Several weeks ago, on Oct. 31, the Employment Cost Index reported a welcome rise in wages for American workers: an increase of 1.2% just between June and September.
This echoes a report by the Federal Reserve Board that the average net wealth of an American household exceeded $1 million for the first time in American history.
Both of these reports suggest the financial life of Americans is demonstrably improving.
Yet the same Fed report also observed a simultaneous growth in inequality, such that the top 10% of Americans enjoyed 22% income growth between 2019-2022, while middle-class Americans saw their wages improve by only 5%. This was the largest reported growth in income inequality over a three-year period since the Fed began tracking these numbers.
One might reasonably ask, what is the problem with this? If most everyone’s economic condition is improving, what concern is it to anyone that some at the top are becoming much, much wealthier than everyone else?
Despite the growing wealth of many Americans, however, there is little consensus that people are happier, more content or more eager to get along.
President Joe Biden’s approval rating is historically low, given the underlying economic indicators, and the Republicans threaten to nominate a presidential candidate who may be convicted of multiple felonies. Americans may increasingly be better off, but they are not more content.
While there are surely many reasons for Americans’ discontent, we would do well to consider that economic growth alone is not a panacea, so long as that wealth grows unequally.
This hypothesis deserves serious consideration, if for no other reason it has been a default assumption of many of the most important philosophers of the Western tradition.
While Plato, for example, is often remembered as inegalitarian — by virtue of lodging all political power in the hands of a few (penniless) philosophers in his Republic — he also observed in his Laws, “If (as we presume) the city must avoid the greatest of all plagues, which has been more correctly termed ‘civil war’ than ‘faction,’ then neither harsh poverty nor wealth should exist among any of its citizens. For both these conditions breed both civil war and faction.”
Concentrated wealth is every bit as much a threat to a republic as is desperate poverty. Any state serious about avoiding “the greatest of all plagues,” which is nothing less than civil war, needs to address inequality.
Such concerns about inequality have been echoed by many of the most celebrated philosophers, including Thomas Hobbes, Jean-Jacques Rousseau, Adam Smith and John Stuart Mill.
The few rich ‘prey on’ the many poor
The inequality that worried these thinkers generations ago assumes a particularly toxic effect today, insofar as diverse societies tend to distribute their goods according to racial and ethnic categories.
It is no surprise that practices such as redlining have promoted and protected economic inequalities that very specifically punish African Americans. As the former University of Illinois Chicago and Northwestern University philosopher Charles W. Mills once wrote, racism “is calculatedly aimed at economic exploitation.”
To the extent that economic inequality expands in America, there is almost always a racial dimension to it. To this extent, another recent report by the Fed confirms that from 2019-2022, the racial wealth gap grew by more than $50,000 between white and Black households.
Although I have mentioned some prominent figures who celebrate our growing inequality, this isn’t to suggest that everyone does. Indeed, the French economist Thomas Piketty has built an international reputation through his “Capital in the Twenty-First Century” as a fierce opponent of inequality. More recently, the Princeton economist and Nobel laureate Angus Deaton has argued inequality allows “a minority [the rich] to prey on the majority [the poor].”
While there have been significant gains in providing for the needs of society’s most desperate citizens, inequality continues to grow almost unabated. Whereas in 1965, the average CEO made 21.1 times as much as a typical worker at the same company, today that same CEO now earns 351.1 times that same worker.
Americans can continue to pretend that such growing gaps are irrelevant to the fate of the republic. But in doing so, they would be ignoring the counsel of much accumulated wisdom.
Let us not be triumphant about the slowly growing wealth of the average American and consider the larger picture that considers the entire economic spectrum, before Americans lose all feeling for those at opposite ends of that spectrum and disintegrate into “the greatest of all plagues.”
David Lay Williams is a professor of political science at DePaul University and author of the forthcoming “The Greatest of All Plagues: How Economic Inequality Shaped Political Thought from Plato to Marx.”
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