Home > Uncategorized > Inequality in the United States—pandemic edition

Inequality in the United States—pandemic edition

from David Ruccio

Year 3 of the Trump presidency was absolutely terrific—indeed, record-breaking—for Americans.

At least that’s how things look in terms of the headline numbers from the Census Bureau: median household income was up (by 6.8 percent, a record) over 2018 and the official poverty rate decreased (by 1.3 percentage points, to 10.5 percent, the lowest rate observed since estimates were initially published for 1959).*

And then there’s Kevin Hassett, former chair of Trump’s White House Council of Economic Advisers (who returned to the White House to lead its pandemic-response team, downplaying the danger of coronavirus and pushing the administration to re-open the economy amid lockdowns and social distancing) who seized on the report to make another of his wild claims:

If you’re a social justice warrior and you’re looking at the data, you would have to say that the Trump years, through the beginning of the pandemic, were the sort-of best years for advances in social justice since World War II.

The problem is that other data in the same report show nothing of the sort.

The distribution of income in the United States was just as grotesquely unequal in 2019 as it was in 2018 (and in every year both before and now during the Trump presidency). The highest quintile of American households captured 51.9 percent of income in the United States (it was 52 percent in 2018), the fourth quintile 22.7 percent (compared to 22.6 percent the previous year), and so on down the line. The lowest quintile got 3.1 percent, exactly the same as in 2018.

So no, no “social justice warrior” would be able to say the Trump years were the “best years for advances in social justice since World War II.”

In fact, quite the opposite. The economic policies of the Trump administration are both the product of and serving to reinforce the fundamental inequalities that have characterized the United States for decades now.

They’re also the reason why the novel coronavirus pandemic has hit the United States so savagely and unevenly. As I argued back in May, and Nick Hanauer and David M. Rolf recently concurred in Time,

Like many of the virus’s hardest hit victims, the United States went into the COVID-19 pandemic wracked by preexisting conditions. A fraying public health infrastructure, inadequate medical supplies, an employer-based health insurance system perversely unsuited to the moment—these and other afflictions are surely contributing to the death toll. But in addressing the causes and consequences of this pandemic—and its cruelly uneven impact—the elephant in the room is extreme income inequality.

The basis of their claim about inequality in the United States is a new working paper by Carter C. Price and Kathryn Edwards [ht: mfa] of the RAND Corporation, “Trends in Income From 1975 to 2018.”

While their general claim is pretty familiar (the pattern of capitalist growth in the United States during the two or three decades after World War II lowered the degree of inequality but, beginning in the mid-1970s, the trend was reversed and inequality rose during every decade), their analysis of the new pattern of capitalist growth reveals just how obscene it has been.

Consider the following conclusions from their study:

  • On average, extreme inequality is costing the median income full-time worker about $42,000 a year. Half of all full-time workers now earn less than half what they would have had incomes across the distribution continued to keep pace with economic growth.
  • The median male worker needed 30 weeks of income in 1985 to pay for housing, healthcare, transportation, and education for his family. By 2018, that “Cost of Thriving Index” had increased to 53 weeks (more weeks than in an actual year).
  • Two-income families are now working twice the hours to maintain a shrinking share of the pie, while struggling to pay housing, healthcare, education, childcare, and transportation costs that have grown at two to three times the rate of inflation.

Basically, according to Price and Edwards’s calculations, the income growth for most groups of Americans—thus, the bottom 25 percent, the median, the bottom 90 percent, and so on—was less than the rate of growth of real per capita Gross Domestic Product. Only the incomes of those in the top 5 percent grew at a faster rate. Thus, for example, the aggregate income for the population below the 90th percentile after 1975 would have been 67 percent higher in 2018 had income growth followed the pattern of the first two post-War decades.

The cumulative result over the past 45 years is that the members of the bottom 90 percent lost almost $50 trillion ($47 trillion or $48.6, depending on the price deflator used), which was seized by those at the top, especially the richest 1 percent of Americans.**

That pattern of unequal growth, which was inherited by the Trump administration, has simply not changed in the last three and a half years, no matter what Trump, Haslett, or the other “hacks and grifters” in the White House say.

Moreover, the monstrous inequalities that existed at the end of 2019 have shaped in profound ways both the effects of the spread of the coronavirus across the country and the early stages of the recovery from the Pandemic Depression. American economic economic and political elites have demanded and been able to implement policies that have only served to reinforce the unequalizing pattern of economic growth, which left most Americans vulnerable to the pandemic and to the resulting economic downturn.

