One of the complaints of the Occupy Wall Street demonstrators is the high level of inequality in the United States. European Communism tried to do away with inequality, but failed, except to give most of the population a substandard life. Meanwhile the elites (the nomenklatura in Russia) lived very well. Some inequality will always exist, but it shouldn’t be so large that you don’t really have a middle class any more.
In the United States, the disparity between the richest 1% of the population and not-so-rich rest of us has become too large to ignore. This widening gap has been caused by a number of factors, resulting in the rich getting richer and the poor getting poorer, and the middle class getting terribly squeezed economically. I believe the worst is yet to come. The factors causing this gap to widen are:
(1) High salaries of the elites. Business executives receive ridiculously high salaries, bonuses, and stock options. Even the incompetent ones receive a generous “golden parachute”, getting rewarded for poor performance.
(2) Sports figures also receive ridiculously high salaries, and still they want more as we see in the NBA walk-out.
(3) With the economy the way it is, the poor have even less opportunities for earning a living, so many are unemployed or underemployed. The poor are getting poorer.
(4) The middle class is getting economically squeezed by a number of factors:
(a) Many are unemployed or underemployed. As a result, some have lost their house, and some have had to declare bankruptcy, moving these families into the ranks of the poor.
(b) Even if they have a job, they haven’t received a raise in years, property taxes are going up, they have to pay more for health benefits, the cost of college has been increasing much faster than the rate of inflation, and other costs (such as transportation) are on the rise.
(c) The first wave of the Boomer generation is now retiring, but they are financially unprepared. Research has shown the Boomers haven’t saved as much for their retirement as they should have, and it will be especially tough for single women when they retire. I believe that the Boomers will swell the ranks of the poor or lower middle class when they retire, since many will be living mostly off social security.
For these reasons, I believe the inequality will get worse, even if the economy turns around. Some Boomers will find themselves working – if they can find a job – well into their 70s in order to keep their heads above water.
While some inequalities are inevitable for various reasons, the current and the future level of inequality is unacceptable. I’m not sure what the answer is, but something will have to be done. Pray that our leaders will have the wisdom to deal effectively with inequalities so that people don’t have to live in abject poverty, especially in their “golden years.”