Why have wages stagnated? Why is home ownership in decline? Why is the rent too damn high? Why are we individually, and collectively, so deep in debt? Why have so many families and communities been left behind?
By Nazarul Islam
America is burning. This spark was not similar to the one triggered by a protester who had set himself fire in Tunis, that had initiated the blood Arab Spring. The ignition was caused by the death of George Floyd at the hands of Minneapolis police.
The anger unleashed that week was, first and foremost, directed at racism. But as important as the foreground issues are, we can’t ignore the economic issues in the background. Looking back at all the political upheavals of the last decade or more, I doubt that either the radical Left or the populist Right would have attracted as much support if opportunity were more widespread.
Money isn’t everything, of course, but if you have (or reasonably expect to have) a decently-paid job, a home to call your own and savings in the bank, you’re less inclined to burn it all down, whether literally or metaphorically.
If one image from last week captured the interplay of these foreground and background issues, it was a photograph of Jamie Dimon kneeling with staff in a branch of Chase Bank. There he was, the notoriously well-paid CEO of JPMorgan Chase, apparently ‘taking a knee’ in front of a bank vault.
It’s all very well for woke corporations to express their solidarity with oppressed minorities, but what we really want to hear from Dimon and the rest of the business elite is why they’ve been doing so well when so many of their countrymen haven’t.
Why have wages stagnated? Why is home ownership in decline? Why is the rent too damn high? Why are we individually, and collectively, so deep in debt? Why have so many families and communities been left behind?
Perhaps the answer is that prosperity is being hoarded at the top. The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent controlled about 8 percent of U.S. national income. The bottom 50 percent shared about 18 percent. Today the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent.
Across the pond from New York we’ve also seen the top 1% racing ahead, in UK if not to the same extent as in America. And yet, the most remarkable thing is just how little political pressure there is for change. Yes, we’ve seen a surge of radicalism and populism — but most of that energy has gone into fighting culture wars.
Attempts by center-left governments to raise taxes on the rich have been reversed — for instance, the wealth tax in France under François Hollande or the 50% top rate of income tax in the UK under Gordon Brown. Further to the Left, insurgents such as Bernie Sanders and Jeremy Corbyn have been neutralized.
Just about everywhere, governments are plugging their deficits with borrowing, not higher taxation. To keep debt cheap, they resort to quantitative easing (QE) which artificially inflates the value of assets held by the rich.
The position of the wealthy has, therefore, held firm. It survived the banking crisis, the Great Recession and austerity. Whether or not it survives the Covid-crisis remains to be seen. Thus far, in most countries, support has rallied to the governing establishment and populists have struggled to stay relevant. We can be sure there’ll be more public borrowing and more QE. Stock markets are already anticipating the financial sugar-rush and are roaring back after the Covid-crash in March.
It’s not that the rich won’t make losses. There will be individual bankruptcies. Some corporations will go under others will be bailed-out. But as a class, their privilege looks secure. Riots and culture wars, far from being an existential threat, are more likely to serve as diversions.
Contrast the situation today with that of a hundred years ago. In the early and mid-20th century, there was an almighty push-back against the inequalities of the Gilded Age. In some countries, we saw the revolutions and police states. Elsewhere, democracy prevailed, but with a shift to progressive taxation, the welfare state and reforms to curb corporate power.
So why hasn’t there been anything on the same scale in the 21st century? After decades of Neo-liberalism, this should have been the Left’s great opportunity to regain the initiative. They failed — and whenever they fail, they cry foul. As they can’t possibly have lost fair-and-square, there must be some kind of cheating going on. It could be Russian interference, the influence of social media algorithms or the eldritch power of a slogan painted on a bus.
You see, it’s not enough for the other side to be simply mistaken, they must be conspiratorially deceitful. If the people are voting the wrong way, it’s because they’ve been lied to — indeed caught in a carefully spun web of lies. And this isn’t just about the fake news and propaganda, there are intellectual strands to this web too — bad ideas that lend a veneer of respectability to the low politics.
In respect to the distribution of income and wealth, there’s one such bad idea that comes in for more criticism than any other: ‘trickle-down economics’ — also referred to as ‘trickle-down theory’ or just ‘trickle-down’. Basically, it’s a supposed justification for inequality. The state should help the rich to get richer, because some of the benefit will diffuse to the rest of society. The wealthy trickle-down on us from a great height — and we should be grateful for it.
(To be continued)
[author title=”Nazarul Islam” image=”https://sindhcourier.com/wp-content/uploads/2021/05/Nazarul-Islam-2.png”]The Bengal-born writer Nazarul Islam is a senior educationist based in USA. He writes for Sindh Courier and the newspapers of Bangladesh, India and America. He is author of a recently published book ‘Chasing Hope’ – a compilation of his 119 articles[/author]
