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Billionaires and Bums - Inequality and the American Dream

“We in America are heading towards ‘developing nation’ levels of inequality…. What does that say about us? What does that say about America?”

“the number of U.S. billionaires has also increased, from just 13 in 1985 to more than 1,000 today. In 2005, an estimated 227,000 new millionaires emerged, many bolstered by lucrative financial hedge funds. The wealth of all U.S. millionaires that year was $30 trillion, or more than the gross domestic products (GDPs) of Brazil, China, the European Union, Japan, and Russia combined.”

(Cited from the WorldWatch Institute)

The proverbial elephant in the middle of the room - inequality. Generally, we all believe, or at least I assume most people tend to believe, that poverty is pretty bad stuff - and it is, sort of. Inequality, however, should be considered more of a problem than poverty itself. This is because poor people don't necessarily cause problems for society (outside of the repercussions of lower standards of living and human health, etc). Crime, for instance, is a bi-product of inequality between groups, amongst other factors which I think can be pretty much be traced back to inequality itself.

Most societies, including America, have transfer systems in place to reduce inequality amongst its members, these are social protection systems – welfare checks, food stamps, Medicaid, unemployment benefits, etc. Europe, especially the Scandinavian countries, tend to internalize their systems much more than the US. Their taxation schemes represent this fact by generally being higher than ours. This is an issue I think most Americans don’t think about enough – taxation that is. But that’s another issue in itself. It suffices to say if we want to reduce inequality, we have to take money from somewhere and put it somewhere else to equalize the pot, and yes – rich folk need to be footing a much higher percentage of the bill.

Why? Self-preservation.

1) There’s no problem with someone earning a higher annual salary than anyone else if their position and abilities are more highly prized than anothers, that’s completely realistic I think, but there’s only so much money someone really needs to be happy. Actually, when you get past a certain point, your utility actually decreases the more money you get, so then you spend on psychologists and high-priced prostitutes and whatnot to get happy again, which can lead to more problems.

2) The richer you are, the more likely it is you have to start taking precautions to stay rich, house alarms, relocating to gated communities, etc…this is just plain ridiculous. Anytime in the modern era where people in the most powerful nation of the world have to have their houses from real or imagined threats by setting up fortresses…there is a disconnect.

3) The American dream of making it is pretty limited, much more limited than we are led to believe. How many millionaires do you know? How many people living week to week do you know? The American dream philosophy was a great mantra to spark movement to progress in the early years of America, but it’s no way to run a sustainable nation.

Solution? (at least in part)

Higher taxes (yes, that’s what I said) for the wealthier and more formalized social protection transfer systems. Salvation Army, you’re wonderful, half of all my clothes come from your shops, however we need to seriously reconsider your mission. And not just the Salvation Army, but all ‘faith-based’ organizations. Religious groups have always been a historical source of help for the poor and under-privileged, there’s nothing wrong with that in itself. However, do we rely too much on these organizations to provide informal social protection for Americans, social protection that has an innate ulterior motive than simply getting people back to work or in clothes? Isn’t it the state’s responsibility to protect society, isn’t that why we elect these people to govern?