Below the Fold: Inequality in a Predatory World

We live in a predatory world. The poor, the helpless, or simply the less well off find themselves dehumanized and victimized around the world. They are often defenseless against the degradation and violence visited upon them by the better off, or by the states the better off control. Without economic equality, human well being, a life rich in the possibilities of self-fulfillment, is impossible. Without economic equality, any gains in achieving full citizenship including racial, gender and political equality are unsustainable.

Indeed, quite the opposite occurs routinely. Disadvantage awakens in the advantaged a desire for gain at the expense of others, even a desire for conquest over others less powerful. The English philosopher John Hobbes argued that when people found themselves in a state of equality, their gnawing fear of losing their status would transform their society into a war of all against all. The world’s rich are showing that Hobbes, if anything, under-estimated the power of circumstances. Even overwhelming economic superiority does not quiet the fear of losing. As the saying goes, you can never be too rich, but for reasons the society wags never fathomed. For those who have it all, they never have enough. Instead it quickens their desire for more. It also arouses in them a need to dominate and degrade the disadvantaged masses beneath them. They enact their sovereignty by violating the dispossessed. The rich become what Hobbes believed the sovereign must become — a monstrous Leviathan capable of instilling shock, awe, and death, this time among the world’s poor.

Perhaps only the cynical Manicheans trying to run the world from the White House understand this need for the Leviathan. The endless desire for more wealth, the fear of the poor from whom the wealth is extracted, and the need to make the masses stand in fear suggest a reason for our period’s particular cruelty. Endless wars, mass annihilations, horrific tortures, barbaric incarcerations, and above all a policy of lawlessness are Leviathan’s means. Its works produce grisly as well as material satisfactions for the rich and a ghastly theater of violence and subjection for the rest.

I argue that the more economically unequal as a world we become, the more an inferno our lives will become. Liberal intellectuals and policy makers, or perhaps one should say the rest of the world ruling elite, seem inured to the relationship between growing inequality and growing inhumanity. Instead of demanding economic equality, they focus on poverty reduction, hoping that reducing poverty will make a dent in economic inequality. Perhaps cynically too, they hope that modest improvements in living standards will dampen popular resistance to the rule of the rich, to which they, though less than the rich themselves, are acclimated.

“Let us abandon the fight against inequality,” writes Foreign Policy editor Moises Naim in a recent Financial Times op-ed. “Let us stop fighting a battle we cannot win and concentrate all efforts on a fight that can succeed. The best tools to achieve a long-term, sustained decline in inequality are the same as those that are now widely accepted as the best available levers to lift people out of poverty.” By fighting poverty through health, education, jobs and housing, Naim argues, we will wear inequality down.

Naim expresses, albeit from the liberal side, the consensus view of the rich-country development community, the World Bank, and an international effort such as the UN Millennium Project. Poverty reduction is the goal because it is achievable, and it is saleable as a strategy precisely because poverty reduction does not call for a redistribution of world resources. Thus, liberals, either naïve or too mindful of the Leviathan, content themselves with lifting up the abject. They either do not countenance or reject outright liberating the dispossessed from subjection.

The trouble with the liberal position, though very different from Manichean murder and terror, is that it is rather wishful, and it ignores rather well established facts. Eliminating poverty does not achieve equality, and it doesn’t take a Nobel-winning economist to show it. The United States hit its lowest historical level of economic inequality in 1968, a time of great prosperity and government intervention to eliminate poverty. The level we reached then was equivalent to the economic inequality we would find in many poor countries today, which is to say a pretty abysmal level. Note too that the good times of the Clinton era and the recent recovery during the Bush regime have not stopped economic inequality from growing. In fact, inequality in America has been accelerating, not slowing.

Economic growth alone does not eliminate poverty. Many economists forecast that it will take China, even at its remarkable rate of economic growth, almost 30 years to eliminate dire poverty, leaving a massive job of lifting another up to half a billion people out of three to four dollar a day poverty. Perhaps cognizant of this, the Chinese state is taking dramatic steps to redistribute income to the rural peasantry, eliminating land taxes, providing free public education, and rebuilding a rural health system. Yet, even as Chinese poverty will prove a difficult problem to solve, a middle class will be living at the level of the today’s Korean middle class, and the great wave of capitalist development will have created a massive new generation of the truly, world-level wealthy. Inequality will get worse, and one can only wish good luck to the Chinese peasants.

The first lesson here is that economic growth creates the wealthy first, and brings along the masses later – far later than the time necessary to earn their way to equality through labor or enterprise. It happens inside countries like our own. It happens across countries. Consider evidence accumulated by World Bank economist Branko Milanovic that the ratio of inequality, rich country to poor country, has grown from 19 to 1 in 1960 to 37 to 1 in 2000. This is true despite the spread of industrialization, thought to be the holy grail of development, and rising income levels in Asia.

The second lesson is that if you don’t go after economic equality, and settle instead for poverty reduction, there is little prospect that the disadvantaged can hold on to their gains given the predations of the rich. Again, the US is a paradigm case. Even as the rich have gotten richer over the past quarter century, the American state has actually contrived to take back a variety of welfare benefits from the poor. As America’s medium family income has stagnated since the seventies, the poor have become objectively poorer. The state has ignored these facts and refused increases in life support consisting of income supplements, housing assistance, health care, education, and food assistance.

The only solution that will work, whether at the national or the international level, is redistribution of the wealth. The rich must be made poorer and the poorer their equals, if the goal is a modicum of well being for all.

We know how to do this at the national level, and again the evidence for its success is widely known. Taxes work. Not only did they increase equality in America starting with World War I and beginning again during the New Deal, but inequality increased as taxation radically declined starting with the Reagan Administration in 1981.

At the international level, how to proceed is less certain, given that no international body possesses the means to compel peoples via their states to contribute tax monies to the common good of all. The amounts necessary to raise are not hard to calculate. We are masters of calculation in this age. Currently, rich countries cannot even come up with 1% of their Gross Domestic Product in transfer payments to poor countries, a figure once considered the minimum moral response to global destitution. Despite six years of posturing about supporting the UN Millennium initiative to eliminate much of less than a dollar-a-day poverty worldwide, rich country support is declining rather than increasing. It is important to put redistribution at the top of the global agenda rather than engage in the bait and switch of poverty reduction.

Economic equality requires an obviously enormous and lasting redistribution of wealth worldwide. Yet someone once calculated that there is US$5000 in wealth for every person on the planet, the equivalent of the Gross Domestic Product of Uruguay. Imagine the world as a big Uruguay. Things could be worse: people in Uruguay live as long as Americans do, their child mortality rate is even with ours, and less than 4% of their children suffer malnutrition.

The beaches are beautiful, Montevideo is a dream, and no one expects an Uruguayan invasion of Iran any time soon.