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 ?



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Anne Chapman
7 years 3 months ago
I have not had time to read the entire report, which was given as testimony to a
congressional committee in Feb. 2007. Those who are interested should download the pdf. In order to draw any conclusions at all, a full reading is needed, along with reading a referenced earlier study done by the same authors (with another author), the Luxemburg Income Study (LIS). The LIS was based on data from a 1999-2000 data base, and the LIS study and sources would also have to be considered in reflecting on the reported poverty rate status of the US v. 29 other countries, given a specific time period - the studies may not reflect on the current situation very well..

 In skimming, one quickly finds out that there are no commonly defined measures of poverty - most countries do not even have an 'official'' poverty level -

''While most rich nations share a concern over low incomes, poverty measurement began as an Anglo-American social indicator. In fact, “official” measures of poverty (or measures of“low-income” status) exist in very few nations. Only the United States (U.S. Bureau of theCensus 2003b) and the United Kingdom (Department of Social Security 1996; Department ofWork and Pensions 2005) have regular “official” poverty series.''

The authors then explain various ways that different countries look at poverty, and develop a proxy measurement.  I have not yet read it, so don't know how their proxy accounts for such factors as the rate of immigration into a country, the rate of population and language diversity in general, etc, etc, - just once concern - comparing poverty rates in a small, fairly homogenous country such as Iceland or Finland with a country like the U.S. can be quite misleading.  It is also necessary to factor in tax structures.  In many European countries, the average middle-class tax payer pays betwen 35-50% of income in taxes. Few Americans would agree to that - they want to tax the rich, but not themselves.  Almost 50% of Americans pay no federal income taxes at all, although they do pay social security and medicare taxes. The LIS uses data from more than 10 years ago - therefore, in looking at income inequality gaps and tax rates (that ''benefit the rich''), you have to go back and see what the tax rates actually were. You would also have to do a demographic comparison of the population in the 1970s v. in this decade.  The Economist magazine (and Web site) provides a lot of economic and financial data for most countries of the world. It is a good reference. The US govt has many data rich web sites - the IRS would be a good place to start to get source income and tax data. I also plan to look at the referenced OECD study when there is time.

Alleviating poverty is an important priority. However, it is a very complex subject and quick fixes and sound-byte opinions seldom analyze, much less actually address the range of complexities involved.  Simply to point out that income inequality has grown does not actually diagnose the problem, much less point to a solution. A solution is needed, but it must address the real, underlying problems and not just be a feel-good quick fix that doesn't actually help accomplish the goal.
PJ Johnston
7 years 3 months ago

Apparently Pope Benedict is due to release a new social teaching encyclical on Monday.  I'm not as confident as Thomas Reese that we can know what the contents are before it's released, but it should be interesting to read.
Tom Maher
7 years 3 months ago
PJ Johnston (#10)

Thanks for your alert on Father Thomas Reese's October 21, 2011 article on what the new encyclical which is about to be released Monday will be about.

According to Father Reese the encyclical will be about the 
refrom of the international fiancial systems and more world government.

According to Reese politiclly the encyclical will be left of Barack Obama and Nancy Pelosi. 

Hopefully, contrary to Thomas Reese's forecast,  the encyclical will not demonstrate that the church has no judgement on world political and economic affairs.  
ed gleason
7 years 3 months ago
What is amazing is the quick GOP embrace of Cain's silly 9-9-9.
It will result in 84% getting a raise in taxes.. guess who will get a decrease  .. yup ..the top 10% of income. {non-partisan analysis]
this does not even account for Cain's and other GOPers wanting no capital gains or tax on dividends.. this would result in the super rich paying nothing nada nothing.
What's to not understand? the super rich don't have wage jobs..

Fr John we really don't need to use Catholic social teaching to prevail against these idiocies.. One ought to hope just a little common sense would un-blind the right wing ideologues. Let's not waste the Christian ethical arguments on the 'right' but  just promulgate/apply  the idea of a  preferential option for the poor to the Faithful.
There is such a thing as hopeless cases
Tom Maher
7 years 3 months ago
Any society always has income inequality.

 As the author points out in the last paragraph: "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 the fact of income inequality is not the cause of economic or social problems/.  It is a non sequitur to say that society is harmed by income inequality which is always present in any society. Income inequality is merely the expcted result of variations in people's income. 
7 years 3 months ago
"Two things in play here are a yearning to find oppression to fight against......."A truly bizzare observation. The point is the widening gap in income inequality that is/will cause the kinds of problems cited in the article. This is real, we're not talking about statistics but our brothers and sisters in Christ!Let's leave the usual left right polemics out of it.  
C Walter Mattingly
7 years 3 months ago
For "America has the highest income equality rate among the rich nations. This has developed largely in the last 30 years-with tax policies that benefit largely the rich,"
we can change just a few words and arrive at a more significant and accurate truth. "America has the highest income equality rate among the rich nations. This has developed laregly in the last 30 years-with public education policies that have benefited largely the unions at the expense of our children dependent upon public education." 
7 years 3 months ago
So now we learn that thet the root cause of all this inequality are teacher unions! Wow, why didn't anyone else figure that out. We need to get rid of those damn unions and we'll all be better off.
7 years 3 months ago
I commend to the various posters here,Fr. Tracy's experiences in Rochester.I further commend if one goes back at this site of "In All Things" Fr. Martin publishing the reflection of the latew Fr. Dean Brackley,"Meet the Victim,. Fall in Love."
There's so much facility from the comfortable about what causes problems related to poverty and it shines through on the posts here.
I think many young Catholics, right or wrong to drift away, drift away because they see  much wrong  in our world met by preachiness and not the care the Gosdpel calls for.


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