Plutocracy in America: How Rising Inequality Destroys Middle Class & Exploits the Poor - Political Science Book on Wealth Gap & Social Justice for US History Studies

A person’s degree of support for inequality in wealth and income is a good indicator of where he or she falls on the political spectrum. Those on the left oppose the Gilded Age level of economic inequality we have today, while those on the right not only defend it, but support policies to increase it.The evidence of widening inequality is difficult to credibly deny, though conservatives predictably say it’s not as bad as it seems. They also say “so what? It’s the invisible hand of the free market at work, where people are rewarded for their contributions.” Ronald Formisano challenges that view.In Plutocracy in America, Formisano describes the growing wealth chasm as well as the repercussions of that inequality. “Inequality is the root of social ills,” said Pope Francis. Formisano argues that our vast and growing inequality leads to a variety of social ills, which includes a shrinking middle class, declining life expectancy for Americans who struggle economically, more sluggish social mobility, politics dominated by powerful elites, and growing residential segregation by income.As wealth becomes more concentrated, the middle class is shrinking, down from 61 percent of adults in 1971 to 51 percent in 2011. Declining home ownership is one symptom. Downward mobility is the grim reality that contributes to the opioid epidemic and the drop in life expectancy among working class whites.As the gap between haves and have nots has gotten wider, upward social mobility has gotten more difficult. Americans have less opportunity to move up the ladder today to higher classes than did earlier generations of Americans. There is also less mobility now than in Canada, Scandinavia, and most other affluent nations.It’s easy to see that the concentration of wealth is unhealthy for a democratic republic. Abundant research shows that the preferences of the affluent are far more likely to become public policy than the preferences of the average American. Large campaign donations influence the recipients, much as they deny it. “Money – the mother’s milk of politics – is the root of representational inequality,” writes political scientist Larry Bartels. Supreme Court decisions striking down limits on big donations are “less about free speech than about giving those few people with the most money the loudest voice in politics,” said the New York Times. Political inequality is growing.When it comes to health, Americans don’t compare well to their counterparts in other affluent nations. Their life expectancy is “one of the lowest among the richest countries,” says one economist. The factor most responsible for the US health disadvantage is “the vast and rising inequality in wealth and income,” according to the US Institute of Medicine.The main driver of rising inequality is the surge in CEO compensation, according to the influential economist Thomas Piketty. Labor’s slice of the pie has gotten smaller as wages have stagnated. The benefits of productivity growth used to be widely shared, back when unions were strong. Now most of the profits go to a tiny percent at the top.Growing economic inequality rests upon three popular myths, belief in which accounts for so little protest of the status quo. One myth is the American Dream, which claims there is better opportunity for success in the US than elsewhere. “Only in America” the politicians say. Most Americans don’t realize that mobility has diminished and almost all other advanced countries have greater socioeconomic mobility.A second myth is that equal opportunity is the American way. There is no equal opportunity for the nearly one in four children who grow up in poverty, a higher percentage than any other OECD nation. Opportunity is highly unequal in the elite universities filled mainly by offspring of the wealthy. Research shows that “unequal chances are real and persistent across generations.” As Paul Krugman puts it, the USA is a nation that “preaches equality of opportunity, while offering less and less opportunity to those who need it most.”A third myth is that poverty and wealth are meritocracy at work; people get their just desserts from the invisible hand of the free market. This view ignores the impact of laws and policies that are shaped by lobbyists to bestow tax loopholes and subsidies on the well-to-do. These deductions and subsidies add up to over a trillion dollars, which is the result of policy choices, not the free market. Conservatives don’t worry that the rich will become dependent on government largess. Meanwhile, state and local taxes are mostly regressive, taking a bigger share of income from those who can least afford it.Then there is white collar crime, such as the financial abuses that led to the Great Recession, for which no individuals were prosecuted. Companies paid fines, banks got bailed out, and executives got bonuses. The just desserts theory also ignores the growing role that inheritance plays as the source of great wealth. Greater inequality means social class plays a bigger role in a person’s success or lack thereof. The rich give their offspring advantages to all but guarantee the next generation will also prosper, regardless of merit, even if that means bribing college officials.What should be done? James Madison believed that extremes of wealth and poverty should be resisted. Madison proposed “political equality among all,” and “withholding unnecessary opportunities” from the favored few to prevent an “immoderate and especially an unmerited accumulation of riches.” The law should “reduce extreme wealth…and raise extreme indigence.”It does not seem likely right now that Madison’s prescriptions will be followed. Opportunity will remain highly unequal, and our political system is becoming increasingly plutocratic. Formisano does an impressive job of putting this era in historical context, and in describing the consequences of living in “the land of the free to be unequal.” ###