The U.S. is the wealthiest country in history. About 30% of the world’s wealth is here, more than all of Europe. Yet, our country continues to maintain some of the worst economic inequality among wealthy nations.
One could argue that this type of inequality is the issue of our time, on par with the climate crisis. Coincidentally, we could properly confront both of these if we found a path through partisanship; we have the resources and power to do address them.
But inequality is not a looming crisis like climate change. Instead, it has nestled into everything American — it’s been here since we became a country — and confounds people’s livelihoods. It’s quite similar to the pandemic we’re experiencing now, a bug that exacerbates existing problems or pre-existing conditions.
Living in a country with immense wealth and power but seemingly fine with the status quo, I feel compelled to ask, more with each day: Do we deserve this? How can we reconcile the spoils we hold with the inequities endemic in our culture and government? Is everything we’ve built worth anything when this persists?
This isn’t a question posed to any singular person, wealthy or otherwise. Individuals of all backgrounds have advocated for equality, after all. Instead, this is a question for us, our community at large. We’re utterly failing ourselves as a people. We’ve allowed a ‘monopoly of wealth’ to grow here, both through policy failures and cultural shifts.
No, we don’t deserve the riches we have. But we could.
I. What does economic inequality look like?
Economic inequality takes countless shapes. Encountering the short end of this stick firsthand could mean the growing discrepancy between how much you make and how much everything in your life costs. It could mean you don’t have access to particular things — education, housing, transportation, food. On the other end, you might have no trouble in boosting your already-exceptional means. It’s not simply about low-income and high-income; it’s also about the mobility to move up and security from falling hard and losing your livelihood.
Observing it from 30,000 feet shows other statistical symptoms. For instance, the national average wage you’d need to have in order to afford a modest one bedroom home is $19.56, over twice as much as the federal minimum wage and higher than any state’s minimum. The proportion of people considered “rent-burdened” has risen steadily over the past several years, most severely for low-income renters. Meanwhile, homeownership remains restrictive toward people of color, shutting them out from building wealth in one of the only ways many can.
Economic inequality stretches its tendrils into most issue areas. High inequality has strong relationships with widening gaps in health outcomes, educational attainment, and affordability of the cost of living. Growing concentration of wealth and power for the few at the top of the income ladder means those on other rungs have less power in our democracy, as dollars are deemed an expression of free speech. Exorbitant expenses in lobbying and campaign financing ensure the voices of the wealthy drown out those of their neighbors.
Internationally, our inequality is measurable and comparable to our peers. Let’s look at one particular measure, the Gini Index. This calculates income inequality, placing countries on a scale of zero (“perfectly equal”) to one (“perfectly unequal”); higher scores mean more inequality.
The U.S.’ score on this index has been steadily rising for decades, according to the U.S. Census Bureau and the World Bank. We have the highest inequality by this measure among the G-7 countries and stand out among many other democratic countries. In other words, we have one of the most remarkable disparities between income strata in the world.
Social services — health care, housing assistance, emergency response resources, etc. — are meant to be a country’s way of equalizing the cost of living and addressing inequalities. The U.S. spends more on social services than any other country besides France, yet we have a much higher Gini coefficient.
Before concluding we need to ditch social service spending since our system isn’t functioning properly, there’s also this: We’re still spending less per capita on these services than many other affluent nations with lower Gini scores than us. That includes France and Germany both G-7 countries), but also Belgium, Luxembourg, Denmark, Sweden, Norway, Finland, and Austria.
These countries are spending more per person on social services, and they have remarkably lower inequality through this lens. Meanwhile other countries, though spending less overall and per person, also have better Gini index scores than we do. If we want to meet our peers and better address our economic inequality, we need to spend more and spend better, more efficiently.
II. How U.S. public policy got us here
Historically, economic inequality has always existed here. But for a time, it was much lower than what it is now, partly because of how we addressed inequality in the past following times of great strife.
Our most popular success story is the post-Depression/World War II boom. For roughly three decades, we saw unprecedented economic expansion, rising wages, and a growing middle class.
There are a lot of theories for this, many involving other developments at the time: spikes in union membership, more graduated income tax rates, expansion of higher ed. It’s actually a combination of these, but the huge growth and relatively low income inequality also stemmed from an expansion of economic access for women, immigrants, and Black Americans, according to Jim Tankersley’s The Riches of This Land. Simultaneously, the U.S.’ Gini coefficient stayed relatively flat and low.
But this changed in the late ’70s and ’80s. We started weakening anti-discrimination laws — decreasing access to the economy for minority Americans, women, etc. Labor laws were similarly weakened, with unions falling out of favor and membership falling. “Pro-business” policies that were really anti-union practices, mixed with deregulation measures for the banking industry, aren’t the only reason worker power declined (e.g. globalization). However, the impact of these changes is indisputable.
As this happened, our Gini coefficient began to climb; the earnings gap between white, affluent Americans and basically everyone else began to grow. The real success of the post-WW2 boom was over, even as the U.S. appeared to excel economically.
When the Great Recession began, we did not meet this moment in the same way we did the Depression and the Second World War. After several years of recovery, we looked to be succeeding again economically by several measures — a prolonged economic expansion, a hot stock market, declining unemployment.
