The Most Important News Story of the 21st Century

“Income Inequality” is the most important news story of the 21st century.

Why?

Because income inequality is the most pervasive hidden dimension beneath a whole range of conspicuous front-page news stories of the last decade.

Inequality is shown by a perfect storm of new data to be the root and driving force beneath a panoply of social movements and social pathologies, national and global, from the Great Recession of 2008 to the Arab Spring to the Tea Party Patriots to the just-now breaking mainstream populist “Occupy Wall Street” (“We’re the 99%) movement.

Booms and Busts

Inequality is now recognized as a primary driver of economic booms and busts. The last time the current level of inequality in America was this extreme was in 1929.

The latest issue of Mother Jones has an article (“Study: Income Inequality Kills Growth“) reporting on a new IMF study comparing “six major economic variables across the world’s economies.” The author of the study, economist Andrew Berg, found that “equality of incomes was the most important factor in preventing a major downturn.”



Social Instability

Affluent societies with high levels of inequality often have more social instability and social pathology than poorer societies with higher levels of equality.

The human innate sense of fairness (sense of grievance) is driving revolutions.

Consider the following conspicuous events (chosen at random from the news of this century). Each event had a radically different effect on the powerful, compared to its effect on the the powerless, or — like the Rise of the Tea Party and  “Occupy Wall Street” — is an expression of that difference.

Aftermath of Hurricane Katrina
Arab Spring
Terror Wars and Who Fights Them
The Great Recession
Rise of the Tea Party Patriots
The Disappearing Middle Class
Occupy Wall Street

Everyday Pathologies

Beyond these front-page stories, recent research shows that there are also many “ordinary” pathologies that are driven by inequality:

An editorial in yesterday’s New York Times Sunday Review reinforces the importance of inequality. Here’s an excerpt:

When the protesters say they represent 99 percent of Americans, they are referring to the concentration of income in today’s deeply unequal society. Before the recession, the share of income held by those in the top 1 percent of households was 23.5 percent, the highest since 1928 and more than double the 10 percent level of the late 1970s.

That share declined slightly as financial markets tanked in 2008, and updated data is not yet available, but inequality has almost certainly resurged. In the last few years, for instance, corporate profits (which flow largely to the wealthy) have reached their highest level as a share of the economy since 1950, while worker pay as a share of the economy is at its lowest point since the mid-1950s.

Income gains at the top would not be as worrisome as they are if the middle class and the poor were also gaining. But working-age households saw their real income decline in the first decade of this century. The recession and its aftermath have only accelerated the decline.

Research shows that such extreme inequality correlates to a host of ills, including lower levels of educational attainment, poorer health and less public investment. It also skews political power, because policy almost invariably reflects the views of upper-income Americans versus those of lower-income Americans.

Populist Movements (Rightwing and Mainstream)

A sense of grievance, driven by inequality, is the common factor driving both the Tea Party and the “Occupy Wall Street” (We Are The 99%) movements.

We are undergoing a political phase change (aka “revolution”), not a new thing in history.

Where this one leads — and how politically potent it becomes — remains to be seen.


Other Resources:

Comments

5 Responses to “The Most Important News Story of the 21st Century”
  1. Anna Haynes says:

    re the 1+min video, it’s nice to see one of these fellows engaged in big-picture & constructive pursuits.

    A very good Infographic (“we grew apart”) (link)

  2. depelton says:

    Anna, I like your “We Grew Apart” link so much, I’m embedding the image here:

  3. Steve Frisch says:

    Don, I fear I have been overlooking the incredible quality of your blog. This is truly an impressive compilation of resources, news, and information, far exceeding anything else available in our community.

    I pulled out my 2010 taxes this morning and did the math on Warren Buffet vs. Me and here is what I found:

    Warren Buffet, who paid an 11.04% tax on his $63,000,000 in income in 2010, pays 6% less as a percentage of his income than I do. That’s right, my middle class, two income no kids family, making approximately .002% of Mr. Buffet, pays 6% more federal income tax; 17.2% to be exact. And guess what, so does almost every American family making anywhere between $75,000 and $400,000 per year. If Mr. Buffet paid what I pay the nation would be $3,780,000 less in debt annually. If I paid Mr. Buffet’s rate I would have another $7500 per year in my pocket, to spend, save or invest.

    I would encourage people to do their own “Buffet” test and ask yourselves, what is fair?

  4. depelton says:

    Steve:

    Thanks for your encouraging remark, and thanks too for the information about the “Warren Buffet test.”

    As soon as I get a chance, I’ll pull out last year’s tax return and do the exercise myself. I’ve been assuming that our middle class, two-retirement-income, grown-kids family probably pays an effective rate of about 18% … but I need to do the math.

    It’s shocking when you get to the absolute figure ($7500 in your case). That’s a vivid measure of the “fairness gap,” to coin a phrase.

Speak Your Mind (You Must Use Your Real Name)

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!

Bitnami