Income Disparities Threaten Economy

IT’S TIME TO TILT THE FIELD IN THE OTHER DIRECTION TO PROMOTE HEALTHY GROWTH

Alas for those who lie on beds of ivory, and lounge on their couches, and eat lambs from the flock, and calves from the stall; who sing idle songs to the sound of the harp, and like David improvise on instruments of music; who drink wine from bowls, and anoint themselves with the finest oils, but are not grieved over the ruin of Joseph.

Amos 6:4-6 In the eighth century BC, the prophet Amos addressed government officials and the business elite in the name of God. He condemned them for permitting conditions of extreme income inequality.

Amos said to the wealthy their greed and their participation in an economic system that allowed a few to enjoy extravagant luxuries while masses lived in poverty would provoke disaster - and God’s judgment.

A recent report by the International Monetary Fund argues income disparities might be today’s most signifi cant factor inhibiting future economic growth.

That makes sense to me.

If funneling more money to the people some call the “job creators” would generate economic development, our economy should be roaring right now. In the middle ofour recent downturn, major corporations reported record levels of unrestricted cash reserves. Earnings for the wealthiest have bounced back: Ninety-three percent of the income gains in the fi rst full year of recovery have gone to the top 1 percent;

37 percent of the recovery went to the top 0.01 percent.

But it’s not trickling down.

Instead, more and more wealth is being concentrated in fewer and fewer hands.

The top 1 percent of households now holds a larger share of overall wealth than the bottom 90 percent does. And they don’t seem to be investing it in creating new jobs.

Instead, they seem to be spending more and more money to infl uence politicians to continue to create economic policies favoring the wealthy.

Taxes on upper earners are at historic lows.

Multimillionaires enjoy taxbreaks on things such as capital gains and carried interest to keep their tax rates at about 15 percent, about half of what my tax rate is.

In Arkansas, people at the bottom 60 percent of income pay twice the proportion of taxes the top 1 percent pays.

It is like we are constipated. All of the money is stuck at the top, and it’s not coming out of the system in a way that can fertilize healthy growth.

God’s creation teaches us a different model. A healthy ecosystem lives on the thriving of its lowest members.

My son-in-law studies coral reefs. The ocean’s healthiest systems are those rich with plankton, singlecell algae. The small fi sh that eat plankton have abundant food, and they multiply abundantly. The abundance flows upward in the food chain. The reefs with the most energetic concentration of microscopic plankton also support the largest concentration of sharks in the world.

Our American economic system is like an ocean environment where the sharks have eaten 90 percent of the plankton and there’s not enough left for the smaller fish to survive.

Send the energy and food and money back down the chain. Moody’s Analytics says the most robust generators of new economic activity are payments to food stamps and to unemployment benefi ts.

The little fish spend that money immediately, and it gets turned over quickly and repeatedly on their end of the economic pool. One dollar in food stamps generates $1.70 in gross domestic product in one year.

In the Eisenhower days of the 1950s, facing a large postwar debt, we increased the tax rate on upper income earners to a maximum of 90 percent for incomes of more than $400,000 a year(comparable to about $3.5 million today).

Eisenhower continued the New Deal policies and expanded Social Security;

he created the Department of Health, Education and Welfare; and he funded a new national infrastructure known as the Interstate Highway System.

When Ike was challenged by some in his party, he responded, “I have just one purpose ... and that is to build up a strong progressive Republican Party in this country. If the right wing wants a fight, they are going to get it ... before I end up, either this Republican Party will refl ect progressivismor I won’t be with them anymore.” We need that kind of progressive Republican and Democratic leadership again.

Thirty years of tax breaks and economic policies favoring the rich have left us with gross income disparities, a huge debt, massive unemployment, an anemic economy, a crumbling infrastructure, sagging public institutions, and a plutocracy. It’s time to tilt the field back and give preference to those who need a bit of preference.

LOWELL GRISHAM IS AN EPISCOPAL PRIEST WHO LIVES IN FAYETTEVILLE.

Opinion, Pages 13 on 11/04/2012

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