IS ECONOMIC INEQUALITY ENDING THE AMERICAN DREAM?By Anne L. Schneider. (full paper available at UUJAZ.org )

Escalating Inequality: the UU “CSAI”

VUU’s Income Inequality Forums: Is Income Inequality Ending the

American Dream? Presentation by Anne L. Schneider Oct. 26

America’s Winter, Dec. 21 (12-2) A 90 minute documentary on what is

happening to the middle class. Led by Charlie Thomas

Income Inequality is Dangerous to Your Health Presentation by Ann Sebren, TBD (March /

April)

Escalating Inequality – Part I. The End of the American Dream?

Is income inequality really escalating, or is this just political hype?

Top 1% of Households: 20% of Income!The “graph of the year”

1913

1921

1929

1937

1945

1953

1961

1969

1977

1985

1993

2001

2009

05

10152025

(Saez and Piketty pretax data, includes capital

gains

Percent

35 Years of Escalating Inequality

50 years of increasing EQUALITY

And If That Isn’t Convincing....

1917

1925

1933

1941

1949

1957

1965

1973

1981

1989

1997

2005

0

20

40

60

Top 10% of Households Get 50% of the Income! (Saez and Piketty data, includes capital gains;

pre-tax)

Percent

How Much Money Are We Talking About?

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Average Annual Income, Top 1% and lowest 90% (Saez and Piketty data,

adjusted to 2012 CPI-U) top 1 % bottom 90 %

Axis Title

The Other 90%

Top 1 %

Arizona Is an “Average” State

0

0.05

0.1

0.15

0.2

0.25Share of all income held by top 1%,

in Arizona (Mark Franks data)

averagearizona

But, What’s Wrong With Income Inequality?

You really don’t expect a capitalist country to try to equalize incomes, do you?

No, but we do have principles!!

The Difference Principle....

.... Income inequality can be justified if it works to the advantage of everyone, especially the MOST disadvantaged (John Rawls)

Rawls may not have been a member, but his memorial

service wa was held in the UU church of Lexington Mass.

Does a “Rising Tide Raise All Boats?”

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000 Average pre-tax income, bottom

90%(Saez & Piketty CPI adj )

income

This is 90%!

A Closer Look: Poorest 20%

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

0

4000

8000

12000

16000

20000

Average Income Poorest 20% (CPS, CPI adjusted to 2012)

The Equal Opportunity Principle (Social Mobility)

Rawls also said that income inequality is justified ONLY IF “stations are open to all.” Economic Justice has never meant Equal Incomes; but rather, TRUE, Equal Opportunity.

Rags to Riches! Horatio Alger Jr. (He was a Unitarian)

Social Mobility, Not Very Good! Is it Worse?

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

05

101520253035

Probability of Reaching Top 20% by Birth Cohort (Chettey, et al)

Q1 Q2 Q3 Q4 Q5

Social Mobility in Arizona

Phoenix 7.5Tucson 7.1Flagstaff 9.5Yuma 10.8Northeast 4.8

Probability of moving from lowest quintile to highest. Some areas are about 20.

The Need Principle:

No one should have “surplus” income until all persons have their basic needs met.

1959

1964

1969

1974

1979

1984

1989

1994

1999

2004

2009

0

10

20

Official Poverty Rate (People), U.S. (Census, Current Population

Survey)

Meeting Basic Human Needs

2000

2002

2004

2006

2008

2010

2012

05

1015202530

Supplemental Poverty Rates (People), Arizona and U.S.

arizonaU.S.

The Proportionality Principle

Plato – The wealthiest should make no more than four times the poorest

Aristotle – No, it would be okay for the wealthiest to make 5 times as much as the poorest

J.P. Morgan – The CEO should not make more than 20 times the workers

Peter Drucker – 20 times is about right

In the U.S. the most egalitarian period was the 1970s and the ratio was 20:1 (top 1% to poorest 20%) and by 2012, it is now 40:1.

What? Me Worry?

Piketty says, Income inequality will continue to escalate well into the 21st century... Unless...

Other leading economists say... The current level of income inequality is damaging the economy as a whole, including the recovery; capitalism cannot survive this level of inequality

Political scientists say ... The infusion of money into politics means that the government is unable to reverse policy directions

Others: Income inequality is damaging to your health, to social capital, to the very fiber of our communities

What can be done?

Masters of the Universe would... Increase the top marginal tax rate (back to

75%) Greatly increase the inheritance tax Create a global progressive tax on wealth Overturn Citizens United (and take money

entirely out of politics, “Clean elections” for everyone)

End the 60 vote “filibuster” in the Senate Curtail lobbying; full disclosure

What can be done by ordinary people?

Level 1: Educate ourselves and others (think and feel it)

Level 2: ORGANIZE ourselves, inspire, identify action opportunities, build alliances with others

Level 3: Take Action – show up, donate money

Level 4: Reach the heart and CHANGE the conversation; use art, poetry, film, music to reach people’s hearts and change the paradigm

Cities can lead the way!

Economics Take on the corporations (pressure them to pay a living wage) and

to get out of ALEC Take on the banks (pressure them to reduce principal on

underwater loans; to refinance student loans) Take on local government (increase the minimum wage; put local

funds into community or public banks) Politics

Increase political participation, stop voter suppression Take on ALEC Strengthen “clean elections,” overturn Citizens United Stop harmful state legislation

Education Make higher Ed more affordable K-12 funding; support public schools

Remember

Do what you can, with what you have, from where you are !

“Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has.” Margaret Mead

Your turn: Questions, Comments, Discussion.