inequality, jefferson, and the 2004 fed survey
i've posted before on trends in u.s. wealth and income inequality, but the most recent national fed survey and state reports from the economic policy institute leave me even more pessimistic. i'm no stratificationist, so i can't speak with any real or imagined expertise. as a citizen, however, i believe that too much inequality is bad for the republic. it also makes for ugly human transactions every time that grinding poverty confronts grandiose privilege on the street.
i'm not sure whether my personal preferences stem from the late-enlightenment rousseau and jefferson of polisci 101, lutheran church sunday school, or my later sociological education. probably jefferson. in his last blog entry in 1826, the original man of the people wrote:
"All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favoured few booted and spurred, ready to ride them legitimately, by the grace of God."
jefferson doesn't cite his light of science data here, but he did cite europe as a negative example of wretched inequality. here's a 1785 letter to james madison:
"[The] unequal division of property... occasions the numberless instances of wretchedness which... is to be observed all over Europe."
europe doesn't seem so unequal these days, eh? jefferson would have taken a dim view of the contemporary trends in american inequality detailed in the new fed survey. here are a few findings:
1. stagnant family income : the growth in family income from 2001-2004 was the smallest since the 1989-1992 period [yes, i realize how closely this periodization maps onto political changes]. average family income actually dropped about 2.3 percent to $70,700 from 2001 to 2004. the median rose about 1.6 percent to about $43,200.
2. rising debt: for the three-fourths of families with debt, the mean value of total outstanding debt rose 34 percent from 2001 to 2004. for comparison, this amount rose only 6 percent from 1998 to 2001.
3. fewer owners: most disturbingly for those with visions of a "stakeholder" society, the level of families with any stock holdings dropped significantly, as did the amount of those holdings. call me naive, but i like the idea of broad participation in equity markets (e.g., through 401(k)s and 403(b)s). until just now, the long-term trend had been toward ever-greater participation. in 2001, more than half of all families (51.9 percent) held stock directly or indirectly. now we're back down to 48.6 percent.
4. declining wealth at the bottom: even with rising home values, median net worth is flat and actually declining for the bottom 40 percent of the income distribution. median net worth for the wealthiest 10 percent of the income distribution increased 4 percent to $924,100 from 2001 to 2004. during this period, the net worth of the bottom 20 percent of the income distribution declined by 10 percent to $7,500. the second lowest quintile declined 13 percent to about $34,300.
5. racial and ethnic inequality: there are enormous differences by race and ethnicity throughout the report. for example, median net worth is almost six times higher for nonhispanic white families ($140,700) than for nonwhite or hispanic families ($24,700). the corresponding means are $561,800 and $153,100. [yes, i realize that racial inequalities were actually quite a bit worse in jefferson's day.]
as a social scientist, i'm not quite convinced by existing empirical work linking inequality and all manner of social ills. still, i'm convinced as a citizen that national trends in inequality are going in the wrong direction. what would jefferson do [wwjd?] to avoid this wretchedness? progressive taxation and public education for starters (more on the latter some other time). this from another letter to madison in 1785:
"The property of this country is absolutely concentred in a very few hands, having revenues of from half a million of guineas a year downwards ... I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind ... Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise. Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labor and live on."
can you believe that this guy actually got elected president? i can accept the fact that for much of human history the mass of humankind really was born with saddles on their backs, with a favoured few booted and spurred to ride them. i'm just troubled that jefferson's nation is moving toward greater rather than lesser inequality today.