The Dangerous Consequences of Growing Inequality

The following is an excellent excerpt from the book “ECONOMIC APARTHEID IN AMERICA; A Primer on Economic Inequality & Insecurity” by Chuck Collins and Felice Yeskel from Chapter 1 “The Dangerous Consequences of Growing Inequality” on page 30 and I quote:
Kerula, India: The Benefits of Greater Equality
“There are places on earth where we can get a glimpse of what a more equal society would be like. The Indian state of Kerula has been much studied because of its relatively small levels of inequality. In Kerula, the income disparity between the top 10 percent and the bottom 20 percent of the population is only 3.5 to 1. In the United States, the disparity is 12 to 1.
What does this mean for life in Kerula? Even though Kerula is materially much poorer than the United States and many other countries, it ranks very high in a number of quality-of-life indicators. Kerula is characterized by low crime rates, long life expectancy, and a lower infant morality rate. It has the highest literacy rate in India, greater than 90 percent. With approximately 32 million residents, Kerula is the size of California. While California has almost 200,000 people in prison, Kerula has only 5,000.
In Kerula there is a strong commitment to ensuring bread and affordable access to public services such as education and basic needs like electricity and food. Taxes are progressive and consumption is low.”
Social Polarization and the Withdrawal of the Haves – In 2004, Senator John Edwards ran for president with a stump speech decrying the polarization of our society as “two Americas.” But almost a decade earlier, the private investment newsletter Taipan, published in Baltimore, began one of its issues with the following image: “An unstoppable wedge is about to be driven through the heart of America. It is a wedge of technology and culture that will divide this nation into two very different parts: the haves and the have nots. . . those who make the leap into the economy of the future and profit, and those who are left behind, trapped in dying neighborhoods and a dying economy.
In one part, crime will spread. Homes will be boarded up. Gangs of fatherless young men and boys will roam the streets. People will live shorter, meaner, poorer lives. Real estate prices will fall. . . entire areas will be abandoned.
Meanwhile, just a few hours’ drive from these living nightmares will be some of the finest environment ever created on the planet. These enclaves of peace and prosperity will be protected by geography and electronic fortifications. And they will benefit from the technological breakthroughs that will totally transform our economy and our lives. They will have no factories and no smokestacks. But they will be centers of the new economy. . . and the upscale neighborhoods of the 21st century.
In our dying cities and declining suburbs, the life expectancy of the average American will drop to 40 years for males. Poor heath habits, pollution, crime, a resurgence of tuberculosis and other diseases will contribute to a shortening life span. Infant mortality, which right now in our inner cities is about the level of Bangladesh, will rise even higher.
Meanwhile, in the lush enclaves of the new wealthy, many people will live to be 120 years old. Why? Because much of the secret to better health and longer life is in lifestyle. And these prosperous enclaves will have the highest standards of living in the world.”
This powerful depiction of two Americas is designed not to galvanize a movement for a fairer economy but to sell a product: in this case, a financial newsletter. If you felt a chill reading it, it had its desired effect. The newsletter manipulates people’s fears about the real dangers of growing inequality so that they will subscribe, and increase their chances of joining the “haves.”
When historian Arnold Toynbee analyzed twenty-one past civilizations that had collapsed, he determined that there were two common factors that led to their demise. The first was concentrated wealth and the second was inflexibility in the face of changing conditions. As employee-ownership expert Jeff Gates writes, concentrated wealth and societal inflexibility are “two sides of the same coin.” concentrated ownership leads to inflexibility when what societies need in greater cooperation, adaptability, and “locale-specific sensitivity.”
Unfortunately, the anti-utopian vision of two Americas is the direction in which our nation is moving. It is a likely picture of what our future holds when the wealthiest 10 percent of the population controls over 70 percent of the nation’s wealth and an even greater share of political power.
