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Income Inequality Was Constructed

Michael Lipsky

What are people angry about?  In a series of 41 well-chosen slides making the rounds on the internet, financial analyst Henry Blodgett graphically demonstrates the distortions in the distribution of income, the dimensions of the unemployment problem, and various indicators of the concentration of wealth in America.  Although there’s little new in these data, the conciseness of the material is extremely valuable. 

But the presentation needs a few more slides.  A key transition between a widespread social problem, such as inequality and low job prospects, and a social movement, is the growing awareness that there are reasons that people experiencing these conditions are stalled or suffering.  People don’t get angry if a hurricane causes a flood that destroys their homes.  There’s nothing one can do about the weather.  They do get angry, however, when a poorly constructed dam breaks, when protective levies fail, and when poisonous mine wastes ruin the watershed.   

In short, people occupying public spaces around the world are angry because the problems of inequality and deprivation that we are now experiencing were and are constructed.

The recession resulted in part from the weakening of regulatory controls on financial institutions.  Income inequality has been greatly exacerbated by legislators’ decisions to tax capital gains differently than wage income.  Organized labor, a traditional force in support of higher wages and better working conditions, has been weakened by deliberate legislative efforts to reduce its power and influence.

Those who benefit from the economy as currently organized would like people to think that nothing can be done to improve conditions.  They promote the idea that market forces, particularly in the era of globalization, like the weather are not subject to correction.    

Blodgett’s admirable slide show takes us part of the way toward an understanding of why people are angry.  But the presentation neglects to report that the incipient movement builds on a latent understanding that the economy is a set of rules that channel the outcomes of markets, and that public structures may be created and reformed to better meet the needs of those of us who are not currently thriving.