Last December Pew Research reported that a majority of American adults no can no longer be classified as middle class, owing to widening inequality, declining industry, erosion of financial stability, and globalisation. The effect is general and includes all the big American urban centres as well as the South and rural areas that are normally associated with poverty. Pew’s survey covered 229 metro areas in the US, about three quarters of the population. In 203 of them the share of adults in the middle-income households fell. On the other hand, of the 229 metro areas, 172 saw a growing share in the upper-income tier.
Without any research at all I can see this happening where I live, and before my eyes. When I arrived the restaurants were fairly mediocre; now the town is full of new restaurants with excellent food, filled every night by a young, confidant clientele. The number of cars, many rather expensive, has grown hugely, and neighborhoods that once were poor – and you were advised not to explore unless you had to – these have been gentrified. Meanwhile, while the violence and gun crime in the poor South East area of the city persists, and never seems to decline. The toll of the young dead by gunshot is still large and, as ever, unacceptable. The two parts of the city live (or die) side-by-side, largely oblivious of one another. Elsewhere, life is often led in quiet desperation. We have it wrong, somehow.
But is it possible to reverse this unfortunate trend towards increasing inequality? Some would argue that globalisation had led to natural increases in inequality across the world, because investment opportunities are greater; the rich, who get a higher proportion of their income from investments, get richer at a faster rate because their investments now have a higher rate of return.
But Inequality on the scale seen in America nowadays is far from inevitable. As Sanders has pointed out throughout his campaign, many European countries have a very high quality of life and many are very wealthy, but none have the scale of inequality seen in America. This is because although the US tax code redistributes as much wealth as most European tax codes because American sales taxes are much lower, American public spending is far less redistributionist than its European equivalents. Big programs such as Social Security, Medicare and Medicaid, ought to be focused more on lower income people, partly by reducing government handouts for those on higher incomes. America also ought to divert its bloated and ineffective military budget towards the welfare system. One more suggestion to increase equality: reduce America’s foreign aid budget and divert the funds towards welfare. For instance, in previous posts you’ve mentioned how America’s aid budget to Israel is too high. I agree, that ought to be cut but I wouldn’t abolish it entirely.