The United States on Money: Idealist, Unequal and Ignorant

The United States on Money: Idealist, Unequal and Ignorant

Perhaps, this time around, the rich aren’t to blame. Recent research has shown that the U.S. has not only the least intergenerational class mobility—second only to England—of any country in the world, but also that we’re pointedly ignorant of the enormous income disparity that has become standard in our country.

Americans Are Off the Mark

Businessweek cites an HBS study that determined what we already know: Everyone wants a more equal America. This is, after all, the land of meritocracy and capitalism. In America, hard work earns you money, and money equals success—theoretically. But it turns out that for all of our blustering about income equality, we continually stop the legislative measures that would work toward that goal. And it’s not so surprising when we consider that a survey of thousands estimated that the wealthiest 20% of the country own only 59% of the country’s wealth (it’s more like 84%) and that the poorest 20% own 3.7% (make that .1%). With such a skewed perception of the nation’s distribution of wealth, it’s no wonder we can’t muster the indignation that sparks change.

Taxation Is the Great Income Regulator

The ideal income distribution described by the survey’s participants (wealthiest, 32%, poorest, 10%) is completely different than our reality—and some say that it’s a good thing. In order to equalize income, the government would have to increase taxes for the wealthiest and decrease them for the poorest—could you ever see that happening? As Businessweek points out, increased taxes for the rich would lead to “a flight of wealth and talent from the U.S,” as well as a serious disincentive for entrepreneurs to keep our economy afloat through innovation and risk. Why take the risk if you won’t get the rewards? From Businessweek:

"It's probably a good thing that the public underestimates how much wealth inequality there is," says Bryan D. Caplan of George Mason University, since "they tend not to understand the ways that wealth inequality is good."

Does Income Disparity Threaten the American Identity?

The New York Times is concerned not only about the lack of intergenerational income mobility, but what it means for the bigger picture—how it fits into this American portrait of a society ignorant and resolute. From the Times:

“If we lose this truly American thing — that you can become anything if you just work at it — then you’re really going to lose what makes America America.”

As far as we can tell, we’re once again caught in the void between theory and practice. Studies have shown that we have an “impressive ability” to understand information contradictory to our own beliefs, but not let it change our own stance. So we can hear that America is becoming more polarized and less equal, that our country is slowing moving away from its defining factor, and still balk at any politician who dares to mention raising taxes. Fine, American government: Preserve our identity. Put us on equal ground. But don’t touch my money.

Tell us in the comments: Do you believe that America’s polarized income is a problem? Is it a good thing? And more importantly—does it affect your political beliefs?

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