In a piece two weeks ago I mentioned that income inequality in the U.S. is at its highest in almost a century. The question naturally arises: Does this matter? I think it does, but not because inequality in and of itself is a bad thing.
Equality of opportunity is a core American value, holding that all citizens deserve the chance to achieve their full potential. Some will become doctors, some will enter the law and business, others will become car mechanics or retail workers. The “American dream” and basic conceptions of liberty in no way require that people’s wealth and status be even roughly equal. An America that lives up to its ideals will be an America with an unequal distribution of wealth and income.
But this inequality has limits, and I think the current levels of inequality point to a larger failure in American society and the body politic.
It is hard to make the case that if everyone in America were truly able to live up to their potential, we would have the rising levels of inequality that now confront us. There are many causes for this increasing gap, among them higher returns to education, the fact that you need money to make money, and the decline of unions. At the same time, public policies have contributed to widening disparities: decreases in tax rates have disproportionately favored the wealthy, while rising healthcare and education costs and relatively stagnant incomes have chipped away at middle-class prosperity.
In addition, the higher returns to education that account for a significant portion of the income gap are driven in large part by an education system that does a great job of serving the needs of the top 10% but a poor job at serving much of the rest. Some states, like California, have an excellent system of community colleges and top-notch state universities, but also have a dismal pre-college education system. Some states, particularly in the South, have mediocre education systems at all levels.
Inequality doesn’t just happen in a vacuum; the levels of inequality we are now experiencing have their roots in bad policies, including our failure to stem the costs of medical care and cover all Americans. Tens of thousands of our fellow citizens go bankrupt every year due to medical bills, and the insecurity bred by the fear of losing health insurance prevents thousands more from looking for better jobs and richer opportunities.
In rich countries like ours, inequality is admittedly less of an issue because relatively few people are starving or out on the street; it is a much bigger concern in developing countries, where so many people don’t even have their basic needs met. Nonetheless, the current levels of income inequality in America are signs of a collective failure that requires sustained effort at the national and state levels, and better policies focused on providing equal opportunity and more reliable safety nets.
Jason Scorse