What does it mean when this richest 10 percent have essentially privatized their personal needs and withdrawn to “prosperous enclaves”? What happens to public services like schools, parks, transportation, and so on? The richest 10 percent are less likely to send their children to public schools; they have private schools. And even when they do send their children to public schools, schools in wealthy areas are more attractive and well equipped because of the inequities in property taxes that fund public education in most jurisdictions.
The wealthy are less inclined to use public parks and recreation areas because they have private country clubs and summer homes. They do not rely on public transportation (though they drive on publicly financed highways). They do not need cities, except for downtown offices, the occasional sporting event, or high-culture performance. They do not always need public police and trash pickup, as many have private security forces and private trash-haulers. They don’t need Social Security; they have private retirement funds. The wealthy have withdrawn from the institutions and public forms of shared common security that the majority of citizens depend on. They come to resent paying for public services they don’t use. They lobby for reductions in money for public services, taking these resources and political clout with them, and build private societies separate from the majority.
Things are great. Just don’t leave your room.
“A visiting European official said during the G-7 economic summit in Denver in 1997: “Americans keep telling us how successful their economy is—then they remind us not to leave our hotel at night.”
When the powerful no longer have a stake in the commonwealth, the common good suffers. This creates a “rush-to-the-door” phenomenon in our society as the withdrawal of the wealthy causes others to withdraw. When the quality of public transportation deteriorates, some people opt to drive their cars instead of fighting to improve bus service. Antigovernment attitudes become self-fulfilling, self-reinforcing prophecies as resources for public services and institutions decline.
As public services and the quality of life in nonwealthy communities deteriorate, those who can get out leave. Those choosing to withdraw include not only the richest 10 percent but anyone in the top half of the country’s income earners who can afford to. They move to the suburbs, small towns, or gated communities. In some cases, they remove their children from public schools and enroll them in private schools. Such patterns further reinforce existing racial and class divides in America.
The problem is, however, that it is very expansive to privatize all of one’s needs. For many in the middle class, the costs of moving to more expensive communities, commuting, parking, and sending their children to private school are out of reach. To attain these benefits, families increase the frenzy of their private lives, take on second jobs, increase personal debt, and isolate themselves from family and community. Just when they most need to be part of the community sphere and join civic institutions to improve their lives, they have no free item.
Even families in the top 20 percent—those with annual incomes over $94,000—sometimes feel economically and psychologically stretched like a drum. They are paying the costs of private schools, long commutes, expensive houses in affluent communities, and exotic vacations to recover from their exhaustion. Maintaining a privatized lifestyle forces many people onto an economic treadmill, even though to judge from their housing and consumption patterns, Robert J. Samuelson and others might call them “successful.”
The corollary is that a society with less polarization of income and wealth could invest more in the commonwealth and in our shared security. The need for privatizing security and other services would be reduced because the community institutions that provide for people’s needs would be stronger.
You Are On Your Own: The New Individualism – This polarization has a dangerous psychological effect as well. If you cannot rely on society for any real security, then you and your family are on your own. There is an entire industry built on privately meeting people’s individual security needs—private pensions, supplementary catastrophic health care insurance, disaster insurance. Put children into the mix and it adds another layer of worry and expanse. These industries pepper us with advertisements to the effect of “What If. . . Disaster Strikes? And “If You Die, What Will Happen to Your Children?” In the years since the 2001 terrorists attacks, these feelings have only intensified.
All parents want the best for their children. If you want your child to go to college, we are told, start saving now. “Your child may only be two years old, but with state of public higher education in jeopardy, it would be imprudent not to save up for a private college,” advises one magazine for parents. The estimated four-year tuition total for an Ivy league university in the year 2016 will be $364,800 dollars. Four years at an average public college will cost $114,786. Financial planners estimate that if you want your child to afford four years of tuition, fees, plus room and board, for an in-state public university, you must start saving $319 a month starting on your child’s date of birth. If we do not want our kids saddled with college debt, then we’re stuck on the treadmill.
