Income Equality for Your Neighbors

Rick Flores

Professor Kevin Reardon

ENG 240

28, February, 2014

Income Equality for Your Neighbors

While income inequality is one of the most important issues that we face today, there are many prominent people that disagree.  While campaigning for the 2012 presidency, one candidate said that he was not concerned about the very poor (Johnson), while the other one made no mention of them. Both, however, vowed to help middle class voters with their problems. Income inequality, it seems, is a stone that very few presidential hopefuls have been willing to turn. How is it possible that a man who is not concerned with the poor can be considered for the highest office in the land? If the vast majority of Americans would benefit from having a larger portion of the nation’s income, why don’t they insist upon it?

Some of the prevailing reasons that the middle class/poor are slow to embrace the importance of income equality—despite its potential for improving the condition of almost every American—are misconceptions. Ideologies, lack of information and disinformation are propagated by representatives of the wealthy. While the influence of partisanship is commonly discussed, it will be easier to refer to ideology, since both of our major political parties are influenced by it. The notion that Democrats are not as American, or that everyone has the same chance of joining the ranks of the wealthy, are misconceptions that are willingly promoted; promoted by people who are aware that they are misconceptions.

The Shadow of Doubt

Although poor people and middle class people are adversely affected by income inequality, many of them are not concerned by it. “Americans in the upper fifth of the income stream make 16.7 times the income of those in the lower fifth, yet barely half (47%) of Americans think that the rich-poor gap is a very big problem for the U.S.”, according to a one study (Stokes).     

Some Americans are altogether unaware of the income inequality debate. According to a study by Norton and Ariely , “respondents vastly underestimated the actual level of wealth inequality in the United States, believing that the wealthiest quintile held about 59% of the wealth when the actual number is closer to 84%” (10). The respondents, who were roughly half liberal and half conservative were asked to assign a percentage of wealth to each quintile; a percentage that they thought to be ideal. “Respondents constructed ideal wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution, reporting a desire for the top quintile to own just 32% of the wealth” (Norton, Ariely, 10). The balance of the money was redistributed to the bottom two quintiles. Without a politician to frame the questions, and without any explanation to provide political context, 92% of respondents in the Norton, Ariely study did not think that income was distributed fairly in the United States. This shows that Americans are concerned about the middle class as well as the very poor.

Identifying With Mitt. During the 2012 presidential primaries, Matt Lauer interviewed former Gov. Mitt Romney, in what would become known as the “politics of envy” interview. During the interview, Gov. Romney assured Matt Lauer that anyone who questions business practices of Wall Street were merely envious of wealthy people. Romney made it clear that he would refuse to address income inequality, but he would provide tax cuts to the rich. There are clearly many Americans who believe as Gov. Romney does and, to them, Romney was being forthright and honest. There is also the possibility that he, like many others, is unaware of the research done on income inequality. The amount of money spent by special interest groups in order to have disproportionate representation should be taken into consideration. This may provide a third plausible explanation for the Governor’s gaff; he could have been promoting disinformation in order to protect the interests of the wealthy people that he represents.

Perhaps the American public feels like they have more in common with our politicians than what is actually the case. Americans are led to believe that certain political parties are against the Constitution and our forefathers, while others favor them. This was the subject of a New York Times article that said “Many Tea Party candidates and activists have tried to seize the moral high ground by explicitly identifying with the founders” (Chernow). Few Americans feel as though it is in the nation’s best interest to oppose our forefathers, so they choose the team that speaks of them most often; never wondering why a political party would aspire to be polarizing, instead of chancing their policies to scrutiny. This sentiment is reflected by a 2013 Gallup poll that found “Older Americans, those living in the Midwest, conservatives, and Republicans are relatively less likely to say the signers [of the Constitution] would be pleased [with the country] than their counterparts” (Newport).

Inequality According to a Forefather. Thomas Jefferson said in a letter to James Madison, “I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind”. Conservatives, including Tea Party members, are among the most likely to oppose policy aimed at reducing income inequality.  The most commonly discussed way for the government to narrow the gap is to increase taxes on the wealthy, which President Obama did in 2012. Another tactic, which is the subject of debate early in 2014, is increasing the federal minimum wage. Another idea is to cut taxes for the wealthy.

