I’ve been struggling to get my head around some issues that have cropped up in past posts relating to how free market capitalism delivers the best of all possible opportunies for regular folks to improve their lot. Well, the Center on Budget and Policy Priorities has the dirt on income inequality, or if you prefer, income concentration. Here’s a graph showing the trend since the first Gilded Age:
The complexities of the capitalist system are invariably too complex to chalk up this graph to one or two factors, such as the tranformation of the progressive tax system into a regressive one, the abandonment of a regultated, Keynesian economic policy in favor of laissez faire capitalism, and the abandoment of the Bretton Woods treaty. However, the results speak pretty clearly: if you’re already super rich, you’re in a considerably favored position to enhance your already monstrously large share of the pie. (Short version: it takes money to make money.)
Whereas some market fundamentalists insist that this result is just, proper, and entirely to the benefit of everyone — especially since acquisition of large piles of capital supposedly stimulates investment and creates jobs down the line for less well-heeled folks — I interpret it more as a morally bankrupt system operating without any sense of social justice.
If that interpretation doesn’t come out of the simple fact shown above, New York Magazine has an article called American Roulette by Kurt Andersen that provides opinion and context on top of some interesting further data. The metaphor adopted in the article is that we are now in a sort of “casino economy,” where the odds are rigged in favor of the house (read: the rich) and the losses suffered by the poor become, literally, the gains of the rich. The data that supports that contention includes a wage gap (CEO to average worker) an order of magnitiude larger than it was in the seventies; a drop in median income over the past five years, which according to a NY Times citation is “the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages for most workers”; and an increased likelihood (1/6 today vs. 1/14 in 1970) of family income dropping by half. In effect, the few blazing success stories provide the faint hope shared by the masses of hitting it big, not unlike casino or lottery gambling.
An interesting byproduct — a harbinger of things to come, perhaps — of the prolonged shift of capital upwards is that Tesco, a large retailer operating in the United Kingdom, has announced plans to build employee housing. Why, you might ask? It’s because Tesco’s staff can’t afford to live where they work, and the company has been suffering from high employee turnover as a result. Makes me wonder when Wal-Mart will similarly branch into real estate. It’s undoubtedly too early to adopt the unfair characterization of the company town, but considering how budding central economies have devolved into that practice before, it’s worth being vigilant.
Speaking of Wal-Mart, that corporation has implemented new employee scheduling software, which promises to streamline or optimise certain labor practices for the employer while having some fully anticipatable and deleterious effects on employees. For example, Wal-Mart is able to track hours to cap employees below full-time status (to deny benefits) and is able to use the software to place employees “on call” to meet customer surges or send employees home during lull periods. Not everyone thinks this flexible scheduling is necessarily a bad thing. Naturally, someone will find in it some benefit to some nonrepresentative employee.
It used to be that Socialism and/or Communism offered the Holy Grail of a worker’s paradise. Free market capitalism has replaced the siren’s call of those defunct ideologies but has yet to deliver fully on the promise. But that’s the subject of a longer, more involved post on market fundamentalism I’m still mulling.