Sixty of us gathered recently in a Chicago church basement for a program about the precarious U.S. economy. For almost two hours, we sat on clanky metal chairs discussing rising gas and food prices, home foreclosures, declining wages, increasing personal debt, and our fears for the future. Everyone knew the story: The economy is squeezing low-wage workers and pushing once-secure middle-class households into deep distress.
The discussion turned to solutions: living wage laws, expanded unionization, and increasing security and opportunity through low-cost college, matching savings programs, and assistance to first-time homebuyers. Then a woman wearing a colorful shawl commented that the problem was deeper, that “the wealthiest 1 percent now had a greater share of the nation’s wealth—and yet were paying less taxes.”
A young man in a Chicago Cubs baseball cap responded, “All this talk about the rich getting richer is a distraction. The key is to help everyone have the same opportunities. We shouldn’t be attacking the wealthy, especially with all the generous donations to charity.”
A lively exchange ensued. Can we reduce poverty, the group debated, without addressing inequality? Is the common good undermined by vast wealth concentrated in a few hands? Can we reduce unequal wealth without demonizing “rich people”? All good questions. All need answers—because our nation’s extreme inequality has become too staggering to go unexamined.
Most of the wealth and income gains of the last three decades, economists tell us, have flowed up to the wealthiest 1 percent of households, those with more than $5 million in assets. And within that affluent group, most gains have gone to the tiptop of the wealth pyramid, the 100,000 households that comprise our richest one-tenth of 1 percent. Last year, 7,500 households in the U.S. actually had annual incomes over $20 million.
Meanwhile, after several decades of unprecedented economic growth and wealth expansion, the U.S. poverty rate is virtually unchanged and the gap between black and white household net worth has improved barely at all. The U.S. has entered, in effect, a second Gilded Age. We live in an epoch that mirrors the horrific inequalities of wealth and opportunity of a century ago. That was the last time that the wealthiest 1 percent of households owned more wealth than all the families in the bottom 95 percent combined.
These facts go largely uncontested in our national political discourse. Even conservative politicians and think tanks concede that income inequality has accelerated. The dispute lies over whether this inequality matters—and what to do about it.
The Inequality Burden. The evidence that inequality does matter has been steadily mounting. The corrosive and growing concentration of wealth and power sits at the root of many of our most urgent societal problems. Extreme inequality is bad for our democracy, bad for our culture, and bad for our economy.
As Louis Brandeis, later a Supreme Court justice, observed during the first Gilded Age, “We can have a democratic society or we can have great concentrated wealth in the hands of a few. We cannot have both.” Today, Barbara Ehrenreich notes, “We live in a society where many people cannot afford to buy groceries, while others are able to buy congressmen.”
Extreme wealth generates extreme power—the power to shape political priorities and cultural norms. Our electoral system more and more resembles nothing so much as legalized bribery, with multiple avenues for the very wealthy to influence elections, legislation, and government operations. Movements for social change—efforts to expand health care, reduce poverty, and adequately fund education—find themselves continually stalled by this monetary might.
Inequality undermines our culture and civic life, breaking down the social cohesion and solidarity required for healthy communities. In societies with narrower divides between rich, poor, and middle, public health officials tell us, people at all economic levels enjoy better health. Last spring’s PBS series Unnatural Causes: Why Inequality is Making Us Sick dramatically portrayed this (see www. unnaturalcauses.org).
Too much inequality also undermines economic health and well-being. After three decades of stagnant wages, average families struggle to maintain their buying power by working more hours and taking on additional debt. Neither course is sustainable over the long haul. At the top of the economic ladder, the desire by wealth-holders to maximize financial returns has led to massive speculation—in technology, housing, and now commodities such as food. These trends make our economy deeply unstable.
Why are we becoming more unequal? The title of a book by former BusinessWeek economist William Wolman and reporter Anne Colamosca offers an apt capsule description: The Judas Economy: The Triumph of Capital and the Betrayal of Work. The rules of the economy, simply put, have been tilted to favor asset-owners at the expense of people who work for wages.
Silence About Inequality. Today, especially in religious circles, we are hesitant to discuss class and wealth inequality. We don’t want to be considered antagonistic or divisive, or be accused of fomenting “class war.” The goal of alleviating poverty, we tell each other, can unite people across political differences. But addressing unequal wealth exposes deeper differences in values and worldview.
Still, if we want to make serious progress against poverty, we need to face these differences. A group of veteran anti-poverty advocates, for instance, recently announced a new campaign to cut poverty in half in 10 years via a combination of tax credits, child care assistance, and higher education grants (see www.halfinten.org). The effort will cost an estimated $90 billion a year. The campaign proposes to raise that money by reversing the “excessive tax cuts” that have gone to households with incomes over $200,000. The activists behind this campaign understand that their effort, to succeed, must focus on the top, not just the floor.
That same lesson jumps out at us from the movements to reduce the inequalities of the first Gilded Age. Labor leaders, rural populists, and adherents of the social gospel stressed the vital importance of not ignoring the dangers of concentrated wealth. They warned against the “anti-democratic perils of plutocracy.” Among these critics: the patrician president Theodore Roosevelt, who railed against the “malefactors of great wealth” and urged Congress to pass progressive income and inheritance taxes.
Between 1915 and 1955, a broad “anti-inequality” movement succeeded in reducing vast disparities. In 40 short years, the U.S. ended an age of excess and Newport mansions and created the first mass middle class in world history. That movement taxed the wealthy and made public investments in shared prosperity, from infrastructure to free higher education to affordable access to homeownership.
