The Tyranny of Gross Wealth Inequality

BrighamYoungIn a 2012 General Conference address, Elder M. Russell Ballard of the Quorum of the Twelve Apostles of the Church of Jesus Christ of Latter-day Saints, expressed concern about “the ever-growing gap between the rich and poor.” Elder Ballard’s concern about gross wealth inequality has been shared by many of his predecessors. Elder Orson Pratt once observed that “an inequality of property is the root and foundation of innumerable evils; it tends to derision, and to keep asunder the social feelings that should exist among the people of God…. It is a principle originated in hell; it is the root of all evils…. It is inequality in riches that is a great curse.”

In 1875 the First Presidency of the Church of Jesus Christ of Latter-Day Saints and the Council of the Twelve Apostles (Brigham Young was President at the time) issued an official statement related to the Church’s economic cooperative system. In that statement, they issued a stern warning about the consequences of gross wealth disparity:

The people of communities and nations among whom wealth is the most equally distributed, enjoy the largest degree of liberty, are the least exposed to tyranny and oppression and suffer the least from luxurious habits which beget vice… One of the great evils with which our own nation is menaced at the present time is the wonderful growth of wealth in the hands of a comparatively few individuals. The very liberties for which our fathers contended so steadfastly and courageously… are endangered by the monstrous power which this accumulation of wealth gives to a few individuals and a few powerful corporations…

If this evil should not be checked, and measures not taken to prevent the continued enormous growth of riches among the class already rich, and the painful increase of destitution and want among the poor, the nation is likely to be overtaken by disaster; for, according to history, such a tendency among nations once powerful was the sure precursor of ruin.

The United States currently has the highest level of income inequality among developed countries. A metric called the Gini coefficient has been used to measure and compare income inequality in countries around the world for many decades. As noted in the Atlantic Magazine, the U.S. ranks near the extreme end of the inequality scale right along with an unflattering list of underdeveloped countries such as Cameroon, Rwanda, and Ecuador. China actually ranks better than the U.S. on the Gini scale.

According to The Economist, 95% of the gains from the current economic recovery have gone to the richest 1% of Americans. The top 1% of Americans have 19% of the nation’s income (this figure has doubled since 1980) and own 40% of the country’s total wealth. CEOs of large companies make about 380 times as much as their average worker today. Meanwhile, the bottom 80% of Americans own only 7% of our country’s net worth. Median household income in the U.S. has barely kept up with inflation since 1980. The net worth of the bottom 93% of Americans has dropped in the current recovery while that of the top 7% has grown rapidly. This viral YouTube video on wealth inequality in America, created by a couple of university professors, does a great job of explaining the actual wealth disparities in America, versus Americans’ perceptions of wealth distribution.

The impact of huge income and wealth disparities on society are severe. Robert Shiller, who was awarded the 2013 Nobel Prize in economics, recently observed that inequality is “the most important problem that we are facing today.” Another Nobel Prize-winning economist, Joseph Stiglitz, concluded that such unequal societies are inefficient and tend to have unsustainable economies and unstable governments. Stiglitz and other economists have warned that income inequality curbs consumer spending and thus results in a reduced aggregate demand, harming overall GDP growth. There is also strong evidence that upward mobility is constrained in countries with great wealth and income disparities. This means that the ideal of the American Dream, the rags-to-riches stories of self-made success, are highly unlikely in economies such as ours.

Additionally, great wealth disparities lead to situations where a limited few wealthy individuals and corporations wield undue political power. The ability of moneyed interests to put into office those who support their political agendas or personal financial interests over the interests of the majority, thereby strengthening their grip on power, poses a significant threat to our republic. As noted recently in The Economist, “the recent concentration of income gain among the most affluent is both politically dangerous and economically damaging.” The Supreme Court’s unfortunate Citizens United decision has placed our liberties under assault because it permits unlimited corporate influence in our elections, giving America’s wealthiest a strong advantage over the average voter. Unfortunately the 1875 warning from Church leaders about the consequences of great wealth disparities was ignored. Their words are especially prescient: “The very liberties for which our fathers contended so steadfastly… are endangered by the monstrous power which this accumulation of wealth gives to a few individuals and a few powerful corporations.” One great irony about the 1875 statement is that one of the faces of this assault on our liberties was the last GOP nominee for president, a Mormon, who stated that “corporations are people,” or in other words, that corporations ought to be treated with the same legal rights that are bequeathed to citizens.