At the same time, there was no real correction to the income inequality that preceded it. Instead, the wealth and income gaps have grown more severe. While income climbed for all, it skyrocketed for higher income individuals and households.
Simply, we didn’t take all of the right steps needed to address economic inequality at the time. Most notably, the recovery involved a great deal of government assistance to the financial industry and those who ran it. In other words, the high income actors that arguably catalyzed the economic meltdown were bailed out, while the majority of America was mostly left to its own devices. Instead of combating inequality, we sanctioned it.
We’ve also sanctioned this inequality outside of economic disasters. Over the last 60 years, we’ve lowered tax rates for our wealthiest far more drastically than for any other group. They now pay lower composite rates than the rest of America and have countless loopholes to escape fulfilling their obligations. We’ve also curtailed the scope of our social safety net. Both of these developments, enacted by both major political parties in the U.S., dovetail with a cultural shift.
III. Society’s views on inequality
Economic inequality isn’t news, and many know it’s a problem. In January, Pew reported that most Americans believe it’s a problem.
However, views on the causes and solutions vary depending on income and political party. Notably, conservative Americans were much less likely to fault the system in place for a person’s economic struggle than others surveyed. Instead, they were more likely to blame that person themself.
It’s not hard to reach this conclusion. You might be someone who worked incredibly hard to make ends meet and would go on to live exceptionally well. Meanwhile, someone else working within the same system didn’t meet a similar goal. What’s more likely, that an entire system favored one person over another, or simply that one person “didn’t try hard enough?”
This conclusion also coincides with one of our most warped American values, that you can achieve anything here as long as you set your mind to the task at hand. We live in the Land of Opportunity, after all. It’s why people who aren’t well-off sometimes buy into this conclusion that failure is a personal problem and not the fault of anyone else or anything larger taking place.
You can easily draw a line from this to views on human services. “I tried hard, but ‘they’ aren’t trying hard” isn’t that far from “why should I pay for someone else’s ‘government handout.’” Maybe they wouldn’t need my money if they just made better decisions.
Of course, we know things aren’t as simple as this. Discrimination in economic access and well-being based on sex, race, and income has a heavily studied and measured history that continues today. Countless people in our country do everything right yet are prevented from moving forward because of barriers we’ve allowed or put in place. Promises of prosperity are frequently empty for people of color, women, the impoverished, the homeless. It’s ludicrous to assert that our current level of inequality is due to “poor life choices.”
People on the other end of the political spectrum are more likely to believe this truth, that the current system is to blame rather than the individual. Most believe the federal government needs to do more to address it. However, most liberal Americans, along with conservatives, don’t support an expansion of benefits to low-income Americans to do this. This isn’t the same as a belief that a person’s problems are most likely their own fault, but it’s still a significant mindset to overcome. Existing benefit programs like SNAP are incredibly reliable and efficient; we know they work, so an expansion of some of these programs would have a profound impact in addressing poverty and inequality.
IV. Policy and the ‘social buy-in’
Over time, empathy in our culture and changes in how we perceive work and wealth have influenced public policies to different effects.
On the one hand, unfair sentiments and prejudices have always been present here. Framing of “the Other” has been pivotal in pitting people against one another to distract from the bigger picture about economic inequality. Nativism and fear of immigrants, misperceptions of rural or urban residents, and talk of who “deserves” support from a community or government have consistently drawn attention away from how wealth has been monopolized at the top.
On the other hand, an understanding that equality and economic mobility are virtually nonexistent has also persevered here. Abolitionism and views on wealth’s role in charity buttress much of the world we live in now; generally, we agree that all people deserve to be treated with dignity, live freely, and have the means to support themselves. None of these positive and negative perceptions happened in a vacuum. They regularly played off or prompted one another.
Where these cultural shifts intersect with public policy is key. The most profound changes have been two-fold in this way. Some are top-down whereas others are bottom-up, but in either case there needed to be a bridge between the policies and the people.
For instance, Theodore Roosevelt’s progress against monopolistic practices in the beginning of the 20th Century was assured largely because of public opinion. Congress, many of its prominent members beholden to banks and corporations, was forced to work with Roosevelt instead of aggressively against him because of that pressure. Conversely in the ’50s, the results of civil rights developments like Brown v. The Board of Education of Topeka and the Civil Rights Act of 1957 were initially toothless. State and local jurisdictions tended to ignore these, and they did little to address the racism existing in our culture. It took a massive movement and additional developments later to do this more effectively.
Simply, public policy changes will only get us so far. Real progress in the past has required a social buy-in.
Moving forward in addressing economic inequality will take enormous energy on the policy and social fronts. We will need to adapt ideas from our more equitable peer nations, invent new solutions of our own, and ultimately shift how we consider a person’s place in their community — and the community’s place in a person’s life. Otherwise, our national wealth is closer to worthless than worthwhile.
We need a cascade of public policy changes across the board at the federal level, and it should start with labor. To shift the balance back into workers’ favor, we need to strengthen labor laws and bolster unions so they can more effectively negotiate with employers. To stop states from allowing poverty wages, we need to raise the federal minimum wage and index it to the national median income.
