It’s Going to Hurt

A rising tide lifts all yachts.

So says Nicholas Kristof, in a recent NYTimes column discussing the best-selling albeit not-so-well-read book on Inequality by Thomas Piketty. In recognition of the fact that few of those who’ve purchased Piketty’s tome have had the time or background to wade through 685 pages of graphs and charts, Kristof proposes to boil the subject down to five main points( a “Cliff Notes” version which should allow you to sound very erudite the next time you discuss economics at a cocktail party). They include the following four:

  • Inequality has significantly increased in the U.S.
  • The disparity is mostly not due to the hidden hand of the market, but to its corruption–to game-playing, manipulation, successful lobbying for “special” treatment and the like.
  • The rich aren’t necessarily happy, despite their greater wealth, because so many of them are caught up in a never-ending cycle of “can you top this?”
  • Progressives need to talk more about restoring genuine opportunity and less about plutocracy.

Hard to argue with any of these, but it is Kristof’s final point that is–at least in my view–the most important: inequality of this magnitude is profoundly socially destabilizing. As Kristof explains:

 Some inequality is essential to create incentives, but we seem to have reached the point where inequality actually becomes an impediment to economic growth.

Certainly, the nation grew more quickly in periods when we were more equal, including in the golden decades after World War II when growth was strong and inequality actually diminished. Likewise, a major research paper from the International Monetary Fund in April found that more equitable societies tend to enjoy more rapid economic growth.

Indeed, even Lloyd Blankfein, the chief executive of Goldman Sachs, warns that “too much … has gone to too few” and that inequality in America is now “very destabilizing.”

Inequality causes problems by creating fissures in societies, leaving those at the bottom feeling marginalized or disenfranchised. That has been a classic problem in “banana republic” countries in Latin America, and the United States now has a Gini coefficient (a standard measure of inequality) approaching some traditionally poor and dysfunctional Latin countries.

We are on our way to destroying the most beloved American myth: the belief that with grit and talent, anyone can be successful, can “make it.” That promise, more than any other, has brought immigrants to our shores, given poor parents fortitude because “the kids will be better off than we are,” and encouraged millions of poor and middle-class workers to submerge envy of the “haves” and substitute a belief that with just a bit more effort, they too can join the privileged class.

When that myth explodes, when that promise is no longer plausible, look out. It will get ugly.


  1. For now the super rich are hiding in their gated communities. A candidate for Governor in one Southern state hides behind TWO gates. One at the entrance to his community and more gates at his home. NOT a good sign for our nation. I watched “1968” on CNN last night. It was awful to see it all again having lived through it. BUT it is a good reminder that when the powers in Washington get far enough off track, AWFUL things can happen. Police Riots like in Chicago at the Dem Convention should give anyone pause. When the people start to rise up, the powers that be get VERY repressive. I hope we are not headed there again but it does not look good for our future. HOW do we get back to a functional government? Do we have time to wait for all the FOX news junkies and Rush junkies to die off? I fear not. When responsible legislators try to CLOSE tax loopholes that REWARD the rich for firing Americans and move jobs offshore, the TEA PARTY / Republicans refuse to close a single loop hole. WHY? Are they just idiot tools for the rich? Sure seems that way.
    And now we may be entering into a new international treaty that FORBIDS us from having “Buy American” preferences in Government purchasing. Really? That is a good idea?
    Good Grief.

  2. I live in a rural area that has been economically declining for the past three decades. Being a person that likes to stay abreast of the economic state of affairs both in this country and in the rest of the world, I began telling my friends ten years ago that our country will have a civil war in our lifetime. By the time I was stating that this would happen, I had already witnessed and experienced the signs of economic struggle and decline for hard working middle class people. Opportunities for good paying employment were disappearing more than two decades ago for the middle class. Working hard to get ahead was slipping through our hands. Ten years ago I stated that we would experience a civil war within 15 years. We are not far from this time now. Too many American families have worked hard and played by the rules only to end up losing everything they worked for. When people have been completely beaten down and have nothing left to lose, their struggle for survival and their anger at what has been done to them will cause them to rise up and fight those that have taken away (stolen) their sense of security and hope. We are heading there quickly folks.

  3. Government at all levels is taking on the characteristics of the people it looks to for continued support. The wealthy and the want-to-be wealthy/protect-the-wealthy in an exclusive coalition. In return for their support, government provides the best in service and public policy for the people who need it least.

  4. Your local sheriff just accepted a tank from the US army to use against you. You will re-elect this sheriff without complaint. Why?

  5. The data on wealth inequity.

    The data shows that the level of wealth unequity that the US has now, virtually the highest in the modern world is socially corrosive. It leads directly to the problems that Republicans blame on poverty. Their solution? Increase wealth inequity.

    just another example of the consequences of denying reality as determined by legitimate science.

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