This is not to say that some wealth inequality is bad. In a capitalist economy, there must be some degree of inequality to create incentives for hard work and risk-taking. Equality of outcome is not the goal. However, we need to do more to spread opportunities widely. In his 2008 Democratic Convention speech, Barack Obama stated, “Government cannot solve all our problems, but what it should do is that which we cannot do for ourselves: protect us from harm and provide every child a decent education; keep our water clean and our toys safe; invest in new schools, and new roads, and science, and technology… It should ensure opportunity not just for those with the most money and influence, but for every American who’s willing to work.” A society that fails to provide sufficient opportunity for its citizens to thrive, thereby increasing the gap between rich and poor, is one devoid of hope and on track for ruin.

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Aaron

Author / Editor at MormonDems
I have been an active Latter-Day Saint all of my life and have also been an enthusiastic Democrat and progressive since my days as an economics undergraduate student at Brigham Young University. The hostile climate towards progressives at BYU inspired me to get involved with the BYU College Democrats, where I served as president during my senior year. I have since obtained a master’s degree in international relations from the University of Oklahoma. I served a full-time mission to the Philippines. I’m active in my local ward, happily married and have two rambunctious little boys and an infant daughter.

19 Responses to The Tyranny of Gross Wealth Inequality

  1. Terence L. Day says:

    I’m a former fourth generation Republican and proud father of several fifth generation Republicans. In the home in which I was raised, “Democrat” was a curse word and in my younger years I was active in GOP politics. Two of my sons have been delegates to state GOP conventions. But, during the 2012 Presidential Election campaign I formally and very publicly severed my relationship with the party. Basically there were two issues: Income disparity and the government isn’t my enemy. No insult intended, but I could never become a Democrat, so I am a man without a party. But since Ronald Reagan I have voted for Democrats as the “least worst” candidates and I don’t see a change comin’ down the road, although I would like to return to the GOP if it ever regains its sanity.

    • dee says:

      I see that income disparity is an issues that also worries me. As a small business owner, my husband and I see the people who come into our pharmacy who struggle day to day to pay for bills, food and their meds. I tire of the conservatives who decry the influence of “government” and make it the enemy. I believe government can and should protect “the least of these”. The influence of the super-rich in the political process, reminds me of the “pride cycle” in the Book of Mormon. We are aching for a fall!

    • Linda says:

      I left the Republican party about 6 years ago, after over 35 years. I am saddened by what I feel is an agenda of deception to win, at any cost. I have had the time I lacked in the past, to listen to all sides of the issues. I even began listening to what many called liberal NPR and found it to be very informative and factual.

  2. Kevin says:

    The problem is that wealth is often not the reward for hard work. The hardest working people I’ve seen are the poorest and it can think of many examples of rich that have done nothing.

    • Aaron says:

      Great comment Kevin. Your remarks remind me of the poverty myth embraced by many people today- the idea that most poor people are lazy. To the contrary, the lowest-paid workers in our country on average work far more hours than the wealthiest. We’ve really got to tackle this growing wealth inequality problem or else we’re going to face a myriad of other problems.