Gov. Romney, who does not believe in income inequality, proposed tax cuts for the wealthy anyway.  Those who are opposed to or uninterested in the subject of income distribution claim that this is the only option that will not slow the growth of the economy. At least one study shows that economic growth is not as beneficial to poor people as is income equality. According to a study by John Iceland, “If per capita incomes rise, on average, because of increasing employment and wages, for example, then it is natural to think that poverty will decline. However, economic inequality can mitigate the overall positive impact of income growth if unemployed and low-income workers do not enjoy the benefits of such growth” (499). This has been confirmed by many studies since then, including a study done by Apergis, Dincer, and Payne which determined that “a policy designed to lead to growth but also to an increase in inequality is not likely to be successful”. This study found a positive relationship between income inequality and poverty. Still, Americans still believe that economic growth is for the greater good.

Only in America

            There are Americans who ignore income inequality because of upward mobility. The idea is that they might be rich someday and they will not want to pay all of these taxes. These Americans subscribe to the notion that great fortunes are available around every corner in the United States. These people are waiting for a result that is not typical. To them, perhaps, initiating public policy that affects income distribution is somewhat of a drastic measure.

Progressive Ideas and Bad Press. Although it is common practice in other countries to examine income distribution when equality is skewed, wealthy people and their sympathizers suggest that the practice is unfair or even socialist. Income distribution and equality are concepts that are harmless unless combined with central planning and the absence of private ownership and free enterprise, yet they have a stigma attached them; certainly by design. At the same time, questions have been raised as to the validity of land and finance monopolies as free enterprise, but the government is thought to prevent these things.

Meanwhile, the very wealthy are not as reluctant to accept the government’s help. Public policy has always redistributed wealth from the middle class/poor to the rich. As a Washington Post article pointed out, free trade resulted in many Americans losing their jobs while the rich improved their situations, and laws like “right to work” pushed out labor unions and reduced wages (Meyerson). Special interests are very well represented, since it is unlikely that a secretary or a mom suggested this legislation.

For his part, President Obama delivered on those tax increases and continues to discuss the issue of income inequality. If he seems ambitious, it is due to the strength of the opposition that he encounters, and not the rate at which he is accomplishing the work. Consider what Linden Johnson accomplished in 1964 (without opposition) when his administration created Head Start, Medicare, clean air and water, and many of the programs that we are losing today. It is clear that there is a blockage in Washington. Some would have us believe that this is due to hapless, comically inept Congressmen who are derelict in their duties, but this is not the case. It is due to Congressmen doing an excellent job of representing the wealthiest among us.

Conclusion

So why would Gov. Romney say that he does not care about poor people or income inequality? Is it because he does not know any better? Chances are that he knows all too well. He was aware of what it would take to escape the Republican Primaries, and he said exactly what was expected of him. Either that or he managed to become Governor of Massachusetts, make a fortune and almost become president by using false logic, dismissing empirical data and relying on incorrect assumptions. And finally, why would a poor or middle class person be opposed or indifferent towards income equality? Couldn’t it be that they are going along with their representatives on the matter? This is problematic for that poor/middle class person because that person is no longer being represented by his or her elected officials. Americans choose to identify with groups that have excluded them from their agenda.

Works Cited

Johnson, Luke. "Mitt Romney: 'I'm Not Concerned About The Very Poor'" The Huffington Post. TheHuffingtonPost.com, 01 Feb. 2012. Web. 17 Feb. 2014.

Stokes, Bruce. "The Income Inequality Debate." Pew Research. Council on Foreign Relations, 03 Feb. 2014. Web. 25 Feb. 2014.

Norton, M. I., and D. Ariely. "Building a Better America--One Wealth Quintile at a Time." Perspectives on Psychological Science 6.1 (2011): 9-12. Print.

Chernow, Ron. "The Founding Fathers Versus the Tea Party." The New York Times. The New York Times, 23 Sept. 2010. Web. 28 Feb. 2014.

 Newport, Frank. "Most in U.S. Still Proud to Be an American." Most in U.S. Still Proud to Be an American. Gallup.com, 04 July 2013. Web. 28 Feb. 2014.

 "Equality: Thomas Jefferson to James Madison." Equality: Thomas Jefferson to James Madison. N.p., n.d. Web. 28 Feb. 2014.

Iceland, John. "Why Poverty Remains High: The Role of Income Growth, Economic Inequality, and Changes in Family Structure, 1949-1999." Demography 40.3 (2003): 499-519. Print.

Apergis, Nicholas, Oguzhan Dincer, and James E. Payne. "On the Dynamics of Poverty and Income Inequality in US States." Journal of Economic Studies 38.2 (2011): 132-43. Print.