Platform Analysis: Economic Participation and Income Inequality

We will be blogging intermittently on each pillar of our platform as a means of both further explaining and defending our platform policies, but also to encourage dialogue among those who read it. Our first pillar is under the Economic Participation section of our platform found here.

Economic policies that expand opportunities for the poor, and rebuilding and supporting a vibrant middle class, the erosion of which is a fundamental threat to our democracy.

Income Inequality

by Kris Follmer

By nearly all accounts, income inequality is increasing dramatically in the United States.  For years, despite macroeconomic trends showing solid economic recovery, the recovery from the Great Recession has largely been limited to those with the highest incomes. Even with record-low unemployment numbers, the middle class and poor have not felt it. The GINI coefficient (a measure of income inequality) for the United States has risen considerably since 1979, and among the members of the Organisation for Economic Cooperation and Development (OECD), a group of thirty-six of the largest democracies across the world, the United States regularly ranks as one of the five most unequal countries.  This inequality, and the growth in its rate of increase, should concern us greatly because income inequality divides us at a time when we need to focus on overcoming the polarization of our society.

Income inequality has been shown to reduce growth, increase volatility, and foster discontent and disillusionment among citizens.  This inequality within the United States has produced the rise of the Occupy movement, increased movement away from capitalism, and led to the groundswell of nationalistic ideologies.  Left unchecked, such discontent can erode national cohesion and even lead to revolution and national collapse.  In fact, a NASA-funded study showed that income inequality is a foundational cause behind every civilizational collapse of the last five thousand years.

To put it in economic terms, increasing inequality means falling aggregate demand because the rich have a much lower propensity to spend, and choose rather to save or to send money overseas.  One key indicator of economic health is increase in national gross domestic product (GDP), of which consumer spending comprises slightly more than two-thirds.  A recovery for those who are more likely to spend will increase aggregate demand and increase GDP more than any other macroeconomic force.

Income inequality negatively affects the national economy; but, more importantly, it is also a fundamental threat to our democracy.  The rich have the luxury of disposable income, while the poor are often forced to spend more money than they can make. If this spiral of consumer indebtedness continues for too long, systems of democracy erode and financial systems sometimes collapse.

The American Solidarity Party is committed to equitable economic policies that limit income inequality and ensure that the poor and middle class have opportunities to work with dignity for a living wage.  They must, like the wealthy, have the chance to work for their future and the future of their children.

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