Saturday, May 2, 2015

Troubled by inequality

My wife and I finally watched the documentary Inequality for all, featuring Berkeley economist Robert Reich. I highly recommend it. It is a bit depressing but the issue is not one that can be ignored.  The movie does a nice job presenting the issue in an engaging and at times humorous manner. Although it focuses solely on the case of the USA, the issues are increasingly relevant in the rest of the world.

Why does economic inequality matter? After all don't those CEOs deserve their high salaries and tax breaks because they do such a good job creating wealth and jobs for others? Isn't inequality a necessary and even good consequence of capitalism?
Well no, it is all a matter of degree.
Furthermore, CEOs pay themselves more and more regardless of their companies performance. Jobs are not created by billionaires but rather by middle class consumers.
During the Eisenhower (Republican and former WWII general) Presidency the top marginal tax rate was 91% !! Now it is like 35%.

But, the biggest problem with extreme inequality is the negative implications for democracy and for political and social instability (Remember the French revolution).
The top 1% increasingly use their wealth to influence the political process to preserve their vested interests and undermine democracy.

The movie focusses solely on the stagnating middle class. They increasingly struggle to just make ends meet: two incomes, longer hours, second jobs, and increasing debt...
Yet, my biggest concern is actually the bottom 25%.
They are voiceless and their prospects for the future are even bleaker.
Someone needs to make an engaging documentary highlighting their plight.

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