We built our current society on a precept that things last forever. That nothing comes to an end, whether it be economic growth or the accumulation of wealth. But this is a lie. Nothing in the universe is eternal and everything reaches its limit. Civilizations are not unsusceptible to this truth. They are fragile and impermanent. And if we continue to fail to address wealth inequality, the pitchforks will come out eventually, and the greatest civilization in history will see its demise.
But what does our wealth inequality even look like?
When measuring the level of wealth inequality in a society, we often look at the Gini Index, which measures a nation’s distribution of wealth or income. But for many economists, like Robert Joyce, the Gini Index often obscures the full extent to which wealth inequality exists and masks the problem that the top 1% is still moving further away from everyone else.
In 2018 on average, CEOs of S&P 500 companies earned $14.5 million in full compensations. On the other hand, rank and file employees earned only $39,888. Yet, roughly 11.8% of the population, 38.1 million Americans, is still stuck in poverty earning at or below the current poverty line, which in 2018 was $25,465 for a family of four. While a tiny handful of elites make an inconceivable amount of money, so many people earn at or right above subsistence level, struggling to afford basic necessities like food and shelter.
In 2018 on average, CEOs of S&P 500 companies made 287 times more than their workers. What’s of great concern, however, is that this gap between CEO and employee compensation continues to expand. In 1965, the CEO-to-average worker compensation ratio was 20:1. Since 1978, CEO compensation has grown by 940%; the average worker’s compensation, a mere 12% increase, with many salaries remaining unchanged or even decreasing. As the top 1% of incomes continue to soar, the rest of the population’s lags far behind, creating a gap that has become larger than ever.
What are the implications?
In America today, the 400 richest people have more wealth than the 150 million adults in America’s bottom 60%. Millions in the United States lack jobs, health care, basic nutrition, adequate education, and struggle living paycheck to paycheck. On the flip side, the top 1% is constantly seeking to increase their already massive fortune.
As compatriots of the same country, it seems odd that wealthy elites at the top who have the power to cause great positive change rarely do anything to better the masses of society. As environmentalist Hunter Lovins argues, inequality is not only immoral, but also threatening to our social stability.
When we look back at the last 5,000 years, economic inequality has been a main contributor to the collapse of almost every civilization. From ancient Mesopotamia to Rome, to feudal Europe to feudal Japan, a disparity in the concentration of wealth that widened meant only one thing for a civilization: their current days were numbered.
For professors Martin Gilens and Benjamin Page, it comes down to the idea that within the United States, economic elites and interest groups representing large businesses have significant influence on government policy making. In acknowledging this, average citizens currently feel they have little to no influence on policy making, with around 75% of Americans feeling their voices are unheard. More and more people are beginning to realize that currently, as Gilens and Page argues, “money is akin to economic votes.” In a system that fails to check wealth and its ability to pervade all aspects of society, the wealthy are able to accumulate greater influence every year. They are able to shape a system that strictly caters to them, their needs, and disregard the demands of the masses.
However, this system could only last far so long. Eventually, people see that the state is no longer representing their interest, and that new laws only benefit the economic elites. People begin to see that when too much wealth and power is handled by a small group of people, the rest of the population loses faith in the idea that it can keep up. They see and understand that such gaps between the haves and the have-nots erodes social stability.
For French economist Thomas Piketty, it is the belief that when too many people lose total faith in the current narrative that a society is vulnerable to toppling. And it is at this point, when people grab their pitchforks.