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Inequality leads to disagreement, unrest

January 6, 2019

Despite a roaring economy, high asset prices and lower overall per capita crime rates, we are witnessing increasing partisan vitriol, rising ethnic scapegoating, rising hate crimes, rising mass shootings, the rise of demagoguery, the abandonment of initiatives to collectively tackle humanity’s great problems, record deaths from drug overdoses, record suicide rates, and widespread disagreement over what constitutes our facts, objective truth and cultural meanings. Imagine what things will be like during an economic downturn and/or another military intervention?

While there are many socioeconomic forces behind these phenomena, a key factor in our recent cultural upheaval has been a rise in inequality. The existing order has created a concentration of economic power in the hands of the few while simultaneously leaching real wealth from the many, public works and the social safety net.

Four key drivers of this widening domestic inequality are the decadeslong neoliberal trend of companies offshoring labor to increase profits through decreasing labor and environmental costs; the Federal Reserve system lowering of interest rates through decades of credit cycles and the corresponding raising of asset prices (which disproportionately benefits the rich); the over $1 trillion annual budget for military interventionism and the national security state; and, lastly, the continuous, accelerating disruption of both society and the labor market by technology.

All four are structural and interrelated in our current system, regardless of which party is in power. Both major parties have presided over policies that encouraged and relied upon these drivers of inequality.

Adding to the widening inequality is the widespread existence of propaganda, influence campaigns and institutional thought control that reinforce the existing order by keeping the U.S. polity fighting itself while broadly consenting to the demands of power.

Citizens often come out of this meat-grinder cultural experience confused by the truth, distracted from fundamental issues affecting their well-being and antagonizing each other over identity politics. Against this backdrop of stagnation and misinformation, reality constantly sends dissonant information and experience contrary to some of our closely held (and scripted) beliefs. Many citizens are becoming more and more agitated by the dissonance, retreating into denial, bizarre rationalizations, self-harm and, at times, violence.

Given that the underlying drivers are structural and accelerating, this dynamic is unlikely to unwind on its own and may get markedly worse in the near future with another economic downturn and a new war. We could see more disturbing symptoms like greatly increased “blow-back” terrorism, environmental degradation and social strife.

These looming issues should make citizens, especially the wealthy, want government to immediately reduce inequality. Ben Franklin suggested that one should appeal to interests when trying to persuade.

It is in the interests of wealth-holders to stabilize U.S. society before it spins further into Orwellian dysfunction and violence. The New Deal was a rescue of market-based capitalism, not a descent into communism or totalitarianism. Ask old American capitalists like Warren Buffett and Charles Munger how they faired in the decades following the New Deal?

Today, the U.S. needs a new “New Deal” aimed at reducing inequality, strengthening the social safety net, eliminating environmental degradation and weaning the world off of fossil fuel consumption through innovation, which would eliminate America’s costly strategic imperative to constantly intervene in the Middle East.

According to recent reporting, some wealth-holders have been developing escape plans from our nation should society fall apart. This logic is flawed. Regardless of party affiliation, Americans should have all their eggs in the basket of improving American society. If America truly falls apart, you can “run to the sea, but the sea will be boiling.”

William Scoular is an investor, hiker, banjo-payer and gardener who lives in in Santa Fe.

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