Tuesday, December 17, 2013

Inequality and Class Warfare.

After a long sojourn in the shadows, inequality has reared its head in the public discourse again, especially in the recent statements of Obama and the Pope. The exact sources of inequality in today's world are a bit hard to trace, but some threads are known. In the first place, greater inequality in the US is partly driven by outsourcing and the rapid economic progress of Asia and parts of the old Communist empire. In that sense, some of American inequality is driven by decreasing inequality between Chinese (say) and Americans. Almost everywhere, though, the disparity between the rich and the rest has increased dramatically.

A lot of this can be traced to the triumph of neo-liberal economic thought - which is pretty much is called paleo-conservative economics in the US. The massive failures of socialist economics led to gigantic opportunities for those who could pick up failing government businesses for a song - usually with the help of political connections and gross skullduggery.

This style of rather anti-capitalistic crony capitalism took root everywhere, even in places where capitalistic economies already existed. After the long defeat of the depression and the Sixties, American plutocrats created a raft of institutions designed to strengthen their grip on the political process, from union busting and Conservative propaganda organs to the Tea Party. At its core, the strategy is thousands of years old - pit the middle class against the poor and scoop up the profits.

The biggest target for those who are against inequality is the long series of tax cuts and policies that benefit mostly or only the very rich. This trend, initiated by Kennedy and greatly strengthened by Reagan and Bush II, has clearly been a factor in our increasing inequality. We have never seen the gains promised for putting more money in the hands of the so-called job creators. Instead we have seen a slowly decreasing demand driven by the fact that fewer and fewer can afford to spend.