Banking regulations following the Great Depression are part of why economic crises were less frequent last century; deregulations and other irresponsible corporate practices are why we suffered through the Great Recession. We can’t keep flip flopping between holding corporations and the financial industry accountable and giving them a pass. Entities like the Consumer Financial Protection Bureau need to be permanently empowered, ideally by changing how its leaders are appointed.
Improving economic access will require ensuring exceptional child care and pre-K programs, so parents can have the option of finding work if they choose. We need to expand SNAP’s scope and payout to meet the actual cost of food, rather than force individuals and families to choose between eating or paying for other things like rent. Better scrutiny on banks’ home loan approvals would make homeownership an achievable goal for more people or color, allowing them to build wealth in a way more common among their white neighbors.
Much larger changes would additionally curtail economic inequality and immobility. Education needs an overhaul, both in how we fund it and its curricula. The federal government needs to step up its contributions to school districts in order to end a reliance on property taxes that has ingrained education inequities. (This would also make the debate about charter schools moot since public schools would be better equipped.)
Students need to gain a better grasp of our history, particularly of poverty and racism, so they can meet our challenges with a compassion and understanding that many of us (including a certain senator from Arkansas) currently lack. We also need to do a better job in explaining the benefits to non-higher ed opportunities in their future, like the trades. High schools should be working closely with trade unions to establish these connections.
If a student does pursue a college degree, they shouldn’t have to mortgage their future to do so. We need to at least cap tuition costs at state colleges, keep interest rates low on loans, and offer new ways for people to pay these back in lieu of grinding out loan payments for years. And that’s the bare minimum; making college free should be the ultimate goal.
Improving health care, infrastructure, and climate policy should be viewed in the same light: The “bare minimum” requires significant change, but the real accomplishment is monumental progress. For instance, lower drug prices, better quality of insurance, and publicly available plans are good, but universal coverage is what we should aim for.
There would also need to be changes at the state and local level. Issues like voting, gun violence, transportation, and public safety frequently intersect with inequality. We disincentivize or criminalize voting for some, prompt crime and poverty through disinvestment, and answer these problems and more with policing and punitive measures that aren’t real solutions. We have a very serious disease, but we’re basically taking Ibuprofen and just hoping we get better when we conduct ourselves this way. This needs to end, and we can do this by strengthening voting access, reallocating state and local dollars to boost human services, and improving overall civilian oversight so communities have a better say on which values they hold dear.
This is a long (but not exhaustive) list of policies we need to pursue. To actually pay for these similarly requires steps at different levels of policy. Largely, we can fund these measures by undoing years of tax cuts for wealthy Americans and corporations, and changing how much we’re already spending in other areas like military and policing costs. States need to step away from a hodgepodge of excise taxes and implement proper graduate income tax structures if they haven’t already. Locally, towns, cities, and counties need to stop handing out huge tax incentives to attract large businesses; this just prompts corporations to take advantage of communities, and the jobs this might create typically don’t replace the tax revenue lost through those incentives.
In addition to being smarter with how we pool and spend our money communally, we’ll need the social buy-in. Without it, these measures won’t matter or even come to pass in the first place. Collectively, we need to reconfigure how we perceive work and wealth — what do these really do for us? What does economic well-being really look like? Awareness of each other’s successes and struggles is key — how different or similar are our individual experiences?
Empathy is everything yet it can be hard to teach; on a national scale, it feels impossible. But we’ve done something like it before. In the years following the Depression, the U.S. hosted public forums to teach the importance of democracy. These provided people of all backgrounds a place to learn why concepts like fascism — the appeal of which was growing here at the time — were incredibly adverse, and a space for them to explore their society and government.
These forums weren’t perfect. Though anyone could attend, participants were more likely to be higher earners or have additional schooling than the general population. But something in this vein could work today with some adjustments; the chance to connect with a neighbor is a precious commodity right now. We just need to try and make those connections.
Additionally, a movement to address this economic inequality akin to that of the ’60s is necessary. Arguably, it’s already here in the shape of protests against police violence, a movement to end inequality and injustice toward people of color by those who are meant to protect us. We just need to make sure we listen to movements like these, work with them, and march alongside them. But as long as many opt to shout them down in favor of the status quo, we won’t find the equality, justice, and unity supposedly at the heart of our American ideals.
We are one of the wealthiest and most powerful nations in the history of the human race. Even when accounting for periods of great struggle, that wealth and power has grown, and economic inequality and injustice with it.
This is what “American Exceptionalism” means right now: exceptional means and exceptional inequality at the same time. We’re in the wilderness, seemingly sure of where we’re going but knowing deep down that we’ve been lost for some time.
This didn’t happen accidentally. We chose this by shifting our understanding of “economic well-being” from an inclusive, collective movement for equality to a laser focus on individual wealth, siloed from that of a person’s neighbor or community. We went from we and us to I and me.
This isn’t to say there aren’t champions against inequality; it’s to say we’re failing on the whole. To move past this failure, we have to be bold, be smart, and be empathetic. Otherwise, we don’t deserve these riches.