The Politics of Inequality in North America



Have just arrived back from Ontario, well away from Team New Zealand mania and masochism. The Globe and Mail, a leading Canadian newspaper had no Americas Cup coverage. Neither did the Vancouver Sun, although Larry Ellison was mentioned in the business pages. A feature article on Forbes annual American rich list had Larry ranked third with a net income of US $41 billion, just ahead of the Koch brothers, Charles and David ($36 billion dollars each). The top two, unsurprisingly, were Bill Gates ($72 billion) and Warren Buffet ($58.5 billion).

Everybody from the billionaires club grew wealthier over the last year. From 2009 to 2011 capital gains, share values and Wall St. bonuses dried up. More recently, the economic situation has returned to `normal`. America`s biggest banks are making record profits. Clearly, the` too big to fail banks` have not disappeared. Neither has the excessive borrowing by banks (leverage) or the unregulated practices of derivatives speculation. Crucially, however, concern about these developments has moved beyond the activist left.

A recent TIME cover story,for example, was entitled `How Wall St. Won: five years after the crash, it could happen all over again` (September 23). Meanwhile, wealth inequality is a hot political issue. In the New York mayoralty race Democratic frontrunner Bill de Blaiso advocates a wealth tax. A proposed surcharge on incomes over $500,000 will fund universal pre-kindergarten education.

We are not talking here about Keynesian socialism but the symbolism is important.

As Paul Krugman wrote in the New York Times `this is exactly the sort of thing we should be doing: taxing the ever richer rich, at least a bit, to expand opportunity for the children of the less fortunate` (September 21). Krugman ponders the possibility that `de Blaiso`s unexpected rise is the leading edge of a new economic populism that will shake our whole economic system`.

An exaggeration, possibly. De Blaiso`s campaign though, is not a one off. Over the border, a Federal by-election in Toronto features not one but two pro-equality politicians. On the left, New Democratic Party (NDP) candidate Linda McQuaig is the author of `The Trouble With Billionaires: how the super rich hi-jacked the world and how we can take it back`. On the right, Chrystia Freeland is the author of `Plutocrats: the rise of the new global super rich and the fall of everyone else`. The candidates have obvious differences. Freeland is the establishment figure. She was deputy editor at the Globe and Mail before becoming managing editor at Thomson Reuters. In a revealing interview she describes inequality as `a topic the rich are very much mulling over`. In her view this concern is entirely rational `the 1 per cent and the 0.1 per cent are not going to be able to prosper for very long when the squeezed middle class can`t buy the things that entrepreneurs and business people produce`.(Globe and Mail September 21). McQuaig`s views about inequality have a more political edge. In a parallel Globe and Mail interview, she refers to `a specific set of policies that were devised to protect the ones at the top and create insecurity for those at the bottom`. McQuaig,from the left of the NDP , advocates significant wealth redistribution and an expansion of public sevices. The electorate itself, Toronto Centre, perfectly exemplifies North American inequality. It contains mansion filled neighbourhoods, poverty stricken streets, luxury shopping boutiques, immigrant working class communities, gentrified apartment developments and homeless shelters.

Once again, it’s the symbolism of this campaign which is fascinating. Even the right wing candidate concedes that stark inequality damages economic growth and social cohesion. Such views were banished from the stage during the 1980s and 90s. Thatcher, Reagan, Mulroney, Douglas and Richardson were scathing of Keynesianism, social democracy and wealth redistribution. Now, however, to misquote a line from my favourite satirical film,` Bob Roberts` `times are a changin` back`. Suppressed, longstanding concerns about inequality have re-emerged. This isn`t happening in New Zealand though, at least, not yet. Not in a country where a top CEO equates the Green Party with North Korea and where a senior politician describes electricity price controls as `economic vandalism`.

TDB Recommends

These are not so much viewpoints as they are signs of amnesia and myopia. These afflicted souls inhabit a world, frozen in time, where every succeeding decade is a repeat of the 1980s (beginning in 1984). Anything before that date triggers the fear of creeping state socialism. Contemporary concerns about inequality are incomprehensible. Well, for these people I bring a terrifying message from the `free market` citadels of North America,- things have moved on, your time is up.


  1. I think you might be reading a tad too much from your interaction with the insular academic crowd you hung out with.

    BTW your information on Derivatives speculation is incorrect. It is not unregulated. It is also simplistic to lump all derivatives together.

  2. I think you might be reading to much into your narrow (neo)con crowd you hang out with.

    BTW regulation written on toilet paper is not really regulation. It is also simplistic to keep repeating the same spin.

    • I take it from the comment regarding regulation that you have never worked in investment banking and/or with derivatives. I have. A large amount of the effort involved in my job was arounf facilitating reporting to regulatorial bodies or to accomodate new regulations from same said bodies.

