Is increasing economic inequality inevitable without catastrophe?

musicprnt
Tue, 09 May 2017 20:42:32 +0000

Usually it takes major disasters for there to be significant change. During the 1920’s economists and social observers pointed out the inequality of wealth in the US and how that was a big problem, that the boom of cash companies brought in for example to expand businesses and the like were expanding into a market that didn’t have demand, because too much of the wealth was going to too few people. One of the things they don’t teach about US history was just how bad it was by the 1932 election and the level that people were willing to go to, congress seriously for example offered FDR ‘extraordinary’ powers, basically giving FDR power normally in their hands, to try and do something, and FDR himself had a speech he never gave (to the American legion) that basically hinted at the possible need for a military back coup to allow him to do what he needed to do. In the end things did happen, things that lastingly changed the country, because of that crisis (as a side note, Stalin had an economist, his name escapes me, who Stalin asked if he thought that the US would have a revolution, presumably a communist one…and the economist came back and told him he didn’t think so, that what would likely happen is the US would in some ways take things out of the socialist/communist playbook in terms of government programs and such, but they would adapt it into the capitalist economy…Stalin wasn’t happy (supposedly had the guy shot), but he was right, that is pretty much what happened.

Without getting into the detailed politics, it usually takes a major crisis for this kind of thing to happen, though, and in one sense looking at the current landscape I am somewhat pessimistic that anything like this would happen soon, the divisions have been engineered to be so big to preclude any real action IMO, but then again, as bad as 2008 was, as bad as some of the things are in this economy making the future gloomy, we have not come anywhere near the depths of horror that was the Great Depression, and it would take that kind of thing I suspect to truly allow some kind of major change on the order that would be needed.

I personally think that the income inequality we are seeing is a major problem, lots of economists from all ends of the spectrum think so as well, and what is especially disturbing to me is like the 1920’s, much of this is based in wealth based on stock prices which in a lot of ways is a big part of the problem, the very things that boost stock price are also the things that IMO are leading towards the inequality of income, much like the 1920’s the paper wealth of stock is choking out the increase in cash wages that drives the economy, and people should be concerned. I don’t think there is anything wrong with income inequality, my problem is how the inequality comes about, if it is as in the 19th century where robber barons made a ton of money basically using workers like slaves and manipulating the financial markets, or these days where what stock analysts think is more important than doing the right thing for a company’s long term benefit. Income inequality drives people forward, but there comes a point where that drive switches from aspiring to do better and becomes greed, pure and simple, and that is a problem.