Inequality, Tax Breaks and Cement

by Bud Meyers, published on April 2, 2015

Some passages from some recent posts I read (The last link I find particularly interesting).

Economic Inequality: It’s Far Worse Than You Think (Edited from Scientific American)

Chris Rock said, “If poor people knew how rich rich people are, there would be riots in the streets.”

The findings from three studies published over the last several years suggests that Chris Rock is right. Most people have no idea how unequal our society has become. The average American believes that the richest 20% own 59% of the wealth and that the bottom 40% own 9%.

The reality is strikingly different. The top 20% own more than 84% of the wealth, and the bottom 40% combine for a paltry 0.3%. The Walton family, for example, has more wealth than 42% of American families combined.

Wealth inequality in America is very real, and 9 out of 10 Americans would be shocked to learn just by how much. This YouTube video clearly demonstrates how most Americans are STILL completely wrong about how the wealth is distributed in America.

The average American estimated that the CEO-to-worker pay-ratio was 30-to-1. The reality? 354-to-1. Fifty years ago, it was 20-to-1. The researchers concluded, “In sum, respondents underestimate actual pay gaps, and their ideal pay gaps are even further from reality than those underestimates.”

Just five percent of Americans think that inequality is a major problem in need of attention. One likely reason for this indifference lies in a distinctly American cultural optimism … the belief that anyone who works hard can move up economically, regardless of his or her social circumstances — 60% believe that most people can make it if they’re willing to work hard.

But researchers found most Americans overestimate the amount of upward social mobility that exists in society. Most Americans may not want to believe it, but the United States is now the most unequal of all Western nations. To make matters worse, America has considerably less social mobility than Canada and Europe.

The three studies indicate, not only that economic inequality is much worse than we think, but also that social mobility is less than we imagine. Our unique brand of optimism prevents us from making any real changes.

George Carlin joked that, “The reason they call it the American Dream is because you have to be asleep to believe it.” (YouTube) How can we wake up all those people who are still in denial?

Huffington Post: A Pew study shows that the U.S. middle-class shrank in every State between 2000 and 2013. Median income also fell in most states during that period. “The middle-class has seen its wages change little since the turn of the millennium, while high-earning individuals keep making more and more each year.”

And from the New York Times: The False Hope of a Limited Government, Built on Tax Breaks: The idea that government must tax and spend more to provide generous social insurance might be wrong. The government might actually be big enough. But if the United States is to moderate the extreme inequities thrown up by the market economy and provide a true safety net to people in need, the federal government would have to tax and spend very differently.

Public social spending in the United States ranks significantly below the average among the other 33 industrialized countries. The main thing here is not about not spending enough. It is about the distribution of this spending.

Over all, the Congressional Budget Office shows how the richest fifth of Americans get more than half of the benefits from the costliest tax breaks. And yet, the Republicans are once again proposing to sharply cut the scale of domestic spending, which would mostly fall on the poor. But their plans fail to recognize that Americans actually prefer a strong safety net.

Washington might be better occupied culling the many goodies hidden in the tax code that serve little or no social purpose other than coddling well-connected constituencies. Those billions could then be used to provide regular American families the social insurance they really need.

* Editor’s Note: Last month I posted this — Infrastructure Spending at Historically Lowest Level, noting China’s historical growth. Now I found this from the Washington Post: “China used more cement between 2011 and 2013 than the U.S. used in the entire 20th Century.”