By Patricia Lee Sharpe
Remember the “takers” and “makers” flap that fatally wounded Mitt Romney when he sought the presidency in 2012?
Takers and Makers
Romney, addressing a controlled-admission audience of his well off supporters, was explaining that lazy “takers” are dragging down the economy. Too many people are on the dole, he confided. A whopping 47% of the population, he declared, a massive accumulation of drones irresponsibly enjoying their too generous entitlements (food stamps, Medicaid, disability payments, etc.) while the entrepreneurial few work long hard hours to create wealth. It was quite a rant. Fortunately, unbeknowst to Romney, his comments were being recorded. His contempt for America’s less advantaged was reported, the report went viral, and one maker’s political career was over.
According to Romney, it seems, overcoming poverty and closing the income gap is a simple matter of character. Get off your duff, work harder and you too will live the life of Riley, though how, without unions, you’ll pry economic justice out of the profiteers who can buy Congress is anyone’s guess.
Today’s super star economist, Frenchman Thomas Picketty, begs to differ with maker Romney. In his data-rich new book Capital, whose title alone is red meat to conservative critics, Picketty concludes that extreme inequality results inevitably from massively unequal opportunities to save when capitalism reigns unregulated. The well paid accumulate surpluses they can invest, after which they keep on investing, thus increasing their capital as well as their income. A virtuous cycle, so to speak. Since the working poor can’t save a sou, they fall ever further behind as time goes on. Inequality expands, and the poor get poorer, resulting in the vicious cycle within which the U.S. is currently trapped.
Another French economist, the non-Picketty, so to speak, is more complacent. He thinks the gap between rich and poor is less extreme, but not because the economic system, even as he sees it, works much more equitably for the poorly paid. No, says Pierre Rosanvallon, in his new book The Society of Equals, the gap should be seen as smaller because Picketty forgot to consider the equalizing effect of entitlements.
Equalizing effect of entitlements?
Agreed, conditionally. Tax-supported programs give a boost to the desperately poor. However, the inadequacy of America’s menu of assistance shouts out from demographic statistics. On the average, compared to those other industrialized countries, Americans have shockingly shorter life spans and dramatically higher maternal and neonatal mortality. (The figures for Americans in the upper income brackets, those who can pay unaided the going rate for the good things in life, mirrors that of their counterparts in Europe, Canada and Japan.)
Note: I’m concerned here with the working poor, the people who live prudently, work full time and are yet so woefully underpaid that they and their families can’t survive without public assistance. The enfeebled elderly and the seriously disabled among others may also need help, but living wage laws wouldn’t apply. They fall into a different category of need, which I am not discussing here.
So, what’s the difference between redistributing obscene over-concentrations of wealth via a fair, inflation-adjusted living wage and narrowing the gap by supplementing starvation wages with handouts from grudging taxpayers?
The Psychic Cost of the Wrong Equalizer
Simple. It’s the difference between shame and pride, contempt and respect, receiving charity and being paid a fair wage for a good day’s work. Disparities may continue, but the bottom rung has to relate humanely to the cost of living.
Guess what! The rules are different for the rich. Income on capital is taxed at a lower rate than earned income. And ordinary people, unlike greedy tycoons busily milking Congress for all we taxpayers are worth, get no respect if they accept government assistance to support themselves and their families. When Mitt Romney, the arrogant self-satisfied taker, was pouring contempt on the so-called takers, he wasn't referring to the never-satisfied beneficiaries of the farm subsidies lavished on agrobusiness, etc. , etc. He meant the exploited workers who can’t make ends meet without extra help.
In America, social welfare programs don’t equalize, you see. They stigmatize the recipients. Only a realistic living wage law can avoid or undo the psychic harm.
Fighting Fear and Deception
Enforcing living wage laws would also make for a more rational, more accurate way of accounting for the real cost of goods and services. Instead, we customers are subjected to a very clever shell game: the burger is cheap, the tee shirt is cheap, but we haven’t finished paying when we leave the cash register. We’ll owe more in taxes to provide assistance to those scandalously underpaid buger flippers and sales “assistants.”
So who wins? Not the workers. Not the customers. Investors may reap higher dividends and lovely capital gains, of course, but top management really rakes it in. Nine figure salaries—plus perks. And golden parachutes. Not exactly the food stamp crowd. The star and serf system is all too prevalent in the capitalist economy of twenty-first century America.
Naturally, those who profit most from the current system do their best to frighten voters away when the question of a living wage appears on the agenda of this or that city council. If workers are paid more, the one per centers warn, prices will skyrocket and—the big tear crocodile jerker—workers will be laid off.
The Reality Check
Not really. Cities that have instituted inflation-adjusted living wage laws do not report soaring prices or de-employment. Santa Fe, New Mexico, among others, took the plunge some years ago. Belief in economic justice defeated the inevitable fear tactics, and the citizens voted to pass the referendum. As a result, in Santa Fe, the minimum wage already exceeds that which President Obama futilely proposed last year for the nation.
Guess what? The sky didn’t fall in.