Regardless of which side of the aisle you belong, there is no question you have heard of the issue of income inequality in the United States. The disparity between wealth and income growth for the top 20 percent of income earners and the bottom 80 percent became very pronounced–and highly politicized–following the recession that began in 2008. While many disagree about the cause of the income gap, I believe that the issue stems from major institutionalized issues within our government. If these larger issues are not fixed, we cannot even begin to tackle the growing disparity of the income gap or focus on the future economic development of the United States.
Figures are thrown all over the place: the top 1 percent (a phrase popularized by the Occupy Wall Street movement) earns a fifth of the income in the United States and received the most income growth since the 1970s; the average CEO makes 400 times what the average worker makes. These are incredibly startling facts. According to the World Bank, which led a report on income and wealth inequality throughout the world, the United States is currently more inequitable than every other developed country in the world, along with developing countries Brazil, Rwanda, and Uganda, among others.
President Barack Obama cited some of these figures in his State of the Union address and characterized inequality as one of the most pressing issues for his presidency. The use of inequality as a means of generating political support, both by Obama and other groups such as the occupy movement, is a bit of a misinterpretation–it only offers a small glimpse of the larger issues facing the country.
During the time period that inequality skyrocketed in the United States, social mobility–the ability for an individual to change their socioeconomic status–did not actually worsen. According to studies published by Harvard and UC Berkeley, social mobility has always been relatively slow. Many politicians want to return the economy to that of yester-year, but in reality the halcyon days they refer to are not much different from our own time.
Income inequality is absolutely a pressing issue in this country, but it is not causally related to many of the problems that we face. What has to be kept in mind is what the end goal that the United States is trying to achieve economically. Things like economic competitiveness and long-term solvency are not going to be accomplished by targeting income and wealth inequality. If we were to solve some of the problems that are at the heart of those issues, such as social mobility and equal opportunity, then inequality would be significantly mitigated.
It would be impossible and inefficient to have a completely equitable and fair country, but the role of the government is to help improve the inherent state of unfairness that exists. Nevertheless, if this administration is going to try to tackle the issue, larger and more institutionally ingrained problems need to be addressed–income inequality by itself is nothing more than a by-product of these larger issues, and solely focusing on it is not going to achieve the goals of Obama’s administration.