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This sermon was presented in November 2018.  It will be published in the June 2019 issue of Free Inquiry magazine.

The Social Consequences of Economic Inequality

Jeffrey S. Victor, Ph.D.

In my opinion, economic inequality is the second greatest danger that Americans will face in the near future. The first is climate warming. And, like climate warming, the consequences of inequality creep up on us slowly, until it is too late to change. The danger is the fact that great wealth translates into the power to corrupt democracy.

Most Americans are living on illusions based upon the past history of America in the 1950s. A majority of Americans vastly underestimate the amount of economic inequality in our country. We Americans mistakenly believe that the U.S. has a greater percentage of people who experience upward economic mobility in their lifetime than any other country, according to Nobel Prize winning economist Joseph Stiglitz.

The following are some of the sad realities.

First. The economic distance between the middle class and the rich in our country is now greater than in any other industrial country. The United States now has the highest level of economic inequality of all similar industrial countries, as reported in a 2007 United Nations study of developed countries.

Second. The same United Nations study reported that the United States now has the lowest level of upward economic mobility of any similar industrial country; contrary to what most American believe.

Third. Money translates into political power and now our democracy is at risk of manipulation by the super-rich.

Income inequality began to accelerate during the 1970s and the gap between the middle-class and the rich has continually widened, as the rich received an ever-larger share of the nation’s wealth, according to a 2011 report from the Congressional Budget Office. The deepest causes of economic inequality in US are a regressive tax system that aids the rich, plus very low spending on social assistance programs. The tax system just aggravates fallout from technological and social changes since the 1970s, such as automation, the growth of information technology, economic globalization and the need for increasing levels of education to get a decent job.

However, enough has been written about the causes of increasing economic inequality. I want to focus my analysis on the social consequences of inequality. Briefly, these consequences include: increasing political polarization and paralysis of government decision-making; declining opportunities for advancement, especially through education; the decreased influence of labor unions and decreasing life-satisfaction.

Political Polarization

Rising economic inequality is correlated with increasing political polarization, according to several recent social science studies published by Princeton University and elsewhere. It is no surprise that these studies found that in order to get elected, many representatives become increasingly dependent upon the wealthy and become less responsive to the needs of people with low income. Conservative representatives, in particular, become less concerned about spending tax money on things that don’t help the rich, such as health care, public education, day-care, job retraining and infrastructure upkeep. What the rich and large corporations want from politicians are lower taxes for them, elimination of financial and environmental regulations of their businesses and increased military spending to protect their overseas properties and markets.  A 2011 Gallup poll found that only 21% of Republicans believes that the reduction of income inequality is very important compared with 72% of Democrats. Political polarization has become even worse since that poll. Aggravating the situation is the delusion that American society offers more opportunities than any other country in the world.

The politics of trying to change the system results in paralysis. The super-rich worry that the increasing inequality will cause poor people to become rebellious and criminal. So, the liberal elite, which supports the Democratic Party, tries to ameliorate the conditions of poverty with minimal social assistance programs. The conservative elite, which supports the Republican Party, reject paying very high taxes to support social assistance programs from which they get no benefit. The conservative elite finds political ways to shift the tax burden of social programs down to the middle and working classes. The rich are able “to buy” sympathetic representatives and hire the best lawyers and accountants to manipulate the system. Middle-class people eventually become angry about being over-taxed to give their money to help the supposedly “lazy” poor. Instead conservatives believe that the way to deal with rebelliousness and criminality is repression by the police and punishments for laziness. In the end, there is little change. Every social assistance program designed to make life a bit better for low and middle-income families meets furious attack.

Declining Opportunities for Advancement

Several correlational studies, known as the Great Gatsby curve, have found that the greater the income inequality in a country, the less opportunities for upward economic mobility. Why? What is the underlying cause? Economist Paul Krugman suggests that it is because the gaps between different skill and income levels widen across the society as a whole, in all kinds of jobs. Every level from the super-rich to people in poverty becomes more rigid, with fewer and fewer people able to move up. The underlying cause is due to the fact that the advantages and disadvantages of parents are passed on to their children.

Opportunities and disadvantages are even different in different neighborhoods in cities, as widely reported in the 2018 research called “The Opportunity Atlas”. The problem is not only an economic issue. The problem is due to differences in family income, of course, but also “cultural capital”. Cultural capital refers to all of a person’s learned habits and knowledge, which enables them to take advantage of opportunities for socio-economic advancement, such as their language ability, ways of speaking, work habits, and social skills.

Education is no longer a predictable path for moving up. Educational advantages follow from parental income, “connections” and cultural capital.

The rich attend elite private schools that are feeders into expensive elite universities, like Harvard, Yale and Princeton. Upper-middle class children attend expensive, tax-paid public schools in wealthy suburbs, and a few also get into elite universities. They commonly go on to get professional degrees from graduate schools. And, poor children, who live in poor rural areas and city neighborhoods, attend poorly paid public schools. College education in the US has become increasingly expensive, even at state colleges, thereby limiting opportunities for economic advancement based upon a middle-class family income. Even worse, adults who have only a high school education, or less, are in a desperate situation. Industrial manual labor jobs for them are disappearing. They are the Americans left behind by the socio-economic changes since the 1970s. Neither Republicans nor Democrats are paying them enough attention and their frustration is festering.

Declining Labor Unions

Labor unions are crucial in bringing about greater economic equality in many ways. Unions create collective political awareness among people in the union by educating them in political issues. Unions fight the economic power of the rich by supporting political candidates who want greater equality. Unions support democratic representation by supporting representatives who favor social assistance programs.