The unequal pattern of capitalist growth in the United States documented in the new RAND report is exactly the opposite of what social justice warriors have been fighting for. Everyone, except the tiny group at the top, have been the ultimate losers.

———

*But there is a caveat on the median household income figures: the bureau’s main household survey for the report on Income and Poverty in the United States: 2019 was conducted in March and April of this year, as the pandemic was surging. That lowered the response rate, especially among low-income Americans. Still, the bureau estimates that median income in 2019 was about 4.1 percent higher than in 2018.

**The missing piece in the story told by Price and Edwards has to do with the mechanism of the massive transfer from the bottom 90 percent to those at the top. I have tried to fill in that missing piece, most recently in 2019 (e.g., here and here).

  1. Ken Zimmerman
    October 18, 2020 at 3:37 pm

    The categories we use to describe ourselves and those around us are the product of cultural rather than biological factors. Specifically, they are the result of cultural evolution. In the same way these categories are ranked, top to bottom, superior to inferior, elite to ordinary are also the result of cultural evolution. So, the elements of economic inequality some economists write about are cultural artifacts. Consequently, changes to just the economic arrangements of society will not change them. This can be achieved only through changes to the culture in total.

    Social scientists apart from economists summarize the study of such cultural constructions under the classification social stratification. To consider social stratification we must take a resolute stance. For this purpose, to think resolutely is to ask questions about what is assumed to be real, valued, and significant in our culture. Stephen Brookfield (1987) offers a useful framework for asking these questions. To consider in earnest has four primary elements.

    First, we must identify and challenge assumptions. We should try to identify the assumptions that are at the foundation of the concepts, values, beliefs, and behaviors that we deem important in our society. Once we have identified these assumptions, we need to explore their accuracy and legitimacy, considering whether what we take for granted does reflect the realities we experience. For example, a common assumption in the United States is that the wealthy are more creative and disciplined in their thinking than the non-wealthy. A related assumption still held today, though with less certainty is that the poor and near-poor lack creativity and cannot master disciplined consideration of options they must deal with in their lives.

    Second, thinking resolutely involves awareness of one’s place and time in our culture. When asking questions about aspects of our culture, we need to be aware of our own standpoint–the position from which we are asking these questions. In other words, we need to be aware of our location at a particular intersection of culture and history; how that is influenced by our race/ethnicity, social class, sex/gender, sexuality, ability, age, and other factors, and these in turn influence the questions we asks and the answers we find acceptable. For example, a millionaire examining the strengths and weaknesses of the US economic system would perceive different problems and solutions for these problems than would a working-class person. One’s ‘standpoint’ also influences what one sees as ‘normal’ or ‘ordinary” action. This relates to the concept of enculturation–immersion in our own culture to the point where we assume our way of lite is ‘natural’ or ‘normal.’

    Third, serious consideration means we need to actively search for alternative ways of reasoning. This means examining the assumptions that form the basis of our ideas and ways of life. For example, the United States is currently a society based on the notion of civil rights–a system based on majority rule. When we vote, the will of the “majority” becomes the will of all. This system is designed to bring the ‘greatest good for the greatest number.’ In addition, there is a fundamental belief that if one is a “good” citizen, one ‘earns’ rights within society, such as liberty. In a civil rights system, some people inevitably do not benefit. Implicit in the statement ‘the greatest good for the greatest number’ is the assumption that society cannot provide for everyone and every situation.

    Fourth, to think critically or in a focused manner one must ‘develop a reflective analysis.’ Such an analysis requires that we be skeptical, not in the sense that we do not believe anything we see but rather that we question rigid belief systems. For example, once we become aware that it is possible to have a society that operates under a ‘human rights’ framework, we come to question those who claim that a system based on civil rights is the only way to operate. A reflective analysis requires that we challenge dominant ideas and popularly held notions regarding what are social problems and their solutions. According to Habermas (1979), thinking critically frees us from personal, environmental, and institutional forces that prevent us from seeing new directions. This in my view is a fanciful notion by Habermas. What thinking critically or resolutely can do, however, is expand the horizons of our view and remove some inhibitions on confronting dominant ways of life.

