Inequality for All

  • Income Inequality

The movie “Inequality for All,” with former US Labor Secretary Robert Reich, is a humorous, enlightening expose on America’s widening income gap where Reich answers questions like: What is happening with the distribution of income and wealth in the US? Why? And, is it a problem?

Concentration of wealth in increasingly fewer hands weakens the economy for everyone.

Reich notes some inequality is inevitable, but the US has by far the most unequal distribution of income of developed nations, ranking 64th in the world. In 1978 the typical US male worker’s income was $48,000, adjusted for inflation, while someone in the top 1% made $390,000. In 2010, a typical male worker made $34,000 while someone in the top 1% made $1,101,000. Today the richest 400 Americans hold more wealth than the bottom 150,000,000 combined, and the top 1% take in more than 23% of total income. Studies of IRS data from 1913 to present show breathtaking parallels in income and wealth gaps at and around the 1929 depression and 2008 recession.

Reich says consumer spending comprises 70% of the US economy, and the middle class is what keeps it going. Concentration of wealth in increasingly fewer hands weakens the economy for everyone.

“Rich guys like me are not the job creators. Our customers are the job creators.” - -Nick Hanauer

Wealthy business owner/venture capitalist Nick Hanauer explains that our economy can’t meet its growth potential because fewer people can afford to buy goods and services. Hanauer says someone calling themselves a “job creator” is not describing the economy or how it works. They are making a claim on status, privilege and power.  They are saying the current economic arrangements are righteous and justified, and they are comfortable with that.  He points out, “Rich guys like me are not the job creators. Our customers are the job creators. We are not the center of the economic universe.”

Prosperity comes from investments in the middle and lower classes.

Hanauer believes middle-out economics should replace trickle-down economics.  He notes that everyplace on earth where you find prosperity, you find massive investments in the middle and lower class. He says the most pro-business thing you can do is help middle-class people thrive.

Reich asks, “When you buy an iPhone, where do the dollars go?”  —  Answer:  34%-Japan, 17%-Germany, 13%- South Korea, 6%-US, 3.6%-China, 26.4%-other. The explanation for this surprising statistic is that Japan, Germany and South Korea have highly skilled workforces that add value to pieces of the iPhone, whereas unskilled Chinese assemblers do not add a lot of value to the product, and significant dollars do not automatically flow to the US where Apple is headquartered.

Hanauer, an early investor in Amazon, says Amazon employs about 60,000 people, but if old-style brick-and-mortar stores were selling the same volume of goods, they would probably employ over 600,000 workers because of their inefficient business model. Technology increases efficiency, which leads to greater productivity and profit, but a decrease in number of jobs.

Middle class pay is stagnant.  Folks work harder but get nowhere because the costs of rent/housing, child care, college education, and health care keep rising out of reach.  This translates into lack of upward mobility. In the US, 42% of kids born in poverty stay there; in Great Britain, which has an aristocracy, it’s 30%; in Denmark it’s 25%.
“Inequality for All” illustrates how workers since the 1970s maintained living standards despite stagnant wages. Women entered the workforce to prop up family incomes; everyone worked longer hours; and we used debt to keep up spending levels, which was easy because higher housing prices allowed people to take out home equity loans, at least until that bubble burst in 2008.

What really counts in the economy? Good jobs, family-supporting wages, public education, adequate nutrition and health care, and equal opportunities for all. When the middle class doesn’t share in economic gains, a vicious downward cycle of lower tax revenues, less government spending on education, health care and nutrition, and higher unemployment ensues.

“When you give rich people tax breaks…the fat cats get fatter.”  - - Nick Hanauer

Inequality undermines democracy, especially when there are no limits on what corporations or the wealthy can spend, because with money comes capacity to control politics. The rich abuse their wealth by lobbying for bailouts, subsidies and low tax rates that further entrench their wealth.

Hanauer, after revealing he paid an 11% tax rate on an eight-figure income, says, “When you give rich people tax breaks, all in the name of job creation, all that really happens is the fat cats get fatter, and of course that’s what’s happened over the last 30 years. It’s the signature feature of the economy.”

The movie ends with an upbeat message: We make the rules of the economy, and we have the power to change them!

For more key points and statistics from the movie, go to:

“Inequality for All” is available on DVD, Netflix, iTunes, or on Demand. Ask your librarian if it’s on hand for viewing. Invite some friends over to watch it with you, and then discuss how inequality affects all of us, how it threatens our democracy, and what we can do about it.