March 27, 2012 · 0 Comments
By Michael McGehee:
For the most part I appreciated Steven Rattner’s recent op-ed piece for the New York Times, “The Rich Get Even Richer.” Acknowledgement in the mainstream media that “a dizzying 93 percent of the additional income created in  went to the top 1 percent of taxpayers” is both greatly welcomed, and largely due to the success of Occupy Wall Street, which continues to shine a bright light on the issue.
Rattner then went on to to write that,
Still more astonishing was the extent to which the super rich got rich faster than the merely rich. In 2010, 37 percent of these additional earnings went to just the top 0.01 percent, a teaspoon-size collection of about 15,000 households with average incomes of $23.8 million. These fortunate few saw their incomes rise by 21.5 percent.
Meanwhile “the bottom 99 percent received a microscopic $80 increase in pay per person in 2010, after adjusting for inflation.”
Rattner says the findings are “not completely surprising” since “the rapid growth of new American industries — from technology to financial services — has increased the need for highly educated and skilled workers,” while “at the same time, old industries like manufacturing are employing fewer blue-collar workers.” What this translates to is ”pay for college graduates has risen by 15.7 percent over the past 32 years (after adjustment for inflation) while the income of a worker without a high school diploma has plummeted by 25.7 percent over the same period.”
Rattner attributes this unequal distribution of wealth to factors like the George W Bush tax cuts, and says “the contours of solving” income inequality are “becoming better known” (i.e. “better education and training, a fairer tax system, more aid programs for the disadvantaged to encourage the social mobility needed for them escape the bottom rung, and so on”), and closes by saying,
The only way to redress the income imbalance is by implementing policies that are oriented toward reversing the forces that caused it. That means letting the Bush tax cuts expire for the wealthy and adding money to some of the programs that House Republicans seek to cut. Allowing this disparity to continue is both bad economic policy and bad social policy. We owe those at the bottom a fairer shot at moving up.
This is good and all but it’s not the “only way.” And it’s not as if income inequality didn’t exist before the Bush tax cuts, or before Bill Clinton gleefully repealed the Glass-Steagall Act. It most certainly did, and it was a problem even then.
And we must look into why “old industries like manufacturing are employing fewer blue-collar workers.” These jobs are being sent overseas so that companies like Apple can profit from slave-like conditions in Chinese factories. This also has the added effect of creating a trading deficit, which is a very big problem.
One solution that is never entertained in Rattner’s piece is the democratization of the economy, which cannot happen so long as productive assets are privately owned, and its resources allocated through market systems.
And recognizing the limitations of private enterprise and market systems opens room to exploring much deeper as to why income inequality exists at all. Why do certain people make more than others? Why does having a legal document, or occupying a specific job, entitle someone to more wealth? Does a banker work harder than a school teacher, or a garbage collector? In a system with private enterprise and corporate divisions of labor it is not surprising that class divisions arise, and that these divisions result in inequalities. Those who either own businesses, or are hired to manage them, are “entitled” to the bulk of the wealth created because they enjoy a position of power of either ownership or decision-making skills that allow them to bargain for more. While those who sell their labor and perform functions lower on the corporate totem pole can only bargain for less.
But what if the economy was socially owned and operated? What if labor was divided more fairly so that all had some access to the tasks, knowledge and power to make informed work decisions? What if we developed a truly classless economy?
Political reforms to constrain the natural tendencies of capital that lead to social and economic inequalities are very helpful in the short term, but Rattner is wrong to assert they are “the only way to redress” the problems. What his piece does is it serves as a boundary of thought; a virtual glass ceiling to contain ideas and to keep them from going too far.
And it makes sense. As an editor from the Financial Times recently wrote: “Behind their journalistic missions, most news organisations have always been commercial operations that sell audiences to advertisers.” The New York Times is a business struggling to make a profit. Within in the Times there exists the hierarchical divisions of labor and profit motive that are a problem for the entire economy. It is reasonable to expect it to reinforce these same boundaries. Decency can only go so far, and that is why it is important to have independent media sources like the NYTimes eXaminer to bring these boundaries into focus.