    One consequential cultural assumption in the US that needs to be critically considered immediately is individualism. This model is commonly invoked in America today. It is important first to recognize that historically individualism has not always been dominant in the US. Proceeding from this deeply embedded American model leads people to conclude that outcomes (social problems and their solutions) are the exclusive result of the choices that individuals make, and that it is up to each of us to take personal action—whether that be working “harder,” purchasing the “right” goods and services, being “smarter,” and so on—to address issues that by definition we have ourselves created (and thus whose outcomes for which we are responsible). Focusing attention on changing our actions—instead of on the contexts that influence and prescribe our options and decisions—makes it difficult to communicate about common processes or structural and cultural-level influences that affect outcomes. Lifestyle choices become the solution to the most pressing societal-level issues. (Too much pollution? Plant a tree.) This bootstrap mentality narrows explanations about what builds problems and how best to address them to individual decisions and essentialist thinking about who is ‘deserving’ of help (a current priority for American social conservatives). It creates a contextual blindness and obscures the social structures that constrain social, economic, and environmental equity. Individualist thinking puts the responsibility for problem solving on “me,” rather than on the “we” needed to build movements to address America’s biggest issues. For example, approaching public problems through the assumptions of individualism, people become resistant to policy solutions, which are seen as mandating unnecessary bans on freedom (e.g., masks to deal with a pandemic) that constrain consumption and personal choice.

    • Robert Locke
      October 18, 2020 at 4:19 pm

      If I am asked why people make a lot of money, I answer that the systemic nature of our financialized economy rewards them inordinately for doing nothing. For example, if they take their firm public successfully, the price of the stock become the vehicle to great wealth (Gates did not create his wealth through creating value working in Microsoft, but though the mechanism of the stock market). Is that cultural?

      • Ken Zimmerman
        October 18, 2020 at 4:33 pm

        Yes, Robert stock markets, in fact all markets are cultural. Gates learned, was taught, or just got lucky in something that everyone, including himself took for granted — stock markets. Now the questions are: should stock markets be allowed to exist, under what circumstances, or never at all, what should their rules be, who should be allowed into them, etc. Most of these questions are ignored in America today. There is little critical questioning of stock markets. They dominate our live with little or no insight into them. Especially, since the 1980s. Frightening!

      • Robert Locke
        October 19, 2020 at 6:50 am

        Stock markets allow the super rich to come into existence, but they can be used for good. If a firm,,e.g. ibm, pays its employees with company stock as provided in a collective barga8hn agreement, the rewards can be greatl Comte Benoist d’Azy told me in 1960 that his dividends for stock in ibm were spectacular. It all depends on how firms are governed.

      • Ken Zimmerman
        October 19, 2020 at 2:58 pm

        Robert. this is correct. But since the cultural revolutions of the 1970s and 1980s large firms (perhaps corporations) have only one purpose — to return the greatest amount to their shareholders. Perhaps we could get around even this cultural norm by making all citizens shareholders in every major corporation. Hypothetically, that could be achieved with a fairly simple law. But this still does not address the other problems current corporation and market models create. The effects of corporations on local communities (political, environmental, justice, wealth distribution); national inequality, environmental health and justice, and politics; and world inequality, environmental health and justice, and politics still must be addressed. Right now Chinese corporations have a better (still not great) record on all these issues than EU (and related) corporations, and much better than US corporations. Expanding government regulation would be helpful. So would an end to the harebrained schemes of Trump and his minions. A book you might want to take a look at is ‘A History of the United States in Five Crashes: Stock Market Meltdowns That Defined a Nation’ by William Morrow and Scott Nations. The good, bad, and ugly about stock markets in the US.

      • Robert Locke
        October 20, 2020 at 6:40 am

        Ken, the cultural change that got u.s. corporations to emphasize return to shareholders, happened in Japan. As long as u.s. board rooms enjoyed big profits, they were willing to share the rewards of enterprise with their workers (the new deal settlement), but when they discovered after 1980 that Japanese staple industries were outperforming them, the US boards turned completely selfish. They eliminated their pensions and benefit schemes, etc. in order to keep incomes up. The source was cultural, what we call the Japanese enterprise system, the Toyota Kata, that H. Thomas Johnson and Mike Rother wrote so much about.

      • Ken Zimmerman
        October 20, 2020 at 7:54 am

        Thanks for this, Robert. Can you suggest some readings on the interactions between US and Japanese corporations? Both direct and indirect. Particularly interactions filtered through American politics of the 1980s and after. I know the Reagan and later Republican administrations pushed hard on the notion of expanding the role of services, especially financial services in the American economy. Along with a push to reduce the role of manufacturing (autos, steel, etc.) in the American economy. This fed the expansion of American imports to replace the lost industrial base. Which lead the expansion of the Japanese, and later Chinese export industries. According to the financialists America would always control the process if it controlled the supply of money. Within this hypothetical control, America also preached the expansion of ‘free markets’ around the world. Preached to the point of absurdity. As the Bible text reads, “For they have sown the wind, and they shall reap the whirlwind: it hath no stalk; the bud shall yield no meal: if so be it yield, the strangers shall swallow it up.” In the American slang idiom, America cut its own throat.