Like their predecessors a century ago, religious leaders today must talk unflinchingly about the wealth gap and the need for redistribution. They need to personally engage those who control vast resources in our society and amplify the prophetic voices that do indeed exist among the privileged. As billionaire superinvestor Warren Buffett observed, “There is a class war—and my class is winning.”
Tackling Inequality or Attacking Rich People? As Christians, we rightfully are uncomfortable demonizing anyone, including the rich. We prefer to talk about abstract “structures of inequality.” Sinful social structures perpetuate economic injustice and can only be altered by changing institutional and governmental rules and values. Yet individual choices and behaviors also matter. There is a difference between attacking someone and holding them responsible—as we all are—for contributing to or diminishing the common good.
Some individuals bear disproportionate responsibility for worsening inequality because of how they unabashedly use their money and power to expand their privilege and wealth. For example, hedge fund manager Bruce Kovner of Caxton Associates collected an income of $715 million in 2006. He donates millions to think tanks and consultants who oppose campaigns that seek living wages, policies that would directly improve the lives of the security workers who protect his Manhattan office building and have no health insurance. Similarly, during the 1990s, 18 high-net-worth families, including the Waltons of Wal-Mart and the heirs to the Mars candy and Blethen newspaper empires, contributed millions toward a campaign to abolish the federal estate tax, our nation’s only levy on inherited wealth.
Fortunately, the wealthiest 1 percent is not a monolith. Significant numbers of wealthy people work for economic justice as donors, activists, and campaigners. In 2001, more than 2,500 multimillionaires and billionaires signed a public petition sponsored by Responsible Wealth, a national network of affluent people concerned about inequality, to preserve the estate tax. Many of these high-net-worth individuals personally lobbied Congress to retain a tax that they would eventually pay.
But the vast majority of wealthy people are as disengaged as other citizens in matters of public policy. They unwittingly benefit from the current rules of the game, which reward wealth, undermine wages, and perpetuate injustice. Like all potential allies, they need to be enlisted into a movement for greater fairness that is in everyone’s long-term interest.
Prophetic Christian witness can help us navigate the politics of class, race, inequality, and mutual responsibility. Our churches can be and should be places where we care for one another, nurture a vision of a just economy, and take action together. We must make clear that this growing economic divide is bad for everyone, including the wealthy. As Rev. Charles Demere, a member of Responsible Wealth, observes: “I don’t want my grandchildren to grow up in an apartheid society. We can’t build walls high enough to protect them or any child.” A movement to reverse extreme inequality can create a moral common ground across divisions of race and class.
The Myth of Individual Wealth. Progressive taxation is key to any program to reduce extreme inequality. For three decades, we’ve reduced taxes on the wealthy, dismantled public investments in opportunity, and shifted our tax responsibilities onto the next generation by racking up $9 trillion in federal debt. We have, in effect, redistributed wealth up the economic ladder.
Yet “redistribution” remains a forbidden word in our political lexicon. Organized anti-tax and anti-government groups frame progressive taxes as confiscatory “takings” from “virtuous wealth creators.” They focus on what a faceless government demands of us through taxation, while ignoring the “givings” we get from government—the public investments and institutions that make our communities healthy and individual wealth possible.
I co-wrote a book with Bill Gates Sr., the father of Microsoft’s founder, about the need to preserve the federal estate tax. Gates Sr. eloquently describes the estate tax as a “gratitude tax,” a mechanism that enables individuals to “pay back” the society that made their wealth possible. Individual creativity and effort matter, he argues, and should be rewarded.
“But when someone has accumulated $10 million or $50 million,” Gates points out, “they have benefited disproportionately from society’s investments in education, public infrastructure, scientific research, and other forms of society’s common wealth. Show me a first-generation fortune and I’ll show you a successful partnership between a talented individual and society’s invisible venture capitalist, the commons.” Progressive taxation, he argues, “recycles common wealth” so others have an opportunity for a decent life. With this refreshing analysis of the origins of wealth, Gates unpacks our national narratives about individual wealth and success and turns what he calls the “great man theory of individual wealth creation” on its head. Our religious congregations are places where this unpacking can continue.
Prophetic religious voices can also press for rules to ensure that the economy works for everyone, not just the very wealthy. These rules need to cover trade, tax, and wage policies and address questions of government spending priorities—whether, for instance, to close corporate loopholes or invest in education.
Instead of being fearful, we should directly engage the taboo issues of class that divide us. This means talking about the true origins of wealth and how it ends up in the hands of a few.
Whatever the social concern we are working on—poverty, climate crisis, local food systems—we face the same problem. The critical changes our society needs are being blocked by the power of concentrated wealth. As long as so much wealth and power resides in the hands of a few, we will be tethered to an economic system more focused on perpetuation of privilege than strengthening the common good.
Chuck Collins is a senior scholar at the Institute for Policy Studies, where he coordinates the Working Group on Extreme Inequality (www.extremeinequality.org). He is cofounder of Responsible Wealth and Business for Shared Prosperity and co-author with Mary Wright of The Moral Measure of the Economy (Orbis). His forthcoming book about privilege is called Born on Third Base.
The Great Divide
In 1976, the top 1 percent of U.S. households received 8.9 percent of all pre-tax income. By 2006, their share was 22.9 percent. This represents the greatest concentration of income since 1928, when 23.9 percent of all income went to the richest 1 percent.
In 2004, the richest 1 percent of U.S. households owned 34.3 percent of the nation’s private wealth, worth nearly $16.8 trillion, which is $2 trillion more than the combined wealth of the bottom 90 percent.
See “How Unequal Are We?” at www.extremeinequality.org.