LIFE ON THE PLANTATION
Thoughts on Income Inequality
Jeoffry Gordon, MD, MPH
paradocs2@hotmail.com
References: http://gordon.netrootz.com
La Jolla Democratic Club
February, 2014

Pope Francis called for renewal of the Roman Catholic Church and attacked
unfettered capitalism as "a new tyranny", urging global leaders to fight poverty
and growing inequality in the first major work he has authored alone as pontiff.
The 84-page document, 'Evangelii Gaudium' known as an apostolic exhortation,
amounted to an official platform for his papacy. In it, Francis went further than
previous comments criticizing the global economic system, attacking the "idolatry
of money" and beseeching politicians to guarantee all citizens "dignified work,
education and healthcare".
He also called on rich people to share their wealth. "Just as the commandment
'Thou shalt not kill' sets a clear limit in order to safeguard the value of human life,
today we also have to say 'thou shalt not' to an economy of exclusion and
inequality. Such an economy kills," Francis wrote in the document issued on
Tuesday. "How can it be that it is not a news item when an elderly homeless
person dies of exposure, but it is news when the stock market loses 2 points?"

Richest 85 boast same wealth
as half the world
Eighty-five people control the same amount of
wealth as half the world's population. That is 85
people compared with 3.5 billion. A new report from
Oxfam has been published in time for the World
Economic Forum in Davos this week. It shows the
world's ultra-wealthy have not only recovered from
the global financial crisis, they have positively
blossomed. The report shows the wealth of the 1 per
cent richest people in the worldis worth about $110
trillion, 65 times the total wealth of the bottom half
of the world's population. It also shows the world's
richest 85 people control about $1.7 trillion in wealth,
equivalent
to the bottom half of the world's population. And far
from hindering the wealthy, the political response to
the global financial crisis - including the actions of
central banks and the austerity measures introduced
by national governments - has made the rich
fabulously richer.
In the US, the wealthiest 1 per cent of the population
grabbed 95 per cent of post-financial crisis growth
between 2009 and 2012, while the bottom
90 per cent became poorer. But an Oxfam survey of
six countries - the United States, UK, Spain, Brazil,
India and South Africa - has found that the majority of
people believe laws and regulations are skewed in
favour of the
rich, so people are noticing.

A WORLD WIDE PERSPECTIVE
on DISEASE and MORBIDITY
& INEQUALITY

There are several ways in which economic inequality undermines people’s well-being.(I don’t claim that mere
awareness that others are better off makes people worse off: I don’t credit envy with a genuine grievance.)
Economic inequality (1) makes the less well-off vulnerable to domination, (2) makes them vulnerable to
stigmatization, and (3) causes governments to favor the better-off at the expense of the worse-off.
Consider the problem of domination. People’s bargaining power is tied to their relative exit costs. This often
enables people with superior wealth to dominate others. Women are more likely to submit to domestic abuse and
control if the cost of leaving their partners is a drastic fall in material well-being. Low-wage workers are often
unable to bargain for predictable work hours because they can’t afford to quit.
Economic inequality can also lead to stigmatization. Adam Smith famously observed that, as the general level of
consumption increases, so does the level of consumption needed by each individual to be able to appear in public
without shame. The consumption of the better-off thereby raises the cost of living for the worse off.
Economic inequality causes governments to make favorites of the better-off and neglect the interests of the
worse-off. A recent study by Larry Bartels finds that the preferences of low-income constituents have no influence
at all on senators’ votes, while the preferences of middle-income constituents have middling influence, and the
views of high-income constituents had great influence. (His findings apply to Democratic as well as Republican
senators.) In some cases, the state grants or extends monopoly privileges to the better off. The state grants the
better-off legal loopholes or vast subsidies at the expense of the worse-off. Payday loans are largely exempt from
usury laws. As economic inequality increases, the better off perceive fewer and fewer shared interests with the
less well-off. Because they buy many critical goods — health insurance, education, security services,
transportation, recreation facilities — individually from the private sector, or pool the provision of these goods
within private gated communities or municipalities governed by zoning regulations designed to exclude the less
well-off, they tend to oppose public provision of these goods to the wider population. At the same time, the
ways they provide these goods for themselves raises the costs to the less well-off of obtaining them. When the
better-off vote down public transportation because they own their own cars, the less well-off must buy cars too.
W hen the better-off spend more on schooling, so too must the less well-off, to give their children a fighting
chance to compete for better opportunities.
By Elizabeth Anderson
October 19, 2009