      • Robert Locke
        October 21, 2020 at 11:36 am

        On the unsuccessful attempt of the Americans to stop the adoption of co-determination in Germany, see Ch on “German Obstinacy” in my The Collapse of the American management mystique,

        on the successful American efforts to stop co-dermination in Japan, see ch, “Japanese Self-Absorption” in the Collapse of the American Management Mystique, and Hideo Otake”The Zaikai under the Occupation, the Formation and Transformation of Managerial Councils, in Robert E Ward and Yoshikazu Sakamoto, (ed), Democratizing Japan: The Allied Occupation, 1987. Andrew Gordon, Postwar Japan as History, 1993, 449-64.

        On Japanese-US firm interpenetration

        Yotaro Kobayashi, “Quality Control in Japan: the Case of

        Fuji-Xerox,” in Kazuo Sato and Yasuo Hoshino, The Anatomy of Japanese Business (1984).
        H. Thomas Johnson. Revelance Regained: From Top Down Control to Bottom-up Management. 1992
        and Broems. Profit Beyond Measure: Extraordinary results through attention to process and people (2000)
        Mike Rother. Toyota Kata: Managing People for Improvement, Adaptiveness, and Superior Results (2010)
        and my bibliography in The Collapse of the American Management Mystique and Confronting Managerialism.
        Martin Kenney and Richard Florida, Beyond Mass Production: The Japanese System and its transfer to the West. (1993)
        Mark W Fruin. The Japanese Enterprise Sysem: Competitive Strategies and Cooperative Structures. (1993)

      • Ken Zimmerman
        October 21, 2020 at 2:10 pm

        Thank you, Robert. I have already begun reading these suggestions.

    • Robert Locke
      October 22, 2020 at 12:37 pm

      Ken, in the 1980s I established contact with H Thomas Johnson, through whom Iearned about the work of Robert W. Hall, (Essentials of Excellence, AME, Wheeling, Ill, 1989, a series of articles reprinted from Target; also his The Soul of Enterprise: Creating a Dynamic Vision for American Manfacturing, NY: Harper Collins 1993. Also Mashiko Aoki, “Towards an Economic Model of the Japanese Firm, Journal of Economic Literature, 28 (Mar. 1990.

      On U.S. corporations abandoning their benefit plans in the 1980s. Jack Ramus points out in 2004 “the ruthless, relentless, and radical transformation of private pension plans that the management caste carried out at the end of the 20th century (with the connivance of Congress), (p.54,of my Confronting Managerialism”

      ‘corporations have been terminating and undermining group pensions plans by shutting down plants and moving companies,underfunding the plans, diverting funds to other corporate use when they can get away with it, funneling whatever remains into 401 k type personal saving plans. From the passage of the Employee Retirement Income Security Act in 1974 until 2003, more than 160,000 Defined Benefit Plans have gone under in the US.”

      • Craig
        October 22, 2020 at 6:02 pm

        Robert,

        So what is the solution to such insensitive managerial manipulation?

        Why a change in the monetary and financial paradigm that directly benefits all economic agents, resolves the deepest problems of the current system and paradigm and firmly punishes those who cannot abide by the understandable and ethically superior rules that any rational system must have to be humane and stable…of course.

        As I said in a post below, everyone’s insights are well taken…they just have to analyze the problem on the level of pattern instead of on the smaller and lesser level of reform.

  2. Craig
    October 19, 2020 at 9:09 pm

    Everyone’s data points regarding the economy are well taken. But what must we do to change the system? What are your policies?

    I’m sorry, but I suspect that everyone here is so hemmed in by orthodoxy that they don’t actually have any policy suggestions that aren’t just palliatives. A UBI/Universal Dividend is a palliative. Increased fiscal spending is a palliative. A job guarantee is a palliative. Even a “modern debt jubilee” is a palliative.

    All of the above AND a 50% discount/rebate policy at retail sale and a 50% discount/debt jubilee at the point of loan signing IS a paradigm change in finance and the money system THAT WILL FOREVER ALTER THE 5000 YEAR OLD DOMINANCE OF THE ECONOMY BY THE CURRENT MONETARY PARADIGM OF DEBT ONLY.

    • October 20, 2020 at 12:16 pm

      I’m sorry, but I see no evidence that Craig has actually read what I write. Is he a ‘chatbot’? By contrast, though I do not always agree with Ken, free markets are indeed the antithesis of American financial control; I loved his Biblical judgment and American slang version of it.

