Economic Inequality and Poverty. Two Sides of the Same Coin?

America as a country is wealthier than it has ever been, and as a population we continue to become more and more prosperous. Homeownership is at an all-time high, as is the percentage of people with a college education. But as we go on vacations and buy second cars, politicians and pundits alike talk about the growing problem of poverty.

Is there really a growing problem? If there is more money circulating through the country, the general standard of living is rising, and the poverty rate remains constant or even decreases, then where pray tell is this growth? Apparently the problem lies in the increasing concentration of wealth in the top .1% of the population. But as a friend of mine once said, “if everyone at the table has a piece of cake, why do you care that the birthday boy gets three”. Although there are real and obvious problems with subpar schools and access to healthcare in this country, the urgency in the discussion seems to be much more centered on the growing income disparity.

So, is income disparity in this country bad in and of itself, and is the concept becoming interchangeable with poverty? Is there really a problem with the Reaganesque concept of the trickle down economy and if there is do we even need the trickle-down justification? What if we work from the assumption that wealth is not finite or a zero-sum game---That one person’s wealth does not necessarily create another’s poverty. Is there still a problem with income disparity?

Yes. Firstly income disparity is both a conduit and reflection of inequality, and secondly it creates a comparative construction of poverty. In a land where all men are created equal under the Declaration of Independence, it is quite obvious that we aren’t. Some of us are born in the New Jersey suburbs to parents who have started a college savings account, and other in a tenement project in Chicago to parents who dropped out after the 7th grade. Granted, life happens, and we can’t help where we are born, but can it really be said that we have the same chances of success? And isn’t the equal chance of success the underlying fallacy of the free-market. When the victors write history, which in this case is in the Wall Street Journal, they say that our economy is fair because it is equal in opportunity and a meritocracy. But we cannot possibly be participating in a merit-based economy when there isn’t equal access to healthcare or education, and most importantly where the human capital necessary to acquire wealth is negatively co-related with poverty. If the starting lines are different then we are not running a fair race, and economic stratification is less a reflection of a meritocracy and more a reflection of how far ahead the womb you came from was.

The problem with this inequality (or even the perception of unfairness) is that it is automatically a source of societal instability. People will fight as a system that they perceive as unfair, regardless of whether it objectively is. The perception of equality is what created the social cohesion that De Tocqueville observed in Democracy in America (1831). Economic inequality breeds distrust which in turn erodes at social cohesion (community involvement and cooperation) and builds social unrest (crime).

Outside of the inherent unfairness and inequality that economic disparity represents, there is the further problem, that regardless of the base on which the lower end of society rests, gross economic disparity creates poverty in that group. Even if one were to imagine an America where our poor had access to sufficient food, adequate education and necessary healthcare, the problem of poverty would not be alleviated if there still existed such income disparity as exists today. In our world of conspicuous consumption income inequality defines poverty. There is nothing innately bad about not having a television. Unless all of your neighbors have one. Wealth is not absolute--- it is not determined by how much you can buy but by how much people around you are buying. Thus the value of assets is assigned by comparison and poverty is relative.

So in addition to the system that creates and perpetuates economic disparity being inherently unfair, it also thrives in an environment where it cannot exist without creating poverty. The question then, is why in such a system the 99% of the population that do not control most of the wealth don’t rally to level the playing field? What makes farmers, accountants and teachers who can only hope not to have to mortgage their house to pay for unexpected healthcare costs vote for people that want to lower the capital gains tax? Perhaps it is the ever elusive “American Dream”- the Horatio Alger myth - that makes us vote year after year for economic policies that we understand to be inherently unfair. We as a society, though disadvantaged by it, find value in economic stratification.

We live in a society of conspicuous consumption where status is determined not by how much you have but by how much more you have than the next. And status is our driving force. Thus there has to be stratification, and there has to be differentiation, because there has to be something to strive for. We need to have the potential for the American Dream available to us, and the only way we will know when we have achieved it is if we see a difference between ourselves and others. People imagine that they will one day be in that .1% tax bracket, and they want to make sure that when they get there there’s a $10,000,000 different between them and the next guy.

• This is a confused essay. Editing the outline carefully and drafting to the outline would help. Too much effort is spent dealing with a problem you aren't actually addressing (is poverty in the US rising?) and a problem you don't need to address (is acute income inequality problematic?). You are, at the center of the essay, asking the eternal question of US politics: why here, as opposed to almost everywhere else in the developed world, the poor don't secure a measure of social equalization for themselves by voting their economic interests? The reason you give, because high social mobility in the US causes voters in the enormous so-called middle class to vote as though the were going to become the super-rich because they believe they might become the super-rich. This is not an easy proposition to disprove, relating as it does to what people internally and subjunctively might believe. But it is almost certainly not the cause, or even the primary cause, of the political passivity of the American working class. You're asking a good question, and it would make sense to put aside the conventional wisdom about the answer and look a little harder.