At my age, 88, one thinks seriously about the future of one’s children and grandchildren. The more I consider the subject, the more concerned I become.
My wife and I have been able to support our children’s and grandchildren’s educations, provide a modicum of financial protection for them, and communicate by word and deed the values by which we led our lives.
But all of this is could be for naught as my generation has failed in the most important legacy of all: passing on to the generations that follow us a healthy, vibrant, and sturdy economy governed by a political system that cares for and fairly addresses the needs of all segments of our society.
In the United States, we have chosen democracy and free-market capitalism as our political and economic systems, a conjunction we call democratic capitalism. Democratic capitalism has propelled our nation to a pre-eminent world role and to unparalleled levels of national prosperity. The success of democratic capitalism is based on a balance of entrepreneurial drive and its rewards with a democratic sharing of the fruits of our collective efforts; that is, a sharing of the immense wealth created by our economic system. The public’s perception of the fairness of the distribution acts upon the social cohesion vital to the workings of democratic capitalism. I fear that this social contract is broken. Consider the following:
The United States has the highest level of income inequality of all industrial nations. On the GINI Index, a measurement of income inequality, the U.S. at 47 percent is half again as high as the E.U. average at 30 percent. The higher the number the greater the income inequality.
In the United States, the top 1 percent of households own 40 percent of the nation’s wealth and receive approximately 20 percent of the nation’s income. The bottom 50 percent saw their share of the nation’s income drop from 20 percent in 1978 to 12 percent in 2015. No nation can live for long with such levels of income and wealth inequality.
Save for a few noble individuals, those earning high levels of incomes and owning vast wealth are most unlikely to voluntarily reduce their incomes and accumulated wealth. The seven cardinal sins are alive and well, greed and hubris prominent among them.
Thus, it falls to the government to address the inequality. We have been here before.
In the early 1900s, President Theodore Roosevelt brought to heel the monopolies of his time, creating the foundation of our antitrust laws. The increasing concentration of U.S. businesses today demands reactivation of our antitrust laws, now long dormant. U.S. income taxes on the wealthy are considerably lower than those in other major industrial nations; they can be increased. And, unimpeded transfers of wealth from one generation to another, only creates and perpetuates social division. A limit of such transfers would seem to be in order. Finally, the federal minimum wage needs to be adjusted to reflect inflation and the realities of living expenses for those at the bottom of the income pyramid.
The problem is severe. Left unchecked, the extreme division of our nation into the rich and the poor will lead to class warfare. Our high level of income inequality is a threat to our democracy. This is a nation blessed with extraordinary wealth, sufficient to provide for all. We have the capacity for and capability of addressing the issue. Now we need to decide where we stand.
Chuck Denny is the retired chairman and CEO of ADC Telecommunications and has been active in many community groups.