      • The problem with your observation is that hard work alone will never make you wealthy. You can work 80 hours a week and that will not make you wealthy. You could be the hardest worker at your job and that will not make you wealthy. You have to find a way to get pay for what you are worth and not the job you do. Staying in a job with low wages and not advancing is a terrible plan that many people follow. Many hard workers in low wage jobs have skills that would be making more and being more successful if they were in, lets say, another job or as business owners but they choose to stay in that job for different reasons but mainly because is a steady income and job security. This is where you want the government to come in and say pay this people more, raise the minimum wage, but that would not solve the problem. Unfortunately, most of them will just adapt to the new income and raise their way of living by spending more because they are used to spend as much as they earn and live paycheck to paycheck. Unless you change their way to manage their money, they will just continue the vicious cycle. Yes, some people don’t make enough to pay their bills and do need help, I do agree with that, but the problem is that many others that, appeared to be in the same situation but are not, just get more and spend more. I used to hear the saying that goes “the more you make, the more you pay” and didn’t really understood it until recently. I was one of those people that the more I made the more I spent, like many people out there. Now, I changed the way I spend money and even when I make less money now that I made before, I have more money available to me because I learned to manage the money wisely and live below my means. Go ahead and check the lifestyle of those people, someone here commented here that they come to their pharmacy struggling day to day to pay their bills. You will see the ones that are poor and need help, but you will also see the ones that drive a new car, eat out all the time, buy clothes every week to live a lifestyle above their means and then they say, I have no money to pay my bills. You want to make more money and reduce the income inequality? Build your own business. Have others work for you, even if you start with a small flower shop or a coffee shop. This is how this country was formed. The rich are the ones that opened businesses or studied to be doctors, lawyers, engineers, architects, etc., when they came to this country. The middle and lower class are the one that did not and worked for someone else all their life. If you don’t have to open a business but want to study, don’t get a school degree that a bunch of other people have. That would not help you much. Get a profession that is and will always be in high demand but make sure you getting it because is what you want and love to do, not just because it makes money. Take responsibility for your own decisions in life. You can’t go around blaming others for your own failures. You and Only “You” have control of your life. If a job doesn’t give you an opportunity don’t blame the job, blame yourself for staying in that job. The great thing about this country is that there are more opportunities here than in any other country in the world. You just have to look for it, but you can’t do that sitting in that dead end job or at home watching tv. In reference to this statement “The ability of moneyed interests to put into office those who support their political agendas or personal financial interests over the interests of the majority, thereby strengthening their grip on power, poses a significant threat to our republic”. The democrats outspent the republicans in donations from the rich during the elections of 2012.

  3. I don’t see a solution to the wealth inequality problem in the near future. Even in the church there are those that cling to the idea that having great wealth is a good thing, though in the Book of Mormon and in conference talks we hear just the opposite. I’m all for taxing the wealthy and corporations at a fair rate and raising the minimum wage to help the working poor. I feel like I am in the minority, especially at church and don’t know if people are not listening to our leaders or listening and heeding the voices of the wealthy.

    • Shawn says:

      Interesting comment Janet – but would you mind citing the quotes or scriptures of which you refer? Why can’t we tax everyone at a fair rate? LDS Tithes seem to be equitable for all, but a flat tax model won’t be supported by any party. Your suggestion to raise the minimum wage for the working poor comes at a direct impact to the lower middle class, who then become more of the “working poor.” It a lousy solution. A Government mandate for equality, or near equality is impossible. It won’t work in the US, and does not even work in communism. The only time it has worked is when a community, being righteous, imparted of themselves, of their own free will, and volition, without force. The LDS faith has doctrine on how to operate such a society, and even its own membership could not abide it when it was instituted. Our Apostles & Prophets live the closest we have to a working model. Having the US Government broach the topic is a gross error we cannot afford to make.

