If I were in the
classroom today, teaching government to seniors as I did for many years, I would
probably hit on a certain theme often between now and the next presidential
election. I would use the level of income
inequality as a way to approach many policy questions, because there seems to
be at last a point of agreement between Democrats and Republicans. Both parties have placed, at least as far as
their current language indicates, the problem of income inequality on center
stage. The benefit of utilizing this
theme is that not only is it a truly important issue and going to be a
recurring topic of political discourse in the media, but it also blends nicely
with the other course seniors take: economics.
As do most social studies programs across the country, south Florida
offered American government for one semester of the senior year and economics
the other. So here is a theme that
allows a teacher to carry it over the thirty-six weeks and a vehicle by which
to reinforce lessons over that time.
Both parties are
concerned with income inequality; they approach policy, though, from different
perspectives. By using this opportunity
to look at inequality, students can research each perspective and determine
which party comes closer to effectively addressing this serious problem. It seems that this attention, on the surface
anyway, is a significant shift for the Republican Party. The last presidential election was noted with
the party’s nominee being quoted as saying how Democrats could rely on 47% of
the vote because it catered to the “takers,” those voters who receive
government assistance of one form or another. Republicans, by implication, are that party
that represents the “doers,” people who work for their livelihood and depend on
their own efforts to meet their needs and wants. Until
recently, the charge by Republicans is that Democrats engage in envy politics;
that is, appeal to those who are envious of the success of those “doers.”
But now that we are in
a new cycle – the last one being so unsuccessful – a new strategy seems to be emanating
from many of the potential Republican candidates. The message I am hearing is that the reason
there is so much inequality is the economic policies of the current president. This reveals a lot about how Republicans “see”
the problem. I write see in quotes
because I feel the party senses that inequality is so rampant that denying it
or blaming it on such large numbers of the electorate is
counterproductive. What they have been
spouting feels as if their rhetoric is just a way to accommodate the practical
political realities associated with the problem. They have hit on this argument so as to talk
about it and to promote policies they favor due to their constituency – the business
class – and at the same time hopefully entice those who will buy into this
message. The message, in simple terms, is
that President Obama’s policies have created disincentives to the business
class – in terms of high taxes and over-regulation – so that they,
businesspeople, are discouraged from creating those jobs that could provide the
type of income that would address the levels of inequality.
Each party has worked
around two visions of equality that have had a degree of popularity in our
political tradition. As I described them
earlier in this blog, they are:
•
Equal Opportunity, Limited Rewards – General belief
orientation which views persons who enjoy superior human assets (e. g.,
intelligence, physical dexterity, humor, etc.) due to their personal efforts
are entitled to above normal considerations in society in the form of status,
wealth, material possessions, etc. These
advantages, though, are limited only to areas associated with their earned
accomplishments or contributions to society.
Any entitlements acquired as a result of employing these assets are time
limited as a recipient must continue to demonstrate his or her worthiness. Said rewards, other than status, must be
purchased and are not distributed to beneficiaries due to membership in any
class or family. Monetary reward payoffs
for an individual’s contribution or for his or her status must be within
limits. That is, they should not
unreasonably exceed the person's contribution to the welfare of the society or
provide such a level of financial standing so as to secure for him or her an
ongoing, established source of benefits.
•
Equal Condition – General belief orientation which views persons
who enjoy superior human assets (e. g., intelligence, physical dexterity,
humor, etc.) due to their personal efforts are entitled to above normal
considerations in society in the form of status, wealth, material possessions,
etc. There are no limits to that
compensation other than as a result of the vagaries of the economic or political
system. In capitalist societies, that
would be the market. Other than status,
all entitlements are to be purchased and monetary advantages do not entitle a
person to unequal advantages under the law.
The orientation extends to prohibit any restrictions on monetary or
other types of rewards as long as the rewards reflect labor compensations,
dividends, rents, or profits. Advantages
are purchased and are not the product of membership in a family or class. The labor value of any person is based on its
market value.[1]
Democrats tend to adopt
the first of these views – Equal
Opportunity, Limited Rewards – and Republicans the second – Equal Condition.
Lessons that utilize the theme of inequality, I believe, should place the
study in some historical context and this ongoing distinction of views – the ones
described immediately above, is helpful in that endeavor.
In addition, lessons should describe and explain main factual
information. One fact is that the move
toward such high levels of inequality was not developed overnight. We can detect increasing levels from the 1980s
and the Reagan administration. Another
fact is that the consensus among economists as to the causes of inequality are
technological changes that have facilitated the exportation of higher paying
jobs and the elimination of manual labor jobs, neutralization of labor union
power, the rise of financial services, and trade policies that have lowered
trade restrictions. Little to no
attribution has been extended to Obama policies. Another point is that Obama, as president,
enjoyed only two years with a cooperative Congress. Since the 2010 midterm elections, Republicans
have controlled the House of Representatives and have enough votes in the Senate
to block any of Obama’s efforts to address inequality. By the same token, Republicans have been
blocked by the fact that a Democrat has been in the White House.
As for the economic conditions that characterize this inequality, there
are many. For example, the ratio between
Chief Operating Officers and the typical worker is 200 to 1. This is at historic highs; it used be 30 to
1; as Nobel Prize winner Joseph E. Stiglitz comments, it is hard to believe
that the productivity of these CEOs has increased so dramatically of late to
justify such increases in this ratio. By
way of comparison, the ratio in Japan is 16 to one.[2] And there is evidence that this is a
particular US problem; not all modern economies are experiencing these levels
of inequality and those nations which enjoy higher equality have not suffered
as a result. Between 2000 and 2010, high-taxing
Sweden that has policies guaranteeing much higher levels of equality – such as
universal healthcare – grew economically at a faster rate than the US.[3]
Lessons can teach such theoretical tools as the Gini coefficient. This gives a numerical representation of how
unequal income is distributed in a particular economy. The coefficient gives an economy the score of
zero if income is distributed equally among all of the population (perfectly
equal) and a score of one if all the income goes to one person (or household,
depending how the numbers are designated); this is perfect inequality. All economies fall somewhere between these
two end points of zero and one. In this
coefficient, “equal” societies have a .3 score, while unequal societies have a .5
or above; such high scores are seen in very underdeveloped economies such as in
Africa. Today the US is .47, up from .4
in 1980.[4]
Armed with such facts, students can study the policy proposals that are
bound to be espoused in the upcoming election campaigns. May the fun begin.
[1] These orientations should be viewed as ideal beliefs
and, in real life, are subject to compromising behavior. In a recent book, Capital in the Twenty-First Century, French economist, Thomas
Piketty, argues that due to the accumulation of capital there has developed an
entrenched class who is benefiting from income based on that capital. This mirrors the conditions of the Gilded Era
and other times of skewed wealth and income to the top of the economic pyramid.
[2] Stiglitz, J. E.
(2012). The price of
inequality: How today's divided society
endangers our future. New York,
NY: W. W. Norton and Company.
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