An updated study by the prominent economists Emmanuel Saez and Thomas Piketty shows that the top 1 percent
of earners took more than one-fifth of the country’s total income in 2012, one of the highest levels recorded in the
century that the government has collected the relevant data.The top 10 percent of earners took more than half of
all income. That is the highest recorded level ever. The income share of the top 1 percent of earners in 2012
returned to the same level as before both the Great Recession and the Great Depression: just above 20 percent,
jumping to about 22.5 percent in 2012 from 19.7 percent in 2011. The new data shows that incomes for the top 1
percent of earners declined about 36 percent during the recession, and rebounded about 31 percent in the
recovery. The incomes of the other 99 percent plunged about 12 percent in the recession and have barely grown
since then, on aggregate. Thus, the 1 percent have captured about 95 percent of the income gains since the
recession ended. The figures underscore that even after the recession the country remains in a kind of new Gilded
Age, with income as concentrated as it was in the years that preceded the Great Depression,

The end of the American dream?
by Steve Schifferes
BBC News Website, September 4, 2006
IT DOES NOT HAVE TO BE THIS WAY:
THE HIDDEN ROOT CAUSE

Rising income inequality corresponds almost exactly with the rise in
household debt relative to income
Factors that are often overlooked in the current policy debates:
1. The potentially devastating consequences for growth and job creation of wage stagnation for the bottom 95% of the
income distribution were largely ignored prior to the crash as their effect on consumption and economic growth were
masked because households compensated for slow wage growth by depleting their savings and by borrowing heavily,
particularly against the steadily inflating value of their homes.
2. The bursting of the housing bubble, accompanied by the financial meltdown, kicked the props out from under
consumption by the 95%.
3. The way the economy generated the demand it needed to grow jobs in the period before 2007 was unsustainable. Even if
we fix finance, we will still need to increase wages for the bottom 95% to ensure adequate and sustainable economic growth
in the future.
4. With little change in the conditions and policies that have led to wage stagnation and rising income inequality, optimistic
forecasts about economic growth in 2014 (and beyond) should be viewed skeptically.
-----Barry Cynamon and Steven Fazzari, “Inequality, the Great Recession and Slow Recovery.”

In January, 2014 the Center for American Progress
and Half in Ten commissioned a poll to ask 2000
Americans what they really think about poverty in
the United States. One-quarter to one-third of
Americans—and even higher percentages of
Millennials and people of color—continue to
experience direct economic hardship. Sixty-one
percent of Americans say their family’s income is
falling behind the cost of living, compared to just 8
percent who feel they are getting ahead and 29
percent who feel they are staying even.

The Populist Imperative
Paul Krugman, THE NEW YORK TIMES, JAN. 23, 2014
“The outstanding faults of the economic society in which we live are its failure to provide for
full employment and its arbitrary and inequitable distribution of wealth and incomes.”
John Maynard Keynes wrote that in 1936, but it applies to our own time, too. And, in a better world, our leaders
would be doing all they could to address both faults. Unfortunately, the world we actually live in falls far short of
that ideal. In fact, we should count ourselves lucky when leaders confront even one of our two great economic
failures. If, as has been widely reported, President Obama devotes much of his State of the Union address to
inequality, everyone should be cheering him on. They won’t, of course. The usual suspects on the right will, as
always when questions of income distribution come up, shriek “Class warfare!
Jobs and inequality are closely linked if not identical issues. There’s a pretty good although not ironclad case that
soaring inequality helped set the stage for our economic crisis, and that the highly unequal distribution of
income since the crisis has perpetuated the slump, especially by making it hard for families in debt to work their
way out.
Moreover, there’s an even stronger case to be made that high unemployment — by destroying workers’
bargaining power — has become a major source of rising inequality and stagnating incomes even for those lucky
enough to have jobs.
Beyond that, as a political matter, inequality and macroeconomic policy are already inseparably linked. It has been
obvious for a long time that the deficit obsession that has exerted such a destructive effect on policy these past few
years isn’t really driven by worries about the federal debt. It is, instead, mainly an effort to use debt fears to scare
and bully the nation into slashing social programs — especially programs that help the poor.
You can argue that Mr. Obama should have tried harder to get these ideas across; But, even if he had tried, it’s
doubtful that he would have succeeded. Consider what happened in 1936. F.D.R. had just won a smashing reelection victory, largely because of the success of his deficit-spending policies. It’s often forgotten now, but the
public remained wedded to economic orthodoxy: by a more than 2-to-1 majority, voters surveyed by Gallup just
after the election called for a balanced budget. And F.D.R., unfortunately, listened; his attempt to balance the
budget soon plunged America back into recession.

