It’s unusual that economic works garner national attention in the United States, especially to the degree that they sell out on Amazon. French economist Thomas Piketty has done just that with his work Capital in the Twenty-First Century. But his results are startling and incredibly important as we analyze the economic conditions of people around the world. Piketty calls for a global top tax rate of 80%, as well as a small tax on held wealth. However, this is not a politically viable policy within America, as the people who benefit from it are not those who control the U.S. political system.
Piketty states that capitalism ultimately leads to Old Money individuals who inherit their wealth gaining increasing amounts of economic power. The trend we’re seeing in America, as shown through the Gini coefficient, is that we’re moving farther and farther away from equality and toward economic hegemony of America’s .001%. The economic wedge in the future isn’t between high wage earners and low wage earners, but rather those who inherit wealth and those that do not. This is terrible for the economic growth of the United States. When capital is held in the bank accounts of a select few, that money isn’t circulating within the economy. This prevents new jobs from being created, middle and working class individuals from being able to purchase essential goods, and lowers the standard of living for almost all in the country. While the top .001 percent can still afford what they need and want, that’s not the case for most. Most employers cannot afford to pay employees, lowering supply, which drives up the cost of necessities that are still in demand. The economy suffers, and because of that, the American standard of living declines.
The connections between socioeconomic status, voting behavior, and political power have long been studied. Christopher Ryan Brown of Columbia shows in his work “Voting Behavior Based on Socioeconomic Status” that individuals earning low incomes are very much less likely to be represented in government because they do not participate in large enough measure to elect representatives who advocate for those with low income. Even if they were able to elect politicians who said they would cater to the poor, it is unlikely that they would follow through on their promises.
Individuals with an income under $10,000 a year were less likely to register to vote than those earning over $150,000 a year: 62% registered as compared to 75%. Low-income individuals incur greater costs by turning out to vote, since they are far more likely to be paid by the hour rather than salaried. Because election day is not a recognized holiday and employers are not required to allot their employees time to leave for the polls, low-income individuals are disincentivized from voting. If somehow the United States were able to get the low-income Americans who aren’t benefiting from capitalism’s course of action to show up to the polls and elect progressive leaders, it’s still unlikely much political change would come of it. According to a statistical analysis of public opinion and U.S. Senators’ roll call votes by political scientist Larry Bartels, constituents in the bottom third of the income distribution have no apparent effect on their senator’s vote choice.
It’s because Americans and American legislators ignore low earners that we’ll never get anywhere near Piketty’s policy proposal. In his work, he proposes a global top tax rate of 80 percent on wage income, as well as a small tax on net wealth. This would be incredibly inconsistent with current policy and our current political attitudes toward the wealthy.
In recent years, we’ve seen the Citizens United and McCutcheon decisions, allowing the wealthy to heavily subsidize politicians they agree with, the lowest corporate tax rates we’ve seen in the modern era, the largest disparities between CEO and average worker pay, the highest amount of corporate profit per dollar, and increasing productivity but stagnating wages since the 1970’s. Inequality in America, and all capitalist countries, is growing substantially.
Citizens in the U.S. don’t see eye to eye on public policy in regards to welfare and government spending. The wealthy in America are far less likely to support government spending than those who benefit from it. Class consciousness is prevalent in America. Because the individuals who influence policy are the wealthiest, we’re seeing a general shift away from government spending and general assistance to citizens in need of it. If Americans were equally informed about this matter and could engage equally in the political realm, real change would be feasible to bring the country back to a more sustainable wealth distribution.
However, when we look at political accessibility and voting trends, we see that it is those who are most downtrodden by income inequality who have the quietest political voice. They do not have the same access to political news and are generally less informed, they don’t believe their vote matters or that their political engagement generally matters, and they are less likely to show up to vote. The reality of the capitalist world is that the system we live in promotes inequality. This should concern people of all political persuasions, especially Republicans who promote the American Dream and Bootstraps Mentality. However, because the political sphere is beholden by the wealthiest Americans, it’s unlikely that we’ll see any real movement toward Piketty’s proposals.
Class of 2014 at Concordia College. Majoring in Political Science and Philosophy. Involved in Student Government and, of course, The Concordian.
I can’t say I’m especially left or right with regard to politics, as both sides seem pretty incompetent to me. However, I do have to play devil’s advocate and ask to what extent you wish to redistribute wealth. If you want a level Gini coefficient, I can tell that you have not researched this statistic enough. The Gini coefficient is only a relative measure of inequality, which is one of the reasons it is abandoned by many statisticians. Human development index, though flawed, is often a much better measure of the well-being of a nation’s citizens. I urge you to take a closer look at the statistics involved in economic measurement, as many flaws that cause statisticians to throw them out are often missed by economists (even the NYT best sellers 😉 )