Reflections on U.S. Economic Inequality

      To the best of my knowledge, Catholic Social Teaching does not, as such, have much to say about economic inequalities, per se, in a society. Indirectly, it castigates them, if they entail the loss of fundamental human rights. Catholic Social Teaching endorses not only human and political rights but some economic rights to adequate food, housing, health maintenance and to work. These are seen as essential for fostering ‘ human dignity’. Yet society pays an enormous price when it tolerates grossly unequal economic statuses.

       Alexis de Tocqueville, in his classic, Democracy in America, argued that American democracy depended on rough equality of status and economic standing. Equality of citizenship–one person, one vote, equal access to justice and voice–was anchored, he argued, in this fairly rough equality. He contrasted America with the aristocracy of France. Closer to our own time, Harvard political scientist, Robert Putnam, reiterates Tocqueville’s argument. He shows how the greater the income inequality of a nation, the more severely low its internal social cohesion and social trust– crucial elements for Catholic Social Teaching’s key concepts of solidarity and the common good. One person, one vote and equal access to justice and voice become banal mockeries, when lobbyists representing the rich and a powerful corporate class can pretty much dictate national economic and political policies. One should not be surprised, then, that a spontaneous Occupy Wall Street movement has recently arisen to protest the ramifications of economic inequality in America.

       In a paper by Gary Burtless and Timothy Seedling, ” Poverty, Work and Policy: The United States in Comparative Perspective”, the authors show that, at a 17 percent poverty rate, the United States ranks second to last ( after only Mexico) among 23 Organization of Economic and Development ( OECD) nations. Most had poverty rates around 10 percent. The American poverty rate was higher than Taiwan ( at 14 percent) or even Estonia and Slovenia. American child poverty at 21.9 percent compared to an overall 11 percent average in other nations. Child poverty has serious consequences for educational attainment and health. We pay an enormous price in squandering what has been called ‘ human capital’ by tolerating such a high child poverty rate. In a similar way, the United States maintains one of the highest income inequality rates among all wealthy nations. A 2011 OECD study of income inequality in 31 OECD nations looked at the 10 worst cases of income inequality. The United States was fourth worse ( after Chile, Mexico and Turkey). Other developed nations tolerated much less steep income inequalities.

       A recent book by British authors, Richard Wilkinson and Kate Pickett, Spirit Level: Why Greater Equality Makes Societies Stronger ( Bloomsbury Press, 2011) should give us some pause in condoning America’s penchant for gross income inequalities. Such inequality is not, in fact, financially sustainable, let alone morally excusable or philosophically justified. Wilkinson and Pickett’s comparative data shows that wiith wide income inequality comes a raft of health and social problems. The higher the country’s income inequality, the higher its infant mortality rates, obesity rates, homicide rates, illiteracy rates, mental illness rates, teenage births, incarceration rates, drug addiction rates, social immobility and the lower its life expectancy rates. In terms of social cohesion, the bigger the gap between a nation’s poor and rich population, the greater the dysfunction in that nation’s social fabric.

       America has the highest income inequality rates among the rich nations. This has developed largely in the last 30 years– with tax policies that benefit the rich. Not surprisingly, Americans find it increasingly difficult to get ahead, get insured, get educated, get a job. All of these have enormous implications for getting respect– what Catholic Social Teaching calls ‘ human dignity’. Since 1980 the American economy has doubled in wealth. The top 1% of the wealthiest Americans now garners 20% of all American wealth–up from 10% in 1980. 90 percent of American households have to subsist on an overall average of $30,000 to $50,000 per year.

      So, in consequence, America has the highest rates of homicide, infant mortality, teenage births, drug addiction, mental illness, incarceration, social immobility and illiteracy among the wealthy nations. These health and social problems have been wreaking financial havoc on our society, in terms of containing violence, healing the sick and fixing these dysfunctions. Consider some of the costs. The Center for Disease Control and Prevention estimatees that the economy loses some 1.65 billion in medical costs, loss of lifetime employment and economic productivity costs due to preventable illnesses. For each person incarcerated the U.S. spends an average of $35,000 per year for a total of $80 billion for the entire correctional system. If we add the total cost of lost productivity due to imprisonment that adds another $97 billion. Combatting violent crime cost the U.S. $94 billion in 2009.

         Given these heavy costs to our innate democratic sensibilities and our economy, Wilkiinson and Pickett’s argument may ring true: greater equality is actually better for everyone. It makes societies stronger. Wilkinson and Pickett do not, however, give us any clear policy markers about how to make a society achieve greater equality. No one would rationally argue for total income equality. Every economy generates income inequalities. Moreover, a certain level of inequality is justified as an incentive and reward for producing greater productivity. But, at some level, soaring income inequalities unravel social cohesion and commitment to a shared and common good. We need to ask if we have reached that plateau ?