Building toward serfdom=92s return
By Paul Heise
Lebanon Daily News
Thursday, May 29, 2008
America idealizes the middle class and denies the validity of an upper
or governing class. Yet we have so structured our economy that all the
increase in income since 1980 has gone to the already wealthy,
undermining the idea of a governing middle class. The resulting
inequality of income and wealth commits future generations to be
divided into the wealthy and the workers, nobles and serfs.
Maldistribution of income is bad. It leads to a lack of op****tunity
and a pauperized middle class, to political corruption and for-sale
politicians, to lower economic growth and to economic and political
instability.
Using either income or wealth, the rich are getting richer, and the
poor remain poor. The result has been great inequality and a
disappearing middle class. The top 5 percent of families own 50
percent of American wealth. The top 20 percent owns 80 percent. The
middle 40 percent share that last 20 percent. The bottom 20 percent
has zero wealth, and everyone below the top 20 is going into debt.
It isn=92t just the CEOs hogging the income. The financial sector far
outdoes them. From 1930 through the 1970s income became more equally
distributed, but the trend has been in reverse since then. As recently
as 1979, the top 1 percent of earners in the U. S. earned about 33
times what the lowest 20 percent earned. By 2000, this disparity had
grown to more than 88 times as much. No other industrial country is as
bad as the United States. The CIA re****ts that measures of income
distribution in America put us in a class with Turkmenistan, Nepal,
Mexico and China.
The closest we get to redistribution of income are the entitlement
programs such as Social Security, Medicare and veterans benefits. But
that is not where the problem is. Unequal income distribution ends up
a more serious problem than the safety nets.
The word =93entitlement=94 spells out the problem. Originally a
=93titled=94=
person had a right to the income from some asset. The noble was
entitled to it. Similarly, today a person can have a right or title to
some income because of who they are rather than what they have
produced. That is what a pension, trust fund or any other wealth
really is =97 the right to an income stream.
As we concentrate ever-more wealth in the hands of an ever-smaller
group, we also allocate to that group an ever larger share of our
children and grandchildren=92s output. We are establi****ng a new,
hereditary nobility.
The question is, how much of our children=92s income do we have a right
to allocate? We commit future income to specific groups when we borrow
and spend for any war or social programs or when we ****ft enormous
wealth to Wall Streeters and to Silicon Valley and away from farmers
and steelworkers. The offspring of the rich will have a legal right to
a substantial ****tion of the output of our descendants.
Imagine a future world where a substantial ****tion of GDP is allocated
not on the basis of productive capacity or other merit but on the
basis of entitlements set generations before. That is where we are
heading.
A serf is someone whose output is allocated in part to someone else as
a property right. The serf gets what is left. Those with no
entitlement, the serfs, will be condemned to glean the leftovers.
These nobles of tomorrow will wallow in their entitled abundance.
It isn=92t just the money. Much wealth is passed on in the form of human
capital that the wealthy are able to give their children through the
superior schooling and enhanced op****tunities that come with money. To
overcome the unfairness of this, we have to find a way to give
everyone an equal access to educational op****tunity.
The Congress has just passed, with veto-proof majorities, a bill that
grants World War II-type education benefits to present-day veterans.
That would be a real start.
The GI Bill educational benefits were among the best investments this
country ever made. We should again invest in our youth to meet the
challenge of this new economy and new century. It is the only way I
see to bridge the divide of income and wealth we have created over the
past 30 years.
Unless we do, our vibrant capitalism will turn into a stagnant
serfdom. We have to invest serious money in education. I mean like the
amounts we spend on war =97 if we are to save our democracy and our
capitalism.
=97=97=97=97=97=97
A resident of Mt. Gretna, Heise holds a Ph.D. in economics and is
professor emeritus of economics at Lebanon Valley College. He can be
reached at:
heise@[EMAIL PROTECTED]
|