      • Craig
        October 21, 2020 at 8:14 pm

        Dave,

        While I like your affirmation of the concept behind the new monetary paradigm, I puzzle over your refusal to actually apply it in the economy. Your idea of giving everyone a credit card resides entirely within the present paradigm of money and so merely extends it. One of the primary signatures of genuine paradigm changes is they overthrow monopoly forces and ideologies with problem resolving concepts and policies. Witness The Reformation. Monetary GIFTING will do to the present paradigm of Debt ONLY, that’s ONLY as in ENFORCED monopoly, what Protestantism did to the Catholic church’s monopoly on the sacraments, that is end it.

  3. October 20, 2020 at 8:54 am

    “The categories we use to describe ourselves and those around us are the product of cultural rather than biological factors. Specifically, they are the result of cultural evolution”.

    When Ken says “we” here (in this context presumably thinking of Americans generally rather than just himself), he does not speak for me. He is also talking of culture as it had evolved since the Reformation and Hume’s “winner takes all” form of representative democracy, which had degenerated from the Christian “all me are equal before the law” (i.e. the brotherhood of Man), and not evolved far enough to recognise biological factors marking complementary differences rather than rankings. The “winner takes all” has indeed taken all, because its monetary economics has not evolved far enough to realise money has become a valueless abstraction instead of a physical valuable, so that markets are claiming ownership or talking up the (net) value of goods (or entitlements to them) paid for with (in reality) nothing. Yes, Robert; most of us (if not our planetary ecosystem) can live with the markets we have got so long as enough people act reasonably, but just by changing the legal conventions to replace corporate ownership with co-operative ownership (literally, those physically operating the asset), the direction of cultural evolution can be changed.

    Leaving the subject to pick up Ken’s reference to Stephen Brookfield, presumably the book he is referring to is “Learning Democracy” (1987). This is of interest to me because I knew Steve back in the late 1960’s, after moderate success teaching well-motivated apprentices during my Army service, but even then little success when trying to share logical arguments with adults, thinking particularly of a sociology teacher who seemed to think critical thinking meant his objecting to our culture and swallowing his half-digested regurgitations. (I moved to a more open-minded discussion of modern literature). I sought Steve’s advice in this issue, finding him emotionally but not practically helpful. I later acquired his 1986 book, “Understanding and Facilitating Adult Learning”, and recently his “Becoming a Critically Reflective teacher! (1995). Ken’s reference prompted me to reexamine these to see if his advice had become more helpful. I found it on pp.129-131, 244-8 in the first book (on learning styles) and pp.95-6,244-5 in the second (this last thinking of group learning through ‘community’ rather than networking). Since inequality in our reactions to each other has bedevilled discussion on this blog, I will quote the first passage at length to see if it rings true with others, as it does with the findings of Myers-Briggs personality research.

    “Even (1982) has drawn attention to the discrepancies that may arise when field independent teachers are working with field dependent learners (or vice versa). Since field independent learners do not require a great deal of structure or a friendly or caring atmosphere, teachers who exhibit it will not emphasise group process and will be unworried by a lack of clear structure in their teaching. But such an approach will be markedly unpalatable to certain field dependent learners”.

    What then if the topic being presented for discussion [like logic or fundamental theory] is not field dependent? Does its being “markedly unpalatable” make it any less relevant? Is the answer going to involve becoming more a cooperative community than a competitive network?

    • Ken Zimmerman
      October 20, 2020 at 5:36 pm

      Thanks for the comments, Dave. Cultural evolution is fancy wording for struggle. Culture creation is always a struggle. Your comments lay out certain parts of that struggle. It seems you consider the current dominant culture in America degenerate. Those who adopt and support that degeneration do not consider it degenerate. And they have for the last 50 or so years won the struggle. At least enough to either set the standards for most major parts of American life today or significantly limit the influence of their opponents in areas such as the economy, schooling, religion, and governing. You can hate what they do and its consequences, but you cannot ignore what they do. That is, if you want to change it.

      My reference is to Stephen D. Brookfield’s 1987 book ‘Developing Critical Thinkers: Challenging Adults to Explore Alternative Ways of Thinking and Acting.’ I like the four steps Brookfield offers but I do not like his in my view over use of the word critical. That word is in my view used too often in our current culture and is often used to suggest capabilities that are not available to humans. Such as discerning the ‘real truth’ of people or situations. Thus, I chose some similar words, sometimes synonyms, sometimes not to explain the steps.

      On your final point, I believe you are incorrect. It is my view that logic and fundamental theory are field dependent. They are not irrelevant, but they are historically and culturally situated. Nothing that I know of in human existence can escape this.

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.