There is reliable evidence that countries with strong unions have less economic inequality, as reported in 2018 by economists at Princeton University. Labor union membership in the U.S. declined from about 34 percent of workers in 1973, to about 8 percent in 2007, according to research published a 2011 article in the American Sociological Review. The decline has resulted in greater inequality and less democratic representation. How? Labor unions have an economic effect beyond their own membership. Union members earn up to 20 percent more than non-union workers in similar jobs. However, unions have the indirect effect of raising incomes of all workers in the areas where they are organized --- by encouraging employers to offer comparable salaries. In addition, union contracts promote job security and not only for their own members. This is the reason why employers in the rural South and Mid-West fight against union organizing.

Labor unions used to counterbalance the political power of big corporations, but can no longer do so. The US now has a national government of the rich, by the rich and for the rich. (Among our representatives in Congress, more than 50% are millionaires, according to a current study by Roll Call.) Unions help to turn out the vote of working-class people and organized white-collar workers. Members of labor unions usually vote progressive. Unorganized workers often vote conservative, if they vote at all. Depending on the ideas to which they are most exposed, working class people vote either right or left. Labor unions expose workers to progressive ideas. Fox news and right-wing talk shows expose people to conservative ideas, such as opposition to national health insurance.

It is not true, as many liberals believe that a majority of urban working-class people supports Trump. The strongest support for Trump’s nationalist and economically reactionary policies comes from unorganized working-class rural and small-town people, who have only a high school education or less. These rural people are the “left behind” Americans, whose lives have been disrupted by the social changes of the last several decades, as reported in a 2018 Pew Research Center study of rural residents, as well as national studies of medical problems in rural areas.

Declining Life-Satisfaction

Blocked opportunities have caused increasing stress and frustration, especially among people with inadequate education, who live in large pockets of poverty, particularly in rural and small-town areas. These are the people who have been left behind by the social changes of the last several decades. They suffer from what sociologists call “cultural anxiety”, feeling as if they are now living in a foreign country. In their experience, graduating from high school is no longer an occasion for a big celebration. Manual labor jobs for them are disappearing. Black and brown people seem to get all the attention and advantages. Women seem to constantly complain about the imaginary advantages of men. Homosexuals no longer appear to feel shame for their behavior. The world has turned upside down.

Their stress has increasing led the “left behind” people to seek relief in the use of opioid drugs and alcohol. Many epidemiological studies show that rural people, in particular, suffer from increasing health problems, family breakdown and divorce, social isolation and loneliness, and the increasing suicide of middle-age men. These are worrisome symptoms of a way-of-life in decay.

These people’s frustration easily leads to anger, expressed like the Tea Party insurgents. They direct their anger toward more prosperous people, particularly toward college-educated professionals, who they resent as being “snobs”. There lies their distrust of professional and technical experts in government and their support for Trump’s amateurism and vulgarity. The reason that they don’t direct their anger at the super-rich is because they don’t encounter them in their lives. They see them only as super-stars. Many of them vote against their own interests and for charismatic celebrities like Trump, who speaks their language and promises them a better life next year. Their politics of resentment is not a form of so-called populism, but a kind of neo-fascism.

Relative Deprivation

The key to understanding the “left behind” Americans is relative deprivation of past advantages, not only current economic deprivation. An economic system can have full employment, while large numbers of people can be left behind, when employed at lower pay and status than they had in a previous job they lost, when their company moved to Mexico or China. Imagine what happens psychologically to a well-paid worker, who loses his or her job at a General Motors factory when it closes down and eventually finds a job at less than half the salary at Wal-Mart. His or her feelings are humiliation and resentment.

The problem of people left behind and the politics of resentment is not only an American problem. Many of the kinds of people who support Trump have the same social backgrounds as the British people who support Brexit against their governing British elite, the French people who rioted to overthrow their governing elite and the Germans who are turning to right-wing extremism again. They are mainly people from rural areas and small towns, who fear foreign immigrants and feel a resurgent nationalism. Even though the British, French and German social systems offer extensive economic assistance, it is not enough to satisfy their resentment. The international comparison is a clue that solutions to preserve democracy must deal with the insecurities of the “left behind” people, in addition to offering material assistance. National health care and job retraining programs are necessary, but will not be enough.

Trump has given resentful “left behind” people the psychological satisfaction of redirecting their anger against scapegoats, such as illegal immigrants who supposedly are taking away their jobs, and snobbish liberals who are taxing them to support lazy welfare freeloaders. If liberals want to attract the votes of “left behind” people, they will have to deal with their cultural anxiety and their insecurities about social change.

Rural Western New York State

I have lived in a small city in rural Western New York for 53 years. The vast surrounding rural area was conservative Republican and it is now Trump territory.  I taught mostly first-generation college students in a community college dedicated to providing them with a path to upward economic mobility. Factories are closing. Stores are closing. Single-parent families are proliferating. There was a met lab in an old house down the street from our home, in a supposedly nice neighborhood. When Hillary Clinton, our former Senator, came to our town, she met with wealthy possible contributors of the Chamber of Commerce. She did not visit with any union leaders or shake hands with union members. She was and is regarded as a self-seeking “snob”. Hillary Clinton lost the majority of votes in our normally Democratic voting small city. That should be a lesson for liberal politicians. They will need to pay more attention to the people who will never be wealthy donors.