Overview
This lecture examines economic inequality in America, focusing on the divide between the ultra-wealthy and the poor, and the political and systemic mechanisms that perpetuate this gap.
Park Avenue: Wealth and Inequality
- Park Avenue on the Upper East Side is the wealthiest area in New York City, home to the ultra-rich.
- Just north, Park Avenue in the South Bronx is the poorest congressional district in the U.S.
- Economic disparity between these neighborhoods highlights broader national inequality.
The Myth of Equal Opportunity
- The American Dream suggests anyone can succeed through hard work, but starting points are highly unequal.
- Social scientist Paul Piff’s rigged Monopoly experiment showed wealth advantage breeds entitlement and limits mobility.
- Many face structural barriers from birth, including poor education, unsafe neighborhoods, and lack of resources.
Rising Economic Inequality
- Since the late 1970s, income growth has been concentrated among the top 1%, while the bottom 90% stagnate.
- The richest 400 Americans control more wealth than the bottom half of all households.
Wealth and Political Power
- The ultra-rich use their wealth to influence politics, buy policy, and entrench their positions.
- High-profile residents of 740 Park Ave, like Steve Schwarzman and David Koch, are key political donors and policy influencers.
- Lobbyists help craft legislation favoring the wealthy, such as the “carried interest” tax loophole.
The Koch Brothers and Free Market Ideology
- Charles and David Koch fund political candidates, think tanks, and movements (e.g., Tea Party) promoting deregulation and anti-government policies.
- Their support influences public perception and legislative agendas in favor of corporations and the wealthy.
The Influence of Ayn Rand and Policy Impacts
- Ayn Rand’s philosophy of selfish individualism is influential among Republican politicians (notably Paul Ryan).
- Policies inspired by this view promote tax cuts for the wealthy and cuts to social programs for the poor.
Declining Mobility and Barriers to Advancement
- Education is key to economic mobility, but college costs have risen dramatically since 1980.
- Cuts to job training and education programs hinder opportunities for low-income Americans.
Shrinking Social Safety Net and Taxes
- Food stamps and other safety nets are set to be cut, threatening millions.
- Corporations and the ultra-rich pay historically low tax rates due to loopholes and tax cuts.
- The wealthy’s share of income and power grows as public services struggle for funding.
Unions and Working-Class Representation
- Unions historically advocated for workers but have lost power due to corporate opposition, including efforts by the Koch brothers.
- Weak union representation leaves the poor and working class with little political voice.
Key Terms & Definitions
- Carried Interest — A tax provision allowing investment managers to pay a lower tax rate on their income.
- Social Mobility — The ability to move up the economic ladder.
- Lobbyist — A person who seeks to influence legislation on behalf of a special interest.
- Collective Bargaining — Negotiation between employers and a group of employees aimed at agreements to regulate working conditions.
- Social Safety Net — Government programs providing aid to individuals and families in need.
Action Items / Next Steps
- Review the impacts of tax policy changes on different income groups.
- Read about the role of unions in 20th-century American politics.
- Prepare for discussion on the effectiveness of social mobility initiatives in the U.S.