Jacob S. Hacker and Paul Pierson Politics & Society June
2010 38: 152-204
Winner-Take-All Politics: Public Policy, Political
Organization, and the Precipitous Rise of Top Incomes
in the United States
Quote-of-the-day@mccanne.org JUNE 28, 2010

Princeton professor Larry M. Bartels’ most significant finding is that there is a partisan pattern to the size of the gap
between the rich and the poor. Over the past half-century, he concludes, Republican presidents have allowed
income inequality to expand, while Democratic presidents generally have not. Bartels goes to great pains in his
introduction to preempt the counterattack he expects from critics on the right. "I began the project as an unusually
apolitical political scientist," he writes, noting that the last time he voted was in 1984, "and that was for Ronald
Reagan." He adds that in doing this work, "I was quite surprised to discover how often and how profoundly
partisan differences in ideologies and values have shaped key policy decisions and economic outcomes. I have done
my best to follow my evidence where it led me." UNEQUAL DEMOCRACY :The Political Economy of the New Gilded
Age, By Larry M. Bartels, Princeton Univ. 325 pp. 2013

An Empire at Risk
We won the cold war and
weathered 9/11. But now economic
weakness is endangering
our global power.
By Niall Ferguson | NEWSWEEK
Published Nov 28, 2009
From magazine issue dated Dec 7, 2009
…if the United States succumbs to a
fiscal crisis, as an increasing number of
economic experts fear it may, then the entire
balance of global economic power could shift.
Military experts talk as if the president's decision about whether to send an
additional 40,000 troops to Afghanistan is a make-or-break moment. In reality, his
indecision about the deficit could matter much more for the country's long-term
national security. Call the United States what you like—superpower, hegemon, or
empire—but its ability to manage its finances is closely tied to its ability to remain
the predominant global military power.

The billionaire investor Tom Perkins, a founding member of the venture capital firm Kleiner Perkins
Caufield & Byers. In a letter to the editor of The Wall Street Journal, Mr. Perkins lamented public criticism
of the “one percent” — and compared such criticism to Nazi attacks on the Jews, suggesting that we are on
the road to another Kristallnacht. Back in 2010 Stephen Schwarzman, the chairman and chief executive of
the Blackstone Group, declared that proposals to eliminate tax loopholes for hedge fund and privateequity managers were “like when Hitler invaded Poland in 1939.”
The very rich, and those on Wall Street in particular, are in fact doing worse under Mr. Obama. Between the
partial rollback of the Bush tax cuts and the tax hike that partly pays for health reform, tax rates on the 1
percent have gone more or less back to pre-Reagan levels. Also, financial reformers have won some
surprising victories over the past year, and this is bad news for wheeler-dealers whose wealth comes largely
from exploiting weak regulation. So you can make the case that the 1 percent have lost some important
policy battles.

This chart* shows the federal effective tax rate, which is Washington's actual cut of your income. Effective
rates matter more than marginal rates. In 1979, for instance, the top marginal tax rate was 70 percent, but
it affected very little income, so the average total tax rate for the 1 percent was about half that figure.
The fiscal cliff deal may not have pleased a number of liberals. But at the very least, they can say
America's richest families will likely be taxed more than any time since Jimmy Carter was president.

“THERE’S BEEN A COUP D’ETAT IN THE UNITED STATES
AND GOLDMAN SACHS WON”
George Soros harshly criticizes true believers in the wonders of unregulated free markets, an ideology he
calls "market fundamentalism.“ Soros attacks market ideology on several grounds, ranging from amorality to its
role in fostering financial instability.
On ethics, he said: "Market values express what one participant is willing
to pay another in a free exchange. They do not reflect social values, nor
do they express many of the intrinsic values that people hold dear..."
Soros disputes the fundamental claim of American textbook economics,
that the "invisible hand" of selfish individual behavior will be good for
everyone:
"Market fundamentalists... [claim] that the common interest is best
served by everybody looking out for his own interests. This claim is false...
There are many political and social objectives which are not properly
served by the market mechanism... These include the preservation of
competition and of stability in financial markets, not to mention issues
like the environment and social justice."
Soros further argues that free-market ideology threatens political
democracy:
"By promoting market values into a governing principle, market fundamentalism has
undermined our society. Representative democracy presupposes moral values, such as
honesty and integrity, particularly in our representatives. When success takes
precedence over integrity, and politics is dominated by money, the political process
deteriorates."

The government is the only reason U.S. inequality is so high

In the 2012 election, 28 percent of all disclosed political contributions came from just 31,385 people. In a nation of
313.85 million, these donors represent the 1% of the 1%, an elite class that increasingly serves as the gatekeepers of
public office in the United States.
More than a quarter of the nearly $6 billion in contributions from identifiable sources in the last campaign cycle came
from just 31,385 individuals, a number equal to one ten-thousandth of the U.S. population.
In the first presidential election cycle since the Supreme Court's decision in Citizens United v. FEC, candidates got more
money from a smaller percentage of the population than any year for which we have data, a new analysis of 2012
campaign finance giving by the Sunlight Foundation shows.

