Neoliberal economic theory, which dominates current American policy, holds that the market, unencumbered by regulation, is the most efficient allocator of resources.
This sort of policy today increasingly benefits the richest members of society.
Instead of allocating resources efficiently, the increasingly unencumbered market seems to be driving inequality to levels that are threatening the fabric of society.
French economist Thomas Piketty writes on the growth of inequality in the United States. According to his research, the two world wars of the previous century combined with the economic policy pursued by the United States and Western Europe following the 1940s drastically reduced the high rates of inequality witnessed at the beginning of that century.
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From the 1950s through the 1970s, middle-class wages grew, and a significant safety net was established in America. In the Reagan era of the 1980s, economic policy began to change.
Since that time, the share of income and wealth held by the richest members of society has grown enormously.
Today, the top 10 percent of Americans control nearly 75 percent of the nation’s wealth and take about half of the nation’s income each year. Research from the Harvard Business School indicates that Americans vastly underestimate wealth disparities. U.S. citizens believe that, on average, the top 20 percent of society should control about 32 percent of the nation’s wealth.
The subjects in the study, as a group, guess that the top 20 percent actually holds around 59 percent of the nation’s wealth. In reality, that group controls a disproportionate 84 percent of wealth.
The salaries and wealth of the rich have increased exponentially over the past few decades, while the middle-class’s wages remain stagnant. The divergence of the rich from the rest of society presents clear concerns.
The middle class struggles to maintain the standard of living that defined the group during the previous century. Home ownership rates decline, wages refuse to rise and social safety nets are retracted making the situation of families ever more precarious.
This is occurring while CEO salaries continue to rise. Currently the average American CEO makes more than 300 times that of his or her average employee. Economist Joseph Stiglitz contends that America’s markets and economy currently fail to produce efficient outcomes for society.
The decreasing levels of regulation over the past few decades have allowed corporations and those influencing markets to act in their own self interest at the detriment of society.
As chief executives are paid more, with salaries often made up of stock options, corporate decisions are made only with regard to short-term growth, the outcomes of which often fail to align with the needs of society. Americans should be up in arms about the state of today’s economy, as it benefits only its richest individuals.
The American dream has become unachievable for most people, and intergenerational economic mobility is on a steady decline.
It is time to re-evaluate our national priorities and policies.
Neoliberal policy that emphasizes the liberty of wealthy individuals and corporations over the opportunity of the remaining 99 percent of us must change.
If not, the future of American society appears grim as the wealthy continue to diverge from the rest of the population.
Ike Uri of Lawrence is a student at the University of Kansas, studying sociology and Russian language. Reach him at firstname.lastname@example.org.