      • Aaron says:

        Shawn- thanks for reading and commenting. I think the comparison of modest poverty-combating measures like the minimum wage to communism is quite the hyperbole. Anyway, on the minimum wage debate, it’s noteworthy that hundreds of our nation’s top economists have spoken out in favor of modest increases. They said on the minimum wage debate is that hundreds of top economists recently spoke out in favor of raising the minimum wage. They said raising it would “improve the well-being of low-age workers and would not have the adverse affects that critics have claimed.” I wrote a short post recently on this very subject: http://www.mormondems.com/archives/501. Another couple of points to consider are: (1) the minimum wage has not kept up with inflation over the past several decades. The working poor make less today then they did a generation ago. And (2) minimum wage employers benefit greatly from taxpayer subsidies that are given to their workers. Employers like Walmart essentially rely on the government to make up the difference between $7/hr and what is required to survive. In Wisconsin, it was estimated that your average Walmart reaped in about $900,000/year in taxpayer subsidies for their employees.

    • Kim says:

      I bet you were just waiting for someone to put this scripture 🙂 Jacob 2:19 And after ye have obtained a hope in Christ ye shall obtain riches, if ye seek them; and ye will seek them for the intent to do good—to clothe the naked, and to feed the hungry, and to liberate the captive, and administer relief to the sick and the afflicted. ——It seems that riches aren’t inherently wrong, but what you choose to do with them that counts. I bet people will always find a way to be richer than someone else no matter how they are taxed, but I can’t think of a better way to get people to use their riches wisely than by teaching them the gospel.

  4. David Tait says:

    This was a very good piece. I am a libertarian at heart and agreed with everything you said. It amazes me how much politicians talk about the middle class yet do nothing for them; President Obama included.

    They get elected by the super rich, buy votes from the elderly and poor via entitlements and thereby largely ignore the middle class. The rich get richer, the poor remain entrenched in poverty, and the middle class just keep treading water, hoping they are going to make it.

    This is exactly how today we have massive Corpate welfare and crushing entitlement obligations.

    Reform entitlements, END all corporate welfare, and overturn citizens united would be a great first step to revitalizing the American dream.

    • Aaron says:

      David- thank you for reading and commenting. I agree with your sentiments. I would love to see Citizens United overturned, although I don’t see it happening soon given the current construct of the Supreme Court.

  5. CR says:

    You can’t beat income inequality. If you tax the rich and businesses more, they lay off workers or raise prices to make up for what they are losing. If you raise min. wage, businesses raise prices because cost of business is more. Your $1 Burger now costs $1.50. You will not take money away from those who know how to acquire it. Learn hiw to make money yourself and stop expecting others to hand you some.

    • Aaron says:

      CR- thank you for reading and commenting. I recently wrote a post addressing some of the concerns you mention regarding the minimum wage (http://www.mormondems.com/archives/501). I studied economics as an undergrad student at BYU and am familiar with some of the arguments against the minimum wage. However, one important point I learned as an econ major is that the real world and real markets are often quite different than extremely simplistic economic models. What is interesting on the minimum wage debate is that hundreds of top economists recently spoke out in favor of raising the minimum wage. They said raising it would “improve the well-being of low-age workers and would not have the adverse affects that critics have claimed.” Anyway, if you have a chance, check out the article and let us know what you think.

  6. Andrew Watson says:

    I’ve always been a Democrat and a Latter Day Saint, and quite frankly I agree with that statement made by brother Brigham in 1875. If we don’t learn to not just help the poor get out of poverty, but to also give to them as well.

  7. Colby says:

    This comment is a couple of years late, but I wholeheartedly agree with this article. I have enjoyed everything that I have read from you Aaron. If you are interested, I am working on chronicling everything the Book of Mormon has to say about inequality in what will likely be dozens of articles. I would be interested in any comments that you, or any other reader, has about the study. http://unconventionalinquiry.blogspot.com/2015/08/introduction-what-does-book-of-mormon.html

  8. Adrian says:

    My concern is that from what I know the LDS Church does not have a clear cut official position on the important issue of what should be the goal of government, or politics based on Christian ethics. The Catholic Church instead has adopted the concept of the “Common Good” as its official doctrine concerning the role of government. “The common good is the sum total of social [and economic] conditions that allow all population to reach their fulfillment more fully and more easily”. I would like to hear a similar statement from the LDS Church, otherwise a big part of Christian doctrine is missing, IMO.

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