Koch Brothers Fund Tea Party
C
harles and David Koch are owners of a
primary funders for the tea party and other extreme
conservative groups. They are worth $34.5 billion
each making them the 8th and 9th richest people
in the world and controlling stockholders for Koch
Industries Inc. They are a private global conglomerate located in over 60 countries,
including interests in oil, refining, pipelines, paper products, chemicals, fertilizer and
commodities trading with annual revenues around $100 billion.
A review of documents and tax records for frequently connected interconnected web
of corporate front groups, supported by the Koch brothers, shows how dangerous
these groups espousing free markets and liberty have become to society.
The Koch brothers’ decision to create a nonprofit network dates back to 1977 when
Charles Koch founded the Cato Institute, an organization the Koch foundations
continue to fund. According to Cato’s web site, David Koch continues to sit on its
board along with Kevin Gentry, Vice President for Strategic Development at the
Charles G. Koch Charitable Foundation and chief honcho of the secret, annual strategy
meetings of the Kochtopi.

The mission of the American Legislative Exchange Council (ALEC)
is…to advance the Jeffersonian principles of free markets, limited government, federalism, and individual
liberty, through a nonpartisan public-private partnership of America’s state legislators, members of the private
sector, the federal government, and general public.
… to promote these principles by developing policies that ensure the powers of government are derived from,
and assigned to, first the People, then the States, and finally, the Federal Government.
… to enlist state legislators from all parties and members of the private sector who share ALEC’s mission.

Americans have a distorted sense of the level of inequality in their society—but not in the
direction one might expect. Associate professor of business Michael I. Norton has found that
respondents to his surveys universally think that wealth is more evenly distributed in the United
States than it actually is—and what’s more, respondents say they would prefer for the wealth to
be still more evenly spread around. Norton and his coauthor, Dan Ariely (author of the popular
title Predictably Irrational and a professor of behavioral economics at Duke), believe that one
reason perceptions are so skewed is because the easy availability of credit masks people’s real
financial situation.

Ill Fares the Land,
By Tony Judt, THE NEW YORK REVIEW OF BOOKS, APRIL 29, 2010
Something is profoundly wrong with the way we live today. For thirty years we have
made a virtue out of the pursuit of material self-interest: indeed, this very pursuit
now constitutes whatever remains of our sense of collective purpose. We know
what things cost but have no idea what they are worth. We no longer ask of a
judicial ruling or a legislative act: Is it good? Is it fair? Is it just? Is it right? Will it
help bring about a better society or a better world? Those used to be the political
questions, even if they invited no easy answers. We must learn once again to pose
them.
The materialistic and selfish quality of contemporary life is not inherent in the
human condition. Much of what appears "natural" today dates from the 1980s: the
obsession with wealth creation, the cult of privatization and the private sector, the
growing disparities of rich and poor. And above all, the rhetoric that accompanies
these: uncritical admiration for unfettered markets, disdain for the public sector,
the delusion of endless growth.
We cannot go on living like this….But if we do no more than pick up the pieces and
carry on as before, we can look forward to greater upheavals in years to come.
And yet we seem unable to conceive of alternatives. This too is something new.

How a New Jobless Era Will Transform America
by Don Peck THE ATLANTIC, March 2010
The Great Recession may be over, but this era of high
joblessness is probably just beginning. Before it ends,
it will likely change the life course and character of a
generation of young adults. It will leave an indelible
imprint on many blue-collar men. It could cripple marriage
as an institution in many communities. It may already be
plunging many inner cities into a despair not seen for
decades. Ultimately, it is likely to warp our politics, our
culture, and the character of our society for years to come…
One recent survey showed that 44 percent of families had
experienced a job loss, a reduction in hours, or a pay cut in
the past year. We are in a very deep hole, and we’ve been in it for a relatively long time
already….We are living through a slow-motion social catastrophe, one that could stain
our culture and weaken our nation for many, many years to come. We have a civic—
and indeed a moral—responsibility to do everything in our power to stop it now,
before it gets even worse.

