Chris Uggen's Blog: inequality, jefferson, and the 2004 fed survey

Sunday, February 26, 2006

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.]

6. rising inequality: the fed report only details the past decade, but the long-term trends show steep rises in inequality since the late 1970s.

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.


At 7:32 AM, Blogger Mike W. said...

The biggest problem is not that racial inequality exists; it is, in my opinion, trying to explain to people how government policies and cultural frames supporting reduced responsibilities for the wealthy (e.g., subsidising sports stadiums, tax breaks for the wealthy, the outrage that Wal-Mart should pay for health care for employees), as well as showing how these attitudes manifest themselves in our society (drastic decreases in union membership, redistributing federal budget surpluses in the form of $300 refunds, ignoring a then-5.1 trillion dollar deficit). That's the hard part, is crystallizing what people know and see into a cogent narrative of how people are holding attitudes and beliefs that harm them and their well-being in the long run.

Instead, I believe, there are select narratives that not only justify the status of the poor, but the wealthy as well; it's not romantic, or easy, to think about how the median income has remained relatively stagnant over the past 16 years, in real dollars, while the cost of goods has increased dramatically.

Rather, we are up against narratives of the "culture of poverty" that suggests a life-course of consistently poor decisions (that none of *us* have ever made, clearly), coupled with missed opportunities (the agent being the poor person, of course, as there would be no discrimination on the behalf of the employer). You know, I'm certain: the arguments that insist upon a particular "they" (more often than not a word that can be read as "blacks") do "this," and "that" becomes the result.

Of course, wealthy people succeed premised upon the pristine foundations of meritocracy upon which our nation was based. They do not make poor decisions, and they have as much chance to succeed as those poor folk.

All sarcasm and blather aside, did you see (perhaps you posted it) a study that showed the % of net profit distributed amongst the top 5 executives at the top 1,500 publicly traded firms? This was about a month ago; at any rate, these 5 guys (and we can be certain they are guys) take amongst themselves 5 cents out of every dollar of net profit for a corporation (in income, bonuses, and stock). This was the case from roughly 1993-1997. By 2003, this percentage became 9.8%. If you haven't seen that, I'll have to find it for you. It evokes the inner Marxist that I like to deny.

At 9:34 AM, Blogger Kim said...

What I find even more astounding is that we are less than 100 years removed from politicians (e.g., both Roosevelts) who were vehemently opposed to the inheritance of large sums of wealth, and who found it politically viable to suggest taxation rates on the order of 80% on what would seem today to be exceedingly modest fortunes. I can't even imagine a politician proposing 80% taxation rates on inheritances today, let alone a politician who might win an election.

At 11:08 AM, Anonymous chris said...

i agree that better narratives would certainly help tell the story and sociologists could do a better job hammering home the basic irreducible and inarguable social facts about inequality.

like kim, i'm struck by how greatly the narratives have changed in a few generations. we could use a new jeffersonian to meld the social science data with some principled political philosophy. s/he'd offer a spirited intellectual and philosophical vision of meritocracy and equal opportunity. s/he'd similarly wrestle to reconcile liberty and equality on issues such as the "death tax," public education, and health care.

to an outside observer, it seems that conservatives have seized jurisdiction over talk about the natural rights of humankind that jefferson articulated. sometimes i wonder whether the left really believes that all are created equal and endowed with unalienable rights.

At 10:05 PM, Anonymous sarah said...

I'm not sure how you manage to be an outside observer, Chris, but power to ya. I think your point re: the left is spot-on, unfortunately. To put it mildly, I think the left has a "vision problem."

As a side note, the site that hosts Jefferson's "last blog entry" is quite...provocative. The site raises nothing new to me in terms of critiques of Christianity, but I find this assertion in the Q&A section to be a bit, well, overreaching: "Just as cigarettes pose a health danger...likewise, believers pose a mental health danger..." Eek.

At 11:15 PM, Anonymous chris said...

oops, sarah -- looks like i can't endorse everything on that link!

At 11:40 PM, Anonymous sarah said...

I didn't expect that you did...=)

At 9:02 AM, Anonymous Anonymous said...

The obvious conundrum your Jeffersonian mantra faces is Jefferson was among the elite, had no desire to share his own wealth, was a slaveholder who paid lip service to their freedom, and went to his grave attempting to amass greater wealth at the expense of his poor slaves. Please save any platitudes you might share regarding the ethos of the era; there were a great many of that era who recognized the evil of slavery and acted upon that cognition. Jefferson as "principled political philosophy" is the epitome of do as say, not as I do politics.

At 3:34 PM, Anonymous chris said...

anonymous, i lack the historical chops to put jefferson's deeds into any meaningful perspective. i know he was a walking contradiction, of course, and i'd never defend slaveholding or slaveholders in any era.

i trotted jefferson out here because rising inequality strikes me as fundamentally unamerican and jefferson offers a familiar (fundamentally american) touchstone and vocabulary to help make this point. to adopt your terminology, he also contrasts sharply with contemporary wealthy do-as-i-say elite hypocrites who don't even give lip service to redressing inequality.

At 8:48 AM, Anonymous Anonymous said...

There are, indeed, many hypocritical elite in the present day. It's pointless to speak in generalities, however. The point I was making in my post was that Jefferson is an extremely flawed examplar of principle.

As a sociologist, it seems the pertinent question to ask yourself is: Why is the gap in material equality widening? My understanding of history says that the Founders intent was to provide man the pursuit of happiness. There's obviously nothing in the constitution or other political writings of that era to suggest otherwise. Is government's role more than to provide everyone with the chance to pursue happiness? If so, then I guess you're a New Dealer or a Great Societer. If not, you may see the same inequity but realize, for better or for worse, that's the system we've chosen for ourselves. That said, the shift in redressing inequity took a hard left turn with the New Deal and I can't say that we're better off.


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