I know it’s close to lunch and everyone is hungry, but for just a minute I want you to imagine a pizza. Imagine I brought a large pizza in for the whole class and just before everyone started to take a slice, I took half the pizza for myself – like this cartoon by John Darkow1. First of all, what am I going to do with all that pizza? Second, what about everyone else in class? Now you all have half a pizza to fight over. This overused metaphor may sound childish (and make you hungry), but it’s a very accurate way of describing our current economic system in America. I represent the wealthiest 400 Americans. You all are the rest of America. Today, those richest 400 Americans hold more than 50% of our nation’s wealth, about half of a pizza. But that’s just wealth inequality. As for income inequality, the wealthiest 1% of Americans are taking home more than 20% of our nation’s total income2. While the rich are getting richer, the middle class is suffering. Wages are stagnating. People are losing hope. America is not the “land of opportunity” it once was. A recent report in the Wall Street Journal showed barely half of 30 somethings make more than their parents did at the same age, and for many, it feels like the “American Dream” is too far out of reach to be a reality. So, today I want to talk about three things: what the problem is, how it has gotten so bad, and what we can do to fix it.
What is the problem? Right now, America is experiencing the greatest income inequality and wealth disparity in 80 years. In February of this year, Bernie Sanders made conservatives across the nation squirm when he claimed that, “The Walton family of Walmart owns more wealth than the bottom 40% of the American people.” No matter how desperately Fox News tries to debunk Sanders’ claim and deny the problem – the Senator from Vermont is right. Thirty years ago, CEOs were making 40 times the pay of average workers. As if that was not shocking enough, consider that today CEOs are raking in more than 300 times the pay of average workers. According to former Secretary of Labor, Robert Reich, the ratio of corporate profits to wages is higher than it’s been since before the Great Depression. This immense gap is causing a multitude of problems. Today in America, there is an intense competition for a shrinking number of jobs and a smaller share of total income. Let’s go back to the pizza for a moment. When you all realize how little pizza is left over, tensions will be high. I know how hungry I get before lunch. Fights may break out. Friendships may be lost. Society is experiencing the same phenomenon when it comes to the economy. Native-born Americans are threatened by immigrants; non-unionized workers are threatened by the unionized; and middle-class Americans are competing with the poor2. Middle-class wages are dropping. Ford’s newest employees are earning about $14 an hour, as opposed to the $25 an hour made by new Ford workers only 15 years ago. For the first time since 1929, corporate profits make up the largest share of the economy. But 1929 was a good time in American history, right? Wrong. In October, 1929, the stock market crashed – beginning the Great Depression. The same thing happened before the crash of 2008.
How has the inequality among classes gotten so bad? After our most recent Presidential election, it is now more evident than ever that with money comes political power. In other words, elections cost money and the money is with the CEOs and the rest of that top 1%. Thanks to Citizens United v. FEC, there is no limit to how much money corporations can throw into campaigns. Like most things in American politics today, this leads to a corrupt system. The richest of the rich are basically buying elected officials and using them like puppets. Of course, the money doesn’t go to the politicians themselves. Rather, it makes our politicians dependent on these large corporations for funds in order to be reelected. Therefore, they give the corporate executives what they want – tax cuts and fewer regulations. The tax cuts under the Bush administration in 2001 and 2003 saved the top 1% more money than the rest of America’s 140,890,000 taxpayers combined4. John Taylor, a member of the Virginia House of Delegates, once said, “There are two modes of invading private property; the first, by which the poor plunder the rich…sudden and violent; the second, by which the rich plunder the poor, slow and legal.5” His words were true in 1814, and are still true now – more than 200 years later.
What can we do to fix it? As Robert Reich says in Inequality for All, “We make the rules of the economy – and we have the power to change those rules.” The rules are not set in stone. So, I propose to you a three step process: raise, reform, and repeal. First, we need to raise the minimum wage and grow our middle class. The federal minimum wage has been stuck at $7.25 since 2009. Although most conservatives will tell you raising the minimum wage would cause job loss, Princeton University economist Alan Krueger says America can afford a $12 minimum wage6. Raising the minimum wage gives more money to people who will spend it, primarily in their local economy. Second, we must reform our broken tax system. Those richest 400 Americans I mentioned earlier pay an average 17% tax on their incomes, which is lower than most middle-class citizens who might be barely scraping by. If we want to shrink that gap between the middle-class and the top 1%, we have to make the richest Americans pay their fair share and invest that money in things like education and infrastructure. Finally, we have to repealCitizens United and get big money out of politics. The Supreme Court ruled that corporations are people and, therefore, limiting their spending on advertisements is unconstitutional. Freedom of speech is the freedom to be heard. But as of now, the only ones being heard are those with the most money, and they’re drowning out the rest of Americans.
Now if you haven’t been listening to me this whole time, that’s fine. I get it, it’s finals week and we’re all tired. But if you only take one thing away from my speech today, let it be this quote from Louis Brandeis, a former Associate Justice of the Supreme Court of the United States from right here in Kentucky – “We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can’t have both.” America cannot grow until the middle class gets a bigger piece of the pizza.
1 Darkow, John. “Let Them Eat Crumbs.” Columbia Daily Tribune. Caglecartoons.com. April 6, 2007.
2 Inequality for All. Directed by Jacob Kornbluth, performances by Robert Reich, 72 Productions, 2013.
3 Wall Street Journal http://www.wsj.com/video/barely-half-of-30-year-olds-earn-more-than-parents-did-at-their-age/02000AAE-E8BE-4E77-BD77-4274829CE6B9.html
4 Reich, Robert. “Beyond Outrage.” First Vintage Books, 2012.
5 Taylor, John. “An Inquiry into the Principle and Policy of the Government of the United States.” 1814.
5 Krueger, Alan. “The Minimum Wage: How Much Is Too Much?” http://www.nytimes.com/2015/10/11/opinion/sunday/the-minimum-wage-how-much-is-too-much.html?_r=0 Accessed 10 December 2016.
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