Essay: Growing trend of wealth & income inequality in the United States

BACKGROUND
The “American Dream” –our national ethos— boasts the set of ideals in which freedom encompasses the opportunity for prosperity and success, as well as an upward social mobility for posterity through hard work in a society, regardless of socioeconomic class or circumstances of birth. And despite the democratic vision on which our country was built, America has now more wealth and income inequality than any other major developed nation in the world. Today’s reality is far from the American Dream. In reality, tens of millions of Americans cannot achieve the American Dream.
Intergenerational mobility, or the movement of socio-economic over generations, is at the core of the American Dream. Yet today the United States finds itself at the extreme ends of what former Council of Economic Advisors Chair Alan Krueger dubbed “the Great Gatsby Curve,” which paints the relationship between income inequality and mobility, or “generational earnings elasticity” (Krueger, 2012). Recent studies of income inequality and social mobility show that higher levels of income inequality are correlated to lower rates of social mobility, suggesting that inequality and mobility have an inverse relationship. Both the decline mobility and low mobility itself serve as threats to the American Dream, as well as to political freedom and American democracy.
A shrinking middle class is not only a threat to the American economy, but it is also a threat to governance. As recognized since ancient times, the coexistence of the extremely rich and extremely poor only leads to two possibilities: the very rich can rule alone, disenfranchising the poor, or the poor can revolt and take the power from the rich. The need for a “middle-class constitution,” then, begs for an economic system characterized by a strong middle class and relatively minimal inequality (Sitaraman, 8). A large, thriving middle class, Sitaraman write, inspires a sense of shared purpose and goals, without which the system of government will fall apart.
CRITERIA
Socio-economic Mobility
Socio-economic mobility is the movement of individuals within or between socio-economic strata. The prospect of upward mobility is a prime motivation to work so hard and when that ideal is nearly unachievable it affects both inequality and perception of inequality in America.
Political Freedom and Democracy
The middle class is a driving force of both the economy and the political forefront. Threats to a strong middle class undermine the system of governance.
ANALYSIS
The United States is home to some of the highest income inequality among the developed nations, and with it, some of the lowest social mobility or income/wealth matriculation between generations. This harsh reality challenges the notion America as a land of opportunity and freedom to pursue life, liberty, and happiness—because Americans simply do not have the resources to do so.
The founders of the Constitution were very wary of the rich becoming too rich and powerful. Jefferson himself called for a progressive tax system to prevent and limit the power of an aristocracy. But industrialization proved to seriously threaten the ideal of a strong middle class as economies of scale prevented entry of competition, and this began the movement of the middle class to opposite ends of the wealth and income spectrum. So often since, political power has gravitated toward people with excess money to spend pushing for more rich benefiting political initiatives while everyone else struggles with limited resources.
Sitaraman highlights the achievements of the Progressive movements that aimed to combat inequality. The four most recent constitutional amendments were made and ratified in only seven years that provided a more even playing field for Americans, namingly the franchise for women and income tax. Politics, as shown even in recent years, can respond accordingly to economic and political inequality, and the Constitution is not unable to reform.
CONCLUSION
The growing trend of wealth and income inequality is a problem in the United States and demands to be addressed. The founders of the Constitution anticipated the threat of economic inequality and lack of mobility to political freedom and democracy, but did not anticipate the volume as which has grown since the Gilded Age. Since, few reforms on the constitutional level have been enacted to rectify such a huge increase in inequality: the poor stay poor, while the rich become richer. The inverse relationship of inequality and mobility, while not necessarily causal, suggest that less inequality will be associated with more mobility. When corporations initially saw drastic increase in returns from the operational efficiencies of economies of scale, there were essentially no regulations to limit their growth and marginalization of everyone else. As workers grew strong (unionization), the economic forefront began to level a bit, but the amount of economic and thus political power that must be earned/gained cannot be achieved without governmental reform.
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