In the last 30 years, the top 1% has grown 21 trillion dollars richer, while the bottom 50% has grown 900 billion dollars poorer. This is a pattern of widening inequality that needs to be addressed, but how? It starts by taking a look at and understanding our economy. Contrary to what you probably think, economics are not set-in stone. The economy is a social construct, a dismal science. We’ve been operating on economic theory that has critical faults. For example, th
ere’s an assumption that an equilibrium exists. Meaning, if one thing goes up (wages) something else must go down (jobs).
Who does the economy work for in the neoliberal era that we’re in today? Before we answer that question, let’s take a moment to understand what neoliberal means, to avoid any confusion later on. Neoliberalism is a policy model that typically enhances the workings of free market capitalism and attempts to place limits on government spending, government regulation, and public ownership. As a country that prides itself on having such a strong free market economy, it’s important to recognize that the general population and your welfare isn