WHY IS THE DIVIDE BETWEEN THE RICH AND THE POOR NOT AN AMERICAN OUTRAGE?

…The defining image of the 1930’s “Income Inequality”.

 

 

American's don't understand today's income inequality.

Many of us have seen and heard that the wealthiest 400 Americans hold more assets than the bottom 150 million Americans combined.  In addition, that the top sliver of financial earners enjoy nearly all the gains from Wall Street's growth versus the stagnant growth of wages and earnings for those millions of Americans at the bottom of the pile.

The reality of just trying to visualize these facts shows just how wide that chasm really is between the “haves” and the “have-nots”.

So, where are the millions of Americans that should be marching on Washington, protesting and going on massive strikes about this worst income inequality in the US since the Great Depression?

This question was asked some time ago and was responded to in an essay by a very deep thinker at the Cato Institute named Will Wilkinson.  Wilkinson’s response was in relation to what the technology changes of the last 100 years have had to do with the past visual issue of income inequality.  I do believe his response does hold some, but not all of the answers.

He starts by making his point in comparing the owning of refrigerators and automobiles……and no, I’m not kidding?

Ok, here is his point.

Back when only the rich could afford an automobile versus the poor individual that had to “hoof-it”, that situation showed everyone a big visual difference between the “haves” and the “have not’s”.  But today the difference between driving a good, affordable used car and a lavish new Tesla “is practically undetectable compared to the difference between motoring in a car, versus hoofing it.”  Both persons today are getting from point “A” to point “B”, and they are both getting there to do their jobs, regardless of any difference in their incomes.

The same can be said about the difference between a rich Wall Street trader and the average auto worker owning two different refrigerators. Per Mr. Wilkinson, ““At the turn of the 20th century, only the mega-rich had refrigerators or cars,” he wrote. “But refrigerators are now all but universal in the United States, even as “refrigerator inequality” continues to grow.”

His point about this? “The difference between the rich man’s $11,000 Sub-Zero refrigerator, a virtual monument to food preservation, versus the poor man’s $250 fridge from Ikea, is smaller than the difference between being able to enjoy fresh meat and milk, and that of having no refrigerator. The Ikea model will keep your beer just as cold as the Sub-Zero model,” Wilkinson dryly wrote.

To Mr. Wilkinson, this difference today can help to explain why we don’t see American’s storming the barricades for dealing with today’s income inequality?  His point is clear.  Today, we don’t see this major inequality from our day to day points of view.

But another more real issue are the perceptions of income inequality of those involved.

When asked how large the actual inequality split is, of those who have what, most people have no idea of how wide the inequality gap is today.

In a survey by Dan Ariely of Duke University and Michael Norton of Harvard Business School, they took on the survey of the public’s understanding of today’s income inequality.

They asked more than 5,000 Americans of what they thought the current distribution of income was in the United States, and what they thought it should be in an ideal society.

The resulting answers were fascinating.

First, the respondents grossly underestimated the concentration of wealth in the United States. They thought the bottom 40% held about 9% of the nation’s wealth, and the top 20% about 59%.

In fact, according to a 2010 study by New York University’s, Edward N. Wolff , the bottom 40% possess only 0.3% of the nation's wealth, and the top 20% possess 84%.

When asked about the "ideal society", those asked said 32% of the wealth should be held by the richest top 20%, and 11% by the bottom 20%.

 

It is interesting that both the Republicans and Democrats came out about the same on this question.

But what is really interesting is that this distribution is dramatically more equal than what exists today in any society on earth!

The reality is that  we vastly underestimate the level of inequality that we have in America.  We want much more equality than what we actually have, and we misunderstand what we think we have.

I personally think (or hope) that if the vast majority of Americans really understood the truth of the gap between the “haves” and “have not’s”, and they were seriously aware of how many Americans go to bed hungry every night, income inequality, minimum wages, and a “living wage”,  these would all be much bigger issues than they are today.

But then maybe that’s just my own thinking.

Copyright G.Ater  2014