The Look and Feel of Inequality

Ten years ago, John Edwards’ stump speech described “two Americas” – one for the wealthy, and one for ordinary working people. It had enough resonance to secure the freshman senator his party’s nomination for VP. Those two Americas have only since diverged further, and the division is increasingly visible in everyday life.

Recently, in New York City, there was an uproar over a new residential skyscraper. In order to obtain lucrative tax breaks and zoning variances, the builder set aside a number of units for middle-income residents – a commonplace in New York. However the builder took the unusual step of creating entirely separate entrances: one for the rich and a “poor door” for the rest. The rich might suffer having the same address as commoners – but they neednt be subject to the indignity of riding in the same elevator.

In the gilded age, the rich built fabulous townhouses in American cities – splendid three- and four-story, single-family residences. Then came the Great Depression and World War II, which wiped out much of the wealth and income inequality in America. And a funny thing happened: as the economic facts shifted beneath those single-family townhouses, many were broken up into apartments and condos – reflecting the postwar demographic shift in America toward the rise of the middle class.

Over the past 25 years, that trend has been reversing, and townhouses in cities like New York and Chicago are being consolidated back into single-family residences. Meanwhile, “modest” million-dollar single-family homes in LA’s most desirable neighborhoods are being torn down for multimillion dollar McMansions. Consonant with the demographic changes in the US, the middle-class are literally being pushed out of town by the growing wealth concentration of the rich and super-rich.

One natural consequence of rising inequality is increased demand for private security. Unsatisfied with the protection offered by public police departments, as the rich get richer, they increasingly have the means and desire to procure their own police force. The number of private security workers in a given nation is roughly predicted by income inequality, and the US is indeed a world leader, with more than 1 million guards-for-hire – opposite fewer than 800,000 police officers. US private security workers have doubled in number since 1980, and have quintupled as a fraction of the workforce since the 19th century.

One of the most insidious manifestations of inequality is the tax code’s bias against work. Despite conservatives’ pretended esteem for “hardworking Americans”, their tax policies discriminate against workers, by shifting the tax burden onto them and off of investors. A hardworking American earning the minimum wage is subject to a flat 15.3% FICA tax on income – no exceptions, no deductions. Mitt Romney – poster-child for the rich who dont pay their fair share – paid a 14% tax rate on his $13.7 million income – less than that of any burger-flipper or supermarket stockboy, or indeed Romney’s own personal secretary. A worker making $100,000 per year will typically pay federal taxes on top of FICA, bringing his total federal tax burden north of 30%. But a wealthy heir living on portfolio earnings of up to $400,000 would pay less than 15%.

No one questions that wealth should be allowed to fetch what it can on the private markets – but we can fairly ask whether it should also buy preferential access to public services – on Monday, when the Field Guide returns.



Thanks to LFG faithful Mary and Chuck for their input and inspiration on this series on inequality.


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