America’s National Inequality Snapshot (1941–2016) – Chapter 1/3

Social Justice and PolarizationGlobal Inequality
(slides courtesy of Erica Swinney, Advisory Board member and Program Director, Manufacturing Connect, Manufacturing Renaissance)

America’s inequality indices have steadily worsened since Franklin D. Roosevelt’s 1941 “Four Freedoms” State of the Union address (freedom of speech & worship and freedom from want and fear). Seventy-five years later, the first point of Barack Obama’s eighth and final State of the Union speech rhetorically asked, “How do we give everyone a fair shot at opportunity and security in this new economy?”

The recent Iowa caucus results on the Democratic side showed that one-third of those voting prioritized the economy while one in four voters identified income inequality as the “killer” issue facing the country.  Our thesis is it doesn’t have to be either/or – with a new reimagining of capitalism and philanthropy charters, not only a “Gospel of Wealth” but an accompanying new economy doctrine of practitioners, principles, metrics and examples built upon the rock of democratic, deepened and widespread workplace ownership – it can and must be both. One-third plus one-fourth is closer to a workable two-thirds majority.

Since the 1992 George H.W. Bush/William J. Clinton NAFTA signing, more than 60,000 factories have closed throughout America due to unrestrained outsourcing, off-shoring, product dumping, global labor arbitraging, and the highest rates of ex-territorial absentee ownership echoing the 1920s Gilded Age leading to the Great Depression. The Great Recession of 2008 wiped out over one trillion dollars in working and middle class household equity and retirement assets, almost equal to the amount of taxpayer subsidies tendered to “too big to fail,” other peoples’ money risk-addicted, predatory financial and insurance sector institutions. Gone are the days when anyone questions the numbers, but how to solve the problem without falling for more discredited quick and partial or ideological fixes so that the recent past does not return as prologue still resoundingly stumps policy experts and political leaders on a bipartisan basis.

Consider these excerpts from the Thomas Piketty – Emmanuel Saez – Elizabeth Warren – Bernie Sanders playbook:

  • America now has more wealth and income inequality than any major developed country on earth, and the gap between the very rich and everyone else is wider than at any time since the 1920s.
  • The top one-tenth of one percent owns almost as much wealth as the bottom 90 percent.
  • 58 percent of all new income since the Wall Street crash has gone to the top one percent.
  • Despite huge advancements in technology and productivity, millions of Americans are working longer hours for lower wages.
  • Oxfam: Just 62 people own as much wealth as the 3.5 billion people subsisting on the bottom half of the world’s income scale. Five years ago (2011), it took 388 billionaires to reach that mark.
  • “Of the 353 most persistently poor counties in the United States — defined by Washington as having had a poverty rate above 20 percent in each of the past three decades — 85 percent are rural. They are clustered in distinct regions: Indian reservations in the West; Hispanic communities in the Rio Grande Valley of Texas; a band across the Deep South and along the Mississippi Delta with a majority black population; and Appalachia, largely white, which has supplied some of America’s iconic imagery of rural poverty since the Depression-era photos of Walker Evans.”
  • From “Closing the Racial Wealth Gap Through Business Ownership:” “Much of the recent coverage of the widening inequality gap in the US has focused on the growing disparity in incomes, independent of race factors. But looking across racial lines in the U.S., the differences in wealth are stark. The Federal Reserve Board of St. Louis has done important work analyzing the balance sheets and wealth of U.S. households. In 2013, it found that the net worth of Latino families was one-tenth that of non-Latino white households—and the net worth of African Americans was even lower.”
    • “Digging deeper, the research found that one reason for the gap in wealth levels among African Americans and Latinos was that they held dramatically lower levels of business and financial assets—assets instrumental to providing greater diversification and higher rates of growth over time.”
    • “African American and Latino families hold fewer of these types of assets because they have historically been less likely to start businesses. Research by Robert Fairlie noted the chicken-and-egg nature of this outcome when he documented that the lower levels of assets owned by Latinos and African Americans are a partial cause of the business creation gap, because they lack savings, or home equity, to help finance their businesses.”
    • “The good news is that the most recent available data suggests this trend has reversed. The number of African American and Latino owned firms is growing faster than those of non-minority firms. However, these firms still have lower survival and growth rates than white-owned firms, posing a challenge for asset accumulation.”

President Roosevelt’s 1944 Fireside State of the Union proposed a Security and Prosperity Bill of Rights as a direct antidote following the Great Depression and global war against fascism, Nazism and other forms of authoritarian tyranny. Against the backdrop of the lingering ravages of the 2008 Great Recession 64 years later, these rights appear more essential than ever but still universally unreachable (e.g. the right: “to a useful and remunerative job in the industries or shops or farms and mines of the Nation”; “to earn enough to provide adequate food and clothing and recreation”; ”of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad”; “of every family to a decent home”; “to adequate medical care and the opportunity to achieve and enjoy good health”; “to adequate protection from the economic fears of old age, sickness, accident, and unemployment”; and significantly, “to a good education”).

The street graffiti on the wall of the 2016 national elections campaign dynamic with 40 percent of Iowa caucus voters self-identifying as socialists shows that old economic definitions and political categories no longer apply. We’ve reached the national inequality tipping point and like the fallen Humpty Dumpty, America’s traditional distributed pieces no longer fit into any previously recognizable  formula. Tumultuous institutional and democratic representational changes promise societal unrest and malaise unless new, credible economic and power structures based on enlightened founding principles can be universally advanced and equally applied.

Up next: Chapter 2/3 How Inequalities Unite to Divide