The other day, NPR ran a story about a recent study on charitable giving. It turns out that poorer people give a significantly larger percentage of their incomes to charity than do the wealthy. The report included interviews with people from some especially deprived neighborhoods, and the general import of their responses was empathetic: they knew first-hand how tough things can get, because they had experienced rough times first-hand.
The report made me think of a conversation a few years back with a Canadian colleague. I was curious about the differences in attitudes between Canada and the U.S. when it comes to the social safety net. Here are two countries with immensely similar histories and populations. We watch the same television programs, (mostly) speak the same language, and have remarkably similar popular cultures. Why, then, I asked, are American and Canadian attitudes so different when it comes to the need for programs guaranteeing access to healthcare? Why do the two countries have such different approaches to other social programs?
Her theory was intriguing: Canada is cold.Canada’s early settlers faced an environment that required them to share and co-operate with each other in order to survive. That reality produced a culture that recognizes the necessity and value of interdependence.
I have no idea whether my colleague’s theory is correct, but intuitively, it makes sense. And it helps to explain why people who have so little themselves seem more willing to share what they do have with their neighbors. Hardship reminds us of a truth we sometimes prefer to overlook: we’re all in this thing called life together.
Wealth–not to mention temperate climate–evidently tends to insulate us from that inconvenient truth.
For the last few years, there’s been a good deal of debate over the growing gap between the rich and everyone else.
We’ve all seen the numbers: the top 1% of Americans own 43% of all the nation’s wealth, and the next 4% owns another 29%. Meanwhile, 80% of Americans share only 7% of the nation’s total wealth.
That bare fact is troubling enough–disparities of this magnitude typically generate resentment and often lead to significant social disruptions–but the reasons for that gap are even more worrisome. The truth of the matter is that money buys access and power. Poor folks don’t have lobbyists, they don’t make significant political contributions. To use academic jargon, the poor lack “voice.” Meanwhile, the rich have megaphones.
Look at the proposals to cut the deficit–a deficit caused primarily by two ill-considered wars (wars that “coincidentally” enriched a number of major corporations) coupled with massive tax cuts for the wealthy. Programs at risk include things like early childhood education, low-income housing programs, community health centers, family planning and job training–all programs that assist poor Americans. It’s estimated that cuts to these programs will “save” 44 billion dollars (save is in quotes because most of these are short-term savings with significant long-term costs). Meanwhile, the recent extension of the Bush tax cuts to the richest 2% of Americans cost the treasury 42 billion a year. Changes to the estate tax–dubbed the “death tax” by opponents–cost another 11.5 billion.
Let me be very clear: I accept the argument that confiscatory tax rates dampen innovation and entrepreneurship. And I not only accept, but heartily endorse market economics. I’m a capitalist and make no apologies for that. But American tax rates are at their lowest levels in fifty years, and one would have to be delusional to believe that returning the top rate to 39%–the rate during the Clinton administration–would discourage investment. What is even clearer is that we have abandoned markets in favor of crony capitalism. Large employers and the wealthy have used their clout to game the system; they have effectively bought tax and other advantages that have had the effect of protecting them from the very market forces they so piously invoke. Instead of a genuinely free market, where businesses compete on a level playing field, we have an economic oligarchy–an Animal Farm where some are much more equal than others.
This state of affairs is bad for the economy in the long term. It is worse for social stability and democratic institutions.