All Bank Accounts are not Created Equal

“How does one put together a democracy based on the concept of equality while running an economy with ever greater degrees of economic inequality?”

Lester Thurow

“Shifting Fortunes”

The rich get richer; the poor get poorer. It’s an ugly truth Americans have been facing for centuries.

Ranked the 39th-worst nation in family income distribution by the CIA World Factbook, America falls below nations such as Uganda, Nigeria and Kenya.

According to the University of California, Berkeley, the top one percent of the U.S. population receives an average income of over $1.1 million, while the bottom 90 percent earns less than $32,000. The highest-paying jobs continue to experience rising incomes each year, while the lowest-paying jobs tend to remain stagnant in pay. In addition to this stark contrast in income at opposite ends of the spectrum, the middle class is increasingly disappearing. The income gap is becoming less of a gap and more of a chasm.

The Constitution declares, “All men are created equal.” Few realize the significance of the word “created” in that sentence. Every person is entitled equality in birth, but it seems the equality ends immediately after. From the lucky “trust fund babies” to the unfortunate children born into poverty, it is evident that “equal” in America does not extend to economic equality. With the richest 10 percent of America owning over two-thirds of the nation’s wealth, how truly equal are Americans?

Despite opposing other various forms of inequality in America – such as racial, legal, political and gender inequality – Congress is seemingly indifferent toward economic inequality.

This isn’t particularly surprising, considering the median net worth of Congress members is $912,000, compared to the median net worth of $120,000 for American families (based on 2009 Congressional Data and the U.S. Census). This is where economic inequality stops being a financial problem and becomes a political hazard. Even the lowest salary of a member of the House or Senate, $174,000, places members in the top 10 percent of Americans.

Income inequality would be less of a problem if social mobility were widely achievable in American society. The ability to move easily between social classes would eventually result in an efficient allocation of labor and wages. Wealth would ultimately be independent of the wealth of the family generation before you. The American dream promises the possibility of prosperity and success to those who work hard and dream big, but this simply isn’t the case.

Unfortunately, there are obvious barriers restricting social mobility in America, which are particularly visible in politics. Nearly every mainstream political nominee tends to have previously accumulated wealth. Often, that personal wealth is used to run extensive campaigns in which additional funds are raised. Despite the fact that a poorer candidate would better financially represent the majority of America, the affluent continue to win elections.

America once believed in fighting for equality: equality of race, of religion, of gender, of opportunity. It is the former that faces the greatest inequality. Every American citizen does not share an equal opportunity for success, and economic inequality grows into an ever-greater divide.

Barriers to opportunity begin within the educational system. In addition to the poor quality of the average American education, there are substantial financial barriers within the system itself. The cost of attending college has skyrocketed in America, pushing top-tier educations at private institutions (where graduates go on to earn top wages) out of reach for even the middle class. With access limited to those who can afford the extravagant tuition (or those willing to take on years of enormous debt), there arises a self-perpetuating upper class. Generally, only the wealthy can afford to obtain the expensive degrees needed to earn top wages.

This born-rich-to-die-rich, born-poor-to-die-poor cycle must be broken. We need to strive to obtain equal opportunity for each of our citizens. The poor must be given opportunities to succeed and move upward through social classes. The education system needs to be reformed to allow greater access to higher education while also improving the quality of the education itself. At the same time, America needs to remove the safety nets that keep the upper class wealthy. Tax cuts and low estate taxes for the rich in the name of “trickle-down” economics rarely seem to reach those at the bottom.

In their book “In Growing Prosperity,” authors Barry Bluestone and Bennett Harrison identify the absurdity of this idea by stating, “If you pour enough wealth into the funnel at the top, those at the bottom eventually receive a little of the benefits themselves. One might ask, what kind of decent society requires making the rich that much richer to prevent everyone else from getting poorer?”

To view the Ka Leo version of this article, click here.


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