Reducing Inequality

The Pope’s Exhortation (pp. 44-51) has highlighted the immorality of the growing inequality in today’s society.  The content of his message should resonate with all Christians, not just Catholics, and with many other people who care about their fellow beings.

Political pressure groups, such as the Occupy Movement, and religious leaders like the Pope can influence public opinion and create a surge of popular support for a reduction in inequality.  For any change to happen, though, it has to be possible for people to vote for it – which means having politicians standing for election on a platform of commitment to a programme of specific actions to reduce inequality.

Several approaches have been suggested to reduce inequality:

• It would be helpful to ensure that wealthy individuals pay their fair share in tax.  Mitt Romney, for example, paid 14.1% tax on an income of $13.7 million whereas many people in employment pay a higher percentage of tax on their (much lower) incomes.  This means fixing the tax code.
• Concerted action is needed to make corporations apportion their profits according to their sales in each country; it is currently too easy for them to avoid tax by manipulating where profits are declared.
• Tax alone, though, does not solve the problem because it polarises society between a small group who pay a substantial amount in tax and a large group who pay little or no tax – either because their earnings are low or because they are unable to work.  The currently fashionable theory of ‘trickle-down’ economics has led to an enormous gap between rich and poor and mutual resentment.  The Pope quite rightly criticised this now-discredited theory and called for change.  A new narrative is needed, which does not so obviously benefit the wealthy and which more clearly benefits the nation as a whole.
• Everybody (including corporations) would be better off with ‘middle-out’ economic growth, where a better-paid middle class creates stable economic demand as it spends its money (in contrast to the wealthy, who gamble their excess money on the financial markets and create instability).  Such a bottom-up engine of economic growth will only develop if the proceeds of wealth creation are more equitably divided between ordinary workers, directors and shareholders.  Changes in corporate governance are required (3.5.6).

Change will not come about, though, while big money exerts such an influence over politicians and while election results are affected by huge advertising budgets.  The US Supreme Court’s Citizens United decision needs to be reversed, so that politicians can no longer be bought with huge sums of money.  Until this happens, both Democrats and Republicans will be beholden to those who make big financial donations – so neither party will dare to make the necessary changes and the plutocracy will steadily strengthen its power over the rest of society.

Even if one of the political parties doesn’t make a wholehearted commitment to reducing inequality, it should be possible for individual political candidates to stand for either party, or as independents, in support of a fairer deal for middle-class Americans.  What is important is that there should be candidates who offer themselves on the basis of a declared programme of action, so that voters can choose change.  That is how democracy is meant to work.