or not. People don't want the standardized educational testing. People didn’t want so called bankruptcy reform.  The people don't want what is called free trade in the form of the WTO or the impending Pacific Basin Initiative. People didn’t want the privatization of public assets.  People curse austerity but keep getting it, no matter who is in office.  All of these, from educational testing to austerity are good for business and corporations so never mind what the people want.

All of these are good for business in general, or benefit specific types of corporations. On the other hand stricter environmental standards or greater pay for workers are quite popular among the people, but because the corporations won’t benefit these don’t happen.  On the other hand if it becomes popular to broaden basic human rights and tolerance and lessen or even eliminate discrimination; that can happen because greater tolerance is good for business as it broadens the consumer base.

The deception has been so great that one has to wonder if Democracy itself still really exists.  Consider this partial list:

De-Democratization

The people vote one way but oftentimes get what they actually voted against.

Whoever is in power be it Democrat or Republican or in Europe Labor/Progressive/Socialist or Conservative/Free Market even though the people do not want certain things, they still keep getting them delivered to them.  So do we really even still have democracy in what we like to call the western democracies?

1, Austerity, the people of Greece voted for Syriza, as the anti-austerity party: they even said no to austerity in a referendum but in the end the politicians seem hell bent on even greater austerity.
2, So Called Bankruptcy reform making bankruptcy harder and harder to declare was passed in a bipartisan vote, without much discussion or media attention in the early years of the George W. Bush Administration.
3, So Called Free Trade agreements -Obama is the perfect example championing the Pacific Basin Initiative, duplicating what Bill Clinton did previously with NAFTA and the WTO, as did all the recent Republican Presidents.
4, So Called Education reform complete with standardized testing whether in the form of Common Core in the Obama Administration or No Child Left Behind in the George W. Bush Administration.
5, Selling off public assets was forced upon Russia in the early days of transitioning to a market economy.  In the UK and throughout Europe, public asset sales of mail, of transportation networks, water systems and the like have continued under both Tory and Labor governments, conservative and socialist alike.  And now even with Syriza in power in Greece, the stage is set for even more privatization.

So, even when the people do vote for real change, the change doesn’t happen.

Myth

Another deception is the active promotion in the media and elsewhere of the myth of the job creators.  According to this myth, it is the rich who create jobs.  The rich save and in so doing create jobs.  A key corollary of this myth is that tax rates must almost constantly be reduced on these job creators or they will not be able to create jobs.  A substantial portion of the working class electorate firmly believes this myth. Robert Reich is absolutely right, when he states the real job creators are the middle class and the poor.  Jobs are created by people who demand goods and services.  Both the Great Depression of the late 20’s and 30’s and the very recent Great Recession prove we cannot always count on demand being there, in sufficient amount to create jobs, particularly in the face of increasing inequality.  The rich do not spend, they save; so sufficient aggregate demand for job creation must come from the middle class and the poor.

We cannot count on sufficient aggregate demand. But we can count on people chasing profits, starting businesses to supply goods and services that are demanded.  Business responds to the profit motive, they maximize profit, and the q that maximizes profit is the same regardless of the profit tax rate.  Rewarded with profit, they need no further reward.

Dumb and Dumber

There is another deception that I like to call the Dumb and Dumber deception.  It comes from a scene in the movie ‘Dumb and Dumber’ starring Jim Carrey and Lauren Holly.  Jim Carrey has been romantically pursuing a totally uninterested Lauren Holly.  The two inadvertently become stranded on a ski lift chair. Jim Carrey asks “So do I have any chance with you at all? She responds, “Oh maybe one in a million”.  A very happy Jim Carrey says, “So I do have a chance then.”  It has become quite popular for some politicians and free market enthusiasts to proclaim that rising inequality is not problematic, and is not unjust so long as people, have some chance, no matter however slight to rise.

In the 2012 campaign for the Presidency, Mitt Romney proclaimed his support for the right of every waiter to rise, through education, or seizing opportunities.  This served as concern for social injustice for many.  Life is fair so long as there is a chance to rise. But true social justice would not end with the right of waiters to pursue other jobs. It would entail the right of all waiters and waitresses to rise as a class.  Social justice demands a livable wage with dignity for all workers however they are employed, so long as someone is doing the work.

Divide and Conquer, is the final and the most sinister deception.  It intentionally stirs the pot of fear and hatred. It tells the working class that indeed they are suffering but casts the blame on immigrants, religious, ethnic, and racial minorities, and sometimes even still on women.  It is so sinister that sometimes it even pits one minority or disadvantaged group against another.

Conclusion

Inequality is increasing within most countries across the globe.  The increasing inequality is particularly well documented in the case of what we call the western democracies.  Yet the working class is not exactly on fire with revolution or even voting that often or consequently for significant economic change.  This paper has explored what are the likely reasons why.  This paper invites more dialogue on those reasons, for surely we must come to more adequately understand the reasons for the complacency of the working class, if we are to move forward on a path to greater equality.

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References

Brown, Sherrod, The Myth of Free Trade, The New Press, 2006
Hartmann, Thomas, Screwed: The Undeclared War on the Middle Class, BKCurrents, 2007
Kuttner, Robert, The Squandering of America, Alfred A Knopf, 2007
Marcuse, Herbert, One Dimensional Man, Beacon, 1964
Phillips, Kevin, Wealth and Democracy, Broadway, 2002
Piketty, Thomas, Capital in the Twenty-First Century, Belknap/ Harvard University Press, 2013
Reich, Robert, SuperCapitalism, Alfred A. Knopf, 2007
Stiglitz, Joseph, The Price of Inequality, W.W. Norton, 2013