America lags behind on addressing inequality

Dear Editor:

When I was young, people spoke differently about our government. My father’s friends were all veterans and, like my father, had benefited from the GI Bill. They had seen their Government orchestrate the victory in WWII, pay for their higher education, provide work during the Depression, connect the country with wide interstate highways, etc. They spoke respectfully about our U.S. government.

Often today, people criticize the “government” like it was some entity other than the president, legislators, judges and some finely written pieces of paper. Some people praise the Constitution and then criticize the “government,” not realizing that the Constitution is simply a description of how our government operates. The founders are still revered, as they should be. Each of them faced the gallows for publicly signing a declaration of their intent. They risked all to create the American government.

So why is the American government now so criticized? During the Great Depression, a self-made, very wealthy and also wise businessman named Marriner Eccles explained it well. He said that the wealthy — his friends and peers — had undue influence on the rules of the very system that influenced them, especially the tax policies. Government is the only entity that can levy taxes, so, along with taxes, it has become the enemy. But are governments and taxes really the enemy of the middle class? In the very prosperous 35 years following WWII, especially the Eisenhower years, the tax situation of the very wealthy was quite different. After deductions their average tax rate was 50 percent. Today, after deductions, particularly the capital gains deduction, the average rate is often closer to 18 percent. The rest of us are taxed at a considerably higher rate. As Eccles said, the undue influence of the wealthy and powerful has changed the rules of the game in their favor. Unfortunately, the majority of the U.S. Congress are now millionaires (with paid health care), which likely puts them out of touch with the lives of most Americans.

In recent years, as the tax rate on the very wealthy was being lowered, inequality rose dramatically. We are now more unequal than 21 other developed countries, including Britain, most of Europe, Japan and Australia. So today, someone in the middle class from any of the 21 surveyed countries has a better chance of getting ahead than someone from the middle class in the United States. It’s hard to believe that today in America, the land of opportunity, the majority of our youth will earn less income than did their parents.

Thomas Piketty, the renowned French economist, using past tax and wealth records mainly from England, France and the United States, tracked, for 15 years, the causes of inequality in various nations. His work bluntly predicts that today, and in our immediate future in this century, if there are no countering policies, which only government can provide, inequality will greatly increase. For a sobering portrayal of unbridled inequality, from French and English history, one can read the accurate descriptions in a Balzac or Jane Austin novel. It’s not a pretty picture unless one has inherited money: for anyone working, regardless of the profession, life is grim, and with almost no upside. In a world of very high inequality, hard work of no avail, there is no “pulling oneself up by the bootstraps.” Inequality is corrosive and expensive to any nation; there is more drug use and incarceration, more polarity, poorer health, less social mobility, lower wages. This sounds familiar.

This is not a criticism of the wealthy; it is a criticism of the laws and policies that have shifted over time and now disadvantage the majority: our working middle class. The 21 countries mentioned above have governments that use the leveling policies that so strongly affect our fortunes, and so their middle class fares better than ours. They subsidize primary and high school education (as do we), subsidize continuing education for either the trades or for college (like the G.I. Bill), subsidize health care, and sometimes even subsidize child care. In short, they help their middle class. And yet, the United States is the richest nation of them all.

Teddy Roosevelt, the fierce Republican president, and then Taft, and then Wilson, confronted powerful individuals and corporations and diminished their power through policies of regulation, trust-busting and eventually taxes. They worked to counter inequality, but these presidents had the support of the public in order to succeed. “We the People” could decide to carry on as usual, or we could decide that any legislator, from any party, who simply repeats “I will lower taxes,” can be likened to a snake-oil salesman; that fair progressive taxes fund educations and other social programs that level the playing field for the majority of us; and that our American government, while it may need some tweaking via knowledgeable voting, is well-crafted and can be on our side.

Bill Lawless