In an insecure world, where one’s security depends on having access to wealth, there is tremendous pressure to accumulate wealth and pass it on to our children. This, of course, is virtually impossible for many people whose annual income barely covers their living expenses. But that doesn’t stop people from literally killing themselves trying.
Low-income and working-class families make tremendous sacrifices for their children and work hard to leave them some escape from the economic treadmill. This includes working longer hours, taking dangerous jobs, and forgoing vacations and rest. Many people sacrifice time with loved ones in the present in the hope of giving them a better future. Being forced to make these trade-offs should be unacceptable.
Among the middle and upper-middle class, the drive for security pushes people into professions with high incomes but not necessarily high satisfaction. Who how many Picassos or cancer researchers are working as unhappy bankers or lawyers? In The Cost of Talent, Derek Bok, former president of Harvard University, describes the enormous cost to a society when talented people enter into high-paying careers in legal or financial professions. Bok shows how the income of professionals such as lawyers, stockbrokers, and business executives has outpaced incomes earned by teachers, social workers, researchers, government officials, and other professions concerned with the common good. This growing disparity leads to the drain of talent away from public-service vocations and further contributes to the growing economic divide.
Will My Child Be the Next Oprah? Bobby Bonds? Michael Jordan?
“A television advertisement for financial services shows a father and five-year-old son playing catch with a baseball. The young boy continually swings and misses the ball. Grounders roll through his legs. The message: You better start putting money into a trust fund for junior because he’s not going to become a highly paid professional baseball star.
How many of us can risk the possibility that our children may not display the entrepreneurial, athletic, or artistic talent to rise to the top in our winner-take-all society? Sure, we hope they are hard workers who possess above-average intelligence, but that does not seem to be enough to be economically secure, let alone prosperous these days. We cannot even assume equality of opportunity, decent pubic education, or access to affordable higher education. The only assurance for the few who can afford it is to pass on private wealth.”
Gated Communities and Bigger Prisons – Nothing symbolizes the fragmentation of community in the United States more vividly than the expansion of gated communities among the affluent alongside the burgeoning prison-industrial complex for the poor. Housing for all income levels is increasingly being built behind gates and walls with entrances patrolled by armed guards. In communities like San Antonio, Texas, one in three new homes being built is in a gated community. An estimated 40 percent of new homes in California are built behind walls. The national number is expected to double in the next five years.
In many respects, the growth in gated communities is the latest chapter of the “white flight” that has led to the disinvestment of so many urban centers over the last four decades. The majority of gated communities are in Texas, California, Florida, and Arizona. All of these states have had large influxes of new Latino immigrants, propelling a new spate of racism and housing segregation. Most gated community dwellers are white and affluent, with incomes between $60,000 and $200,000 a year.
The growth of gated communities often precedes tax battles, as inhabitants begin to resent paying for services that they themselves have privatized. Journalist Christopher Parkes observes:
“Most gated developments pay for their own private police patrols and security guards. Traditionally communal services such as schools, parks, entertainment facilities and even street cleaning and maintenance are often privatized within the enclaves. The inhabitants are ever more reluctant to pay higher taxes to maintain government and city services outside their walls.”
Not every gated community is a bastion of the privileged. According to Fern Shen of the Washington Post, “Electronic gates and guard shacks have long been features of the nation’s wealthier communities and retirement developments. But in the last few years, gated communities have been mushrooming across the country and especially in the Sunbelt, offered at a wide range of prices.” In metropolitan Washington, D.C., new home developers are finding a significant market for moderately priced homes in gated communities. Battered urban dwellers can escape their old neighborhoods to buy houses starting at $95,000.
All this leads to a physical reinforcement of the growing economic divide in the structure of communities. In their book, Fortress America: Gated Communities in the United States, authors Edward Blakely and Mary Gail Snyder warn that behind the gated community trends of suburban separatism and the privatization of social needs lies a rejection of the sense of mutuality on which this country was founded.