MICHAEL SANDEL
PROFESSOR OF GOVERNMENT
HARVARD UNIVERSITY 2005
www.justiceharvard.org
TO THEIR MISFORTUNE, DEMOCRATS IN RECENT YEARS HAVE NOT SPOKEN
CONVINCINGLY ABOUT SELF-GOVERNMENT AND COMMUNITY…..FOR
UNLIKE CONSERVATISM,
LIKE LAISSE-FAIRE CONSERVATIVES, LIBERALS BELIEVE
THAT GOVERNMENT SHOULD BE NEUTRAL ON MORAL AND RELIGIOUS
QUESTIONS….THEY BELIEVE GOVERNMENT SHOULD PROTECT PEOPLE’S RIGHTS,
NOT PROMOTE CIVIC VIRTUE….
THE CHRISTIAN COALITION AND OTHER SIMILAR GROUPS SEEK
TO CLOTHE THE NAKED PUBLIC SQUARE WITH NARROW, INTOLERANT MORALISMS.
FUNDAMENTALISTS RUSH IN WHERE LIBERALS FEAR TO TREAD….A POLITICAL AGENDA LACKING
SUBSTANTIVE MORAL DISCOURSE IS ONE SYMPTOM OF THE PROCEDURAL
REPUBLIC. ANOTHER IS THE LOSS OF MASTERY. THE TRIUMPH OF THE VOLUNTEERIST CONCEPTION
OF FREEDOM HAS COINCIDED WITH A GROWING SENSE OF DISEMPOWERMENT.

The Wrecking Crew
by Thomas Frank
Holt Paperbacks, August 2009

Religious and Free-Market Fundamentalism Have
More in Common Than Their Fans in the Tea Party
Because fundamentalists are ideologically driven, they tend to reject basic facts
that do not comport with their ideology. Religious fundamentalists have
unyielding faith in the literal veracity of the Bible and consequently dispute all
conflicting science, such as the theory of evolution. By the same token, freemarket fundamentalists dispute basic facts that call into question the efficiency
and fairness of strict laissez-faire economics.
Since the fundamentalists' extreme views usually do not square with the facts, they commonly proceed to make
up their own facts, resorting to disinformation and conspiracy theories. As such, religious fundamentalists have
claimed that the theory of evolution is a "fraud," that there is no consensus in the scientific community about its
validity, and that creationism is accepted by many scientists. Free-market fundamentalists have likewise resorted to
glaring misrepresentations in order to defend their ideology. Partisans of deregulation have notably challenged
the Obama administration's health care reform by claiming that America provides better and cheaper access to
medical treatment than nations with universal health care, whose systems are less market-driven and more
regulated. While fundamentalists are adamant that an unregulated market efficiently provides for everyone's
health care, the opposite is true. America is the only developed country allowing insurance companies to profit
from basic health coverage. Until the Democratic reform, it was also the only one that let insurance companies
deny coverage to people with "pre-existing medical conditions," such as cardiac problems or lupus. These
arguments have heavily shaped opposition to "Obamacare," plausibly even more than claims about its
unconstitutionality, which the Supreme Court has now largely rejected, albeit by a narrow majority.
Indifference toward the plight of the uninsured illustrates a salient feature of fundamentalism: obliviousness
towards the social costs of ideological purity. Religious fundamentalists have displayed an equivalent indifference
to the social costs of their purist ideology.
By Mugambi Jouet, Truthout Saturday, 21 July 2012

GEORGE LAKOFF
“The moral of Katrina is mostly being missed….The
cause was political through and through �- a matter of
values and principles. The progressive-liberal values are
America's values, and we need to go back to them. The
heart of progressive-liberal values is simple: empathy
(caring about and for people) and responsibility (acting
responsibly on that empathy). These values translate
into a simple principle: Use the common wealth for the
common good to better all our lives. In short,
promoting the common good is the central role of
government.”

Franklin D. Roosevelt “The Economic Bill of Rights”
Excerpt from 11 January 1944 message to Congress on the State of the Union
“We have come to a clear realization of the fact that true individual freedom
cannot exist without economic security and independence. “Necessitous men
are not free men.” People who are hungry and out of a job are the stuff of
which dictatorships are made.
In our day these economic truths have become accepted as self-evident. We have accepted, so to speak,
a second Bill of Rights under which a new basis of security and prosperity can be established for all—
regardless of station, race, or creed.
Among these are:
The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;
The right to earn enough to provide adequate food and clothing and recreation;
The right of every farmer to raise and sell his products at a return which will give him and his family a
decent living;
The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair
competition and domination by monopolies at home or abroad;
The right of every family to a decent home;
The right to adequate medical care and the opportunity to achieve and enjoy good health;
The right to adequate protection from the economic fears of old age, sickness, accident, and
unemployment;
The right to a good education.
All of these rights spell security….America’s own rightful place in the world depends in large part upon
how fully these and similar rights have been carried into practice for our citizens.”