One of the frustrations of my job is that I don’t have nearly as much time to read policy research as I used to. So until a fairly lengthy excerpt appeared in the Gotham Gazette (itself something I don’t read as often as I should) about a week and a half back, I was unaware that James Parrott of the Fiscal Policy Institute had recently released a report on income inequality in New York City. The key finding is that the top 1 percent of City residents now takes 44 percent of total income.
James tracks the historical evolution of this trend, which strongly supports the contention of Paul Krugman and others that we’re in a New Gilded Age in terms of concentration of wealth. Nationally, the share of wealth held by the top 1 percent held steady from about 1950 through 1980 around 10-12 percent, then began a largely uninterrupted ascent to the current level of about 23.5 percent. The reasons why are fairly well known: the explosion of the financial industry, the evisceration of unions in the private sector, the general shift to a knowledge-based economy. He notes how this played out in recent years, implying something very interesting about the growing gap between a collective mindset geared toward an ever-higher standard of living and overall income stagnation:
Today, most experts expect the pace of the nascent recovery from the Great Recession of 2008-09 to remain subdued in large part because of high household debt burdens, stagnant or declining wages, and a bleak job outlook. The recession was triggered by the bursting of the housing bubble and a speculative, excess-prone financial system, but it occurred in an economy with an increasingly shaky foundation characterized by weak job growth, continued export of middle-income jobs and wage growth that failed to keep pace with inflation and the growth in the productivity of labor.
This shaky foundation has a lot to do with the post-1980 hyper-concentration of income. The expansion from 2004 to 2007 was the first in which family incomes and median wages adjusted for inflation did not rise over the cycle to reach the peak of the previous business cycle. Despite economic growth, many Americans never saw their income return to the levels they had reached in 2000. Faced with this, families turned to debt, using credit cards and home equity borrowing to sustain their living standards. The crash of the financial and housing bubbles destroyed trillions of dollars in retirement and college savings that had been accumulated by middle- and low-income Americans, and decimated the value of their homes.
Locally, the concentration of wealth is much worse--cementing New York as the most economically polarized state in the country, and NYC as the most unequal of the 25 largest American cities. I think this concentration must exert a large distorting effect on everything from housing prices to policy choices at the local level, as is the case nationally; to the latter point, James cites the recent book “Winner Take All Politics,” which I’m afraid to read anytime soon, as anything that depressing shouldn’t be consumed in the winter.
Even more depressing is how farfetched it seems to imagine this situation reversing itself. Money hasn’t been this powerful in our politics for more than a hundred years, and my sense is that it will only get worse with the courts having settled for the indefinite future on a very permissive position with respect to campaign finance. This creates a vicious circle; if you’re poor and convinced your vote doesn’t matter, you’re that much less likely to exercise it—even in the unlikely event that there’s a viable candidate championing a platform that might improve your circumstances.
But the problem might go even deeper than that, to the level of culture and discourse. Among the majority of society that isn’t in desperate circumstances, we’ve largely stopped thinking about those who are, much less feeling like our well-being is in any way tied to theirs. A complacency now obtains such that you can’t even make the argument about public space and “shared sacrifice” that reaches the wealthy and powerful instead of solely the middle/working classes without being called a socialist. Hence we see political and economic elites earnestly speaking about bringing government budgets into balance--a fully worthy goal, if one we might wish was held as dear when one’s own party is in power as when the opposition is--not by a real consideration of what tax burden is bearable and appropriate, but by cutting “discretionary spending” (loosely defined as “spending on other people”) at first and middle class entitlements if need be.
Amazingly, what populism exists is aligned with the economic elites against the cultural elites—hence the Tea Party, which is “organic” but not really new. It’s Nixon’s Silent Majority, Reagan’s Reagan Democrats, Bush’s and Rove’s cultural conservatives, taken up a few notches in their rage by the closed circuit informational loop of Fox News. (Though maybe not quite entirely and only that: see Matt Taibbi’s take on the ‘baggers here. Sounds right to me.) One effect of the last forty years of policies that facilitate concentration of wealth has been to delegitimize the labor movement, which admittedly has helped the process along through its own tone-deafness and greed.
Self-interest could be said to reside at the core of the democratic idea. But what’s especially frustrating is that the self-interest that now seems to motivate public majorities is so narrow! To take one example recently in the news, we don’t want to restrict “gun rights” because we only see our short-term wish to own badass guns under threat, not the idea that ourselves or loved ones could get killed as a direct result of someone else’s untrammeled access to automatic weapons.
(Mayor Bloomberg had a line in his State of the City speech last week about this which I found almost touching: ““There has been a lot of focus in Washington lately about the Constitution. But we must remember that we have a duty to honor and uphold not only the Bill of Rights, but also our Founding Fathers’ common purpose: to ‘establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty.’ “As long as we allow dangerous and deranged people to buy guns, the promise of a more perfect union will remain empty for the thousands of Americans who are murdered with guns every year.” Occasionally, tragically, you get a Carolyn McCarthy—or a Gabrielle Giffords—whose life is horribly altered by gun violence. Those are stunning events that make the news. What fills the bulk of the statistics are mostly people we don’t care very much about. )
The list goes on. We don’t want to pay more for “Obamacare” because we don’t see that the problem of the uninsured indirectly costs us (more) money. Many of us don’t even want to see our elected officials vote to raise the federal debt ceiling because the abstract problem of federal debt evidently bothers us more than the disastrous impacts that will be felt if the country goes into friggin’ default.
There’s upside to this—the liberalizing trends in individual rights, seen most recently in the repeal of Don’t Ask/Don’t Tell and, we might hope, next extending to same-sex marriage. And in the abstract, greater economic autonomy isn’t a bad thing at all; professionally, I try to frame everything I’d like to see in the context of “helping people stand on their own two feet in the labor market.” That means educational attainment, workplace competencies, and (because there’s always some interdependence in complex societies) professional and social networks. The paradox, though, is that we can’t get there without deeper investments in human capital up front. On my worse days, I wonder if it’s not too much to say that we’re en route to “individualizing ourselves to death.”