There is another type of gated community that is proliferating in the United States due to growing inequality: prisons. The number of inmates in jails and prisons rose again in 2002 to over 2 million. Between 1985 and 20003, the incarceration rate more than quadrupled from 313 inmates per 100,000 residents to 1,423 inmates per 100,000. Blacks, who make up 40.3 percent of jail inmates, are six times more likely than whites to be incarcerated.
The prison-industrial complex now builds a new 1,000-bed jail every week to keep up with the demand for prison space. The stock of Corrections Corporation of America, the nation’s largest private for-profit prison corporation, has increased tenfold since 1994. Unions representing prison guards are one of the fastest-growing sectors of the union movement. Like any industry, the prison economy needs raw materials. In this case, the raw materials are prisoners. The prison-industrial complex can grow only if more and more people are incarcerated. Corporations have a vested interest in prison expansion and longer prison terms.
But the costs are extremely high, both in absolute dollars and in human costs. U.S. taxpayers pay an estimated $65 billion a year for incarceration. Sixty percent of the incarcerated population has substance-addiction or abuse issues, with a majority being nonviolent offenders. In California, it cost $3.5 billion in 2003 to run the state’s prison system, but the costs are expected to rise to $1.3 trillion over the next two decades. The annual cost of jailing someone is over $22,500. A year in prison and a year at Princeton now cost about the same; only the curriculum is different.
A wide variety of evidence shows that when the social fabric is stretched too far, we can no longer successfully live side by side. Economic inequality is the single greatest factor that puts our nation’s social cohesion at risk. We all have a stake, even the very wealthy, in building a society with greater equality and security for all. In the next chapter, we will examine the dimensions of economic inequality in the United States.”

(WHEN YOU’RE WORKING YOUR WAY UP THE LADDER SO YOU CAN HAVE A SUCCESSFUL RETIREMENT LIFE, YOU WANT MORE EQUALITY. YOU SHOULD EXPECT TO PAY INCOME TAXES AND IT MUST BE BASED OFF YOUR NET INCOME NOT GROSS. YOU MUST MAKE SURE THAT YOUR GOVERNMENT HAS A FAIR INCOME TAX SYSTEM, WHICH IS ENFORCED AND BASED ON ABILITY TO PAY. LIKE THE AUTHOR SAID ON PAGE 48: “Wealth comprises assets (all the stuff you own) minus liabilities (what you owe). This remainder is called “net worth.””
THAT MEANS IF YOU DON’T HAVE A LOT OF BAD HABITS LIKE DRINKING, SMOKING OR GAMBLING TO WASTE YOUR MONEY ON, THAT YOU ARE GOING TO GET YOUR FARM OR A HOME IN TOWN PAID FOR AND HOPEFULLY, YOU CAN WORK YOU WAY UP TO THE MIDDLE CLASS.
LaVern Isely, Progressive, Independent, Overtaxed, Middle Class Taxpayer and Public Citizen and AARP Members

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About tim074

I'm a retired dairy farmer that was a member of the National Farmer's Organization (NFO). Before going farming, I spent 4 years in the United States Air Force where I saved up enough money to get my down payment to go farming. I also enjoy writing and reading biographies and I write about myself as well as articles and excerpts I find interesting. I'm specifically interested in finances, particularly in the banking industry because if it wasn't for help from my local Community Bank, I never could have started farming which I was successful at. So, I'm real interested in the Small Business Administration and I know they are the ones creating jobs. I have been a member of Common Cause and am now a member of Public Citizen as well as AARP. I have, in the past, written over 150 articles on the Obama Blog (my.barackobama.com) and I'd like to tie these two sites together. I'm also on Twitter, MySpace and Facebook and find these outlets terrifically interesting particularly what many of these people did concerning the uprising in the Arab world. I believe this is a smaller world than we think it is and my goal is to try to bring people together to live in peace because management needs labor like labor needs management. Up to now, that hasn't been so easy to find.
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