One thing we can thank the Great Recession for is that it has finally drawn attention to the growing inequality in American society. Any study or report you care to look at leads to the same sorry conclusion: the rich are getting richer, the poor are getting poorer, and the middle class are disappearing. These trends have accelerated since 2000, but they have been in place for decades; yet, a large percentage of people who are suffering as a result of the inequality seem to favour, or at least tolerate, the policies that perpetuate it.
Real wages have been stagnating and income inequality has been steadily rising in the US since the 1970s, even during periods of sustained economic growth. But we are now reaching a point where economists are panicking about middle class erosion. The recent census report showed that the median income of $50,221 was down about 4% last year from the start of the recession in December 2007. At the same time, the number of families earning less than $25,000 increased by 1%.
The average American family that used to aspire to a comfortable existence that included annual vacations, college education for their kids and home ownership is now battling just to hold on to that home and stay afloat. At least no one is in denial about this. Whatever news channel you tune into you, be it right or left of the spectrum, you will hear cries of help for the ordinary Americans. It is the form of help that is on offer, and the complacency with which we are accepting that 'help' that is perplexing.
The Republican party recently unveiled their "Pledge to America" in which they outline their plans to address the economic anxiety of the majority of Americans by awarding a $700bn dollar tax cut extension to the wealthy who are thriving and cutting spending on programmes that benefit the rest of the country who are not. What is surprising about this is not the lack of imagination (or shame) displayed in the GOP's approach to improving prosperity for all Americans, but that so many people who are not themselves well-off support this generous gift to the rich.
According to a recent AP-gfk poll, 44% of the country is opposed to raising taxes on the highest earners. And, by a margin of 46 to 41%, people want Republicans steering the economy. This is unfortunate considering that according to research compiled by Larry M Bartels of the department of politics at Princeton, income inequality rises under Republicans, whose policies favour the rich, and falls under Democrats, whose policies favour the not-rich, yet more people want Republicans running the show. This perhaps explains, though does not excuse, why the Democrats, in a classic display of what the New York Times calls "timidity", have deferred dealing with the tax cut issue until after the mid-term election – when it may be too late.
The generally accepted explanation of why many Americans, even those that are poor, are opposed to raising taxes for the rich is the enduring belief in upward social mobility or that they may one day be rich themselves. We still believe America is the land of opportunity. You can be born in the ghetto and rise to super stardom. A welfare recipient from a broken home may become president. But the truth is, for the vast majority of people, these dreams are out of reach and, in fact, the US actually has the lowest social mobility of any industrialised nation.
This was one of the more startling findings in a recent book called The Spirit Level, written by two British epidemiologists, Richard Wilkinson and Kate Pickett. The main conclusion the authors came to, after examining examined decades of research from reputable sources, was that everyone fares better in a more equal society. Countries like the US and Britain and Australia that are very unequal have higher crime rates, lower educational standards and generally more social ills than more equal countries like Sweden and Japan. All this seems pretty self-evident, but the findings have come under attack from rightwing groups in Britain and the US, who are perhaps unnerved by the book's widespread popularity.
We seem to be determined to support politicians and policies that do not serve our best interests regardless of the outcome. At some point, we have to address this trend and not allow delusion to dilute the dream. The middle-class erosion and levels of poverty we are currently experiencing have not yet reached levels where social unrest is the inevitable outcome, but we are headed in that direction.