While the country’s attention is focused on the presidential election that is fourteen months down the road, and Trump and Biden’s gaffes and lies, inequality between the haves and have nots keeps growing. And nothing is being done to correct this. Democratic candidates have proposed various ideas to close the gap, but first a Democrat has to beat Trump and the party has to take control of the Senate. Whether these outcomes will occur remains uncertain.
Many citizens do not realize how vast the gulf of economic inequality is between the top 0.01 percent and the bottom 99 percent. And if there is no change, dynastic wealth will lead to increasing oligarchy, with the mega-rich completely controlling society’s political, social, and economic systems. The power of this group must somehow be curbed to allow advancement on the basis of merit rather than money. A democratic society should provide as much equality of opportunity as possible for its citizens. If economic inequality continues to grow, a social explosion is likely to occur at some point.
Ray Dalio, the CEO and Chief Investment Officer of Bridgewater Associates, one of the world’s largest hedge funds, wrote an essay in April 2019 on reforming capitalism, concerned that the degree of inequality was going to destroy the system. Growing up in a middle class family in the United States, he became a billionaire but is unhappy with the way capitalism has evolved. Though he believes the capitalist system is an effective motivator for people and a good allocator of resources, it has not been successful for the majority of Americans, with widening economic disparities between the haves and have-nots. There has not been significant growth in personal or family wealth since the 1970s for most of the population while it has skyrocketed for the top 1 percent. The bottom 60 percent can actually be considered poor. Economic mobility for the most part is a myth and many impoverished children are malnourished and poorly educated, their futures bleak.
To change the current situation, there must be more focus on educating those having difficulty with school, offering incentives and support to keep them from abandoning education. Pre-school education for disadvantaged children must be made universal and its quality improved. Much more money must be spent on teacher’s salaries and on the worst performing school districts, making teaching a more attractive profession to improve its quality. Governments at all levels must also make certain all children are receiving healthy, well-balanced diets, for one cannot learn and function well if one is malnourished.
These changes of course will require higher taxes on the wealthiest citizens, needed to keep society vibrant and innovative, allowing those from the lower economic strata to reach their potential and benefit the nation. While affluent citizens may resist higher taxes, they are necessary for America to progress to a more equal, successful, and conflict free society. As Dalio says- “capitalists typically don’t know how to divide the pie well and socialists typically don’t know how to grow it well.”
Because of the degree of inequality, populism is arising on the right and the left, and a future economic crisis could lead to major confrontations. Working now to diminish inequality, and increase optimism about the future by less affluent citizens could prevent open conflict. The pursuit of profit and efficiency by capitalists and capitalist companies must not cause further damage to those at the bottom rungs of the economic ladder or the ladder will be pulled out from under individuals on the higher rungs. The share of the economic pie going to the working and middle classes must be made more equitable. With automation and artificial intelligence increasing in the nation’s factories and service industries, productivity is going to rise. Much of that growth should be earmarked to improve the lives of the working and middle classes.