  3. An interesting and timely piece of writing. I have lately been expecting such a change on the international front. The “consolidate wealth and reduce politics to management and branding” model has its limitations. Contingencies can arise that the model cannot meet, and those with the greatest vested interests have the most to lose by its failing to meet them.

    Unfortunately for us, however, NZ elites are accustomed to being big frogs in a small pond, and the above danger is not felt to the same extent in a small country.

  4. Getting involved in a crowdfunded project a few months ago made me realise that if you give the rich the appropriate tools, often they will actively support other projects and redistribute their wealth voluntarily.
    Investors were talking about how they enjoyed the social experience of finding other projects with a group of friends and making contributions to the ones they liked.
    Statistics also support this idea, in that people will voluntarily contribute more than they might if they feel they are required to.

    While it’s easy to blame the rich and talk about taxing more, changes in technology make it seem like less regulation could be more suitable, in that it would support smaller operators and startups.
    Policies supporting big business and traditional jobs seem to be sticking around but are essentially living in denial of what’s actually happening.

    Those supporting traditional interest based financial systems should expect things to change a bit in the coming years.
    A return to sound monetary policy would perhaps bring some sanity to the system after the next big readjustment. It might take a change in currencies though, something that traditionally occurs after a revolution.
    Hopefully the entire legal system will be recognised as being unlawful, so Black’s Book of Law and legalese can be abandoned.

    Corporations might try to prop up the petrodollar by backing invasions of Syria, Iran and Cuba…but the world is getting wise to the reality of the criminal actions of the big banks and multi-national corporations.
    The TPP appears to be an attempt to consolidate and support a broken system based on corrupt governments and corporations.
    Recent research has shown that over a 2 year period, rats fed on Monsanto produce had reduced quality of life, with increased rates of disease and cancer. Roundup has also been shown to be extremely toxic to all organisms, not just plants.
    Other big corporations involved in the TPP also have a record of corruption and waste.

    • Just to add to this, perhaps the biggest issue with the rich-poor gap is passive investment and interest. This is effectively a funnel for money to go from the poor to the rich.

      …as something positive, check out this cool project to bring biogas to Samoa:
      This is the kind of thing environmentalists should be bringing us.

      • This is the kind of practical project many environmentalists are working to create, we just don’t hear much about them. Mainly because the corporate media seldom gives them coverage, as they flies in the face of the propaganda that ‘There is No Alternative’ to state-corporate rule.

        If you have any spare $, please consider contributing to fundraising campaigns on PledgeMe, but let’s not kid ourselves that the emergence of “crowdfunding” sites somehow democratizes investment. I think if you look at the metrics you’ll find that like traditional charity, most of the money actually comes from upper working class and lower middle class people gifting relatively tiny amounts, not the rich sharing their wealth.

        Wealthy people with scruples have said publicly since 2008 that they think they should be taxed more. But “post-distribution” measures like tax are arguably less important than addressing the “pre-distribution” systems, like “intellectual property” enforcement, which allow the majority of the wealth to pool in the hands of the 1% and their corporate vessels in the first place.

        • Power in numbers. 🙂

          While pledgeme might be small currently, Kickstarter in the US is growing at an incredible rate, with total pledges in the hundreds of millions of dollars now.
          Star Citizen, an AAA computer game, crowdfunded $20 million, fully funding the game. They had the option of traditional investors, the difference being that the investors want a monetary return and aren’t emotionally invested in it.

          With the increased surveillance and regulation on the internet, there’s been an increase in stability ‘events’, one of the most notable being Google stopping for five minutes.
          Internet infrastructure was designed weaker than it would have otherwise, in order to enable surveillance. Some recent design choices(buffering) are also having a negative affect.
          Overall, it seems like the stability of the system as a whole is degrading, although this might not have anything to do with mass collection of data.

          Government/corporate services are currently provided top down, with low emotional investment. Managers don’t care about the people they’re supposed to be helping, instead being more concerned about getting more tax dollars and cutting costs.

          If/when the internet degrades significantly, having local services available wouldn’t cost much and could enable communities to share and stay in touch with those around them.
          Changes at the community level could be enabled by low power/cost open source mesh networking, like Flutter networks Arduino Kickstarter project.

          The shift in perspective would be towards enabling communities at the local level, rather than treating people as individual consumers, and could make crowdfunding systems indispensable.
          If some kid you know down the road wants to start a project to make an open source water purification system design, you might be more prepared to contribute than if it’s some kid you don’t know.

          If you’re contributing to a local organisation that provides support to those out of work, disabled or retired, you can get emotionally involved and see the great work that’s being done. Having feedback from providers, through social networking, allows people to see they’re actually making a difference.

        • Anybody who feels like they should be taxed more is free to contribute more if they so desire. The problem is when they demand others should be taxed more.

  5. I think all your writers who write about the USA, should live their for a year, and see what it’s really like.

    It’s not the capitalist satan you make it out to be.

    Middle Class Americans get on fine.

Comments are closed.