Why we should care about income inequality

I don’t want to get into the argument of the 1% versus the 99% because I think the issue, unaddressed, will hurt 100% of us. The issue is income inequality in the United States, and the good news is I’m not asking anyone to trust my economic arguments. I’m a dope, after all—a journalism major from a state university in the South who never focused on economic theory much beyond the law of supply and demand. But I know what makes sense, and Timothy Noah’s series in Slate does.

The 10-part series on income inequality published in September 2010 has helped me understand the issues, and understand why they matter. It’s not a question of the vast majority of Americans being jealous of the terrific success of others, or of them trying to take away anything the rich have earned. In a current discussion of this subject on Slate, Noah says “Let me start by conceding a point that conservatives often make: Yes, a certain amount of income inequality is necessary in a capitalist system. You have to let the market reward effort and skill. But a system in which inequality of incomes constantly increases over time is worrisome.”

That’s what’s happening in America today: the inequality of incomes is constantly increasing (the series drills down deep into the numbers to prove that it’s more dramatic now than ever), and Noah argues that “creates alienation.”

Income earners at the median have not shared in America’s prosperity. They’ve actually seen their incomes go down (after inflation) during the past decade, and over the past three decades their increases seem pitiful compared both with people earning top incomes (and here I mean not just the top 1 percent but the top 10 and even 20 percent) and with people at the median during the postwar era. For a long time economists said: Wait until productivity rebounds. Then working families will get their share. But when productivity rebounded like crazy in the aughts, working families saw no reward.

What this means is that if you’re at the median you have no positive reason to care how the economy does. Your only motivation is fear—if the economy does really badly you may lose your job. But there’s no upside.

I think this situation has a lot to do with why there’s so much suspicion of institutions that knit the country together—Congress, the media, etc. Logically the suspicion should be directed at the rich, but nobody knows what Lloyd Blankfein looks like. Everybody knows what Barack Obama and John Boehner look like. So people rage against Washington, and government, and you get both the Tea Party and Occupy Wall Street. These groups are quite different in their political orientation, but both groups express contempt for democratic processes.

Read the series: Noah digs through the numbers that show the historical trends of income inequality, and explores the theories for what’s responsible for today’s situation–and he doesn’t just end up blaming Congress or presidents, or Republicans or Democrats, or Wall Street or the educational system, or trade policy or labor unions or immigrants.

Income distribution in the United States is more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador. Income inequality is actually declining in Latin America even as it continues to increase in the United States. Economically speaking, the richest nation on earth is starting to resemble a banana republic.

Noah’s current book “The Great Divergence” grew out of the research done for the 2010 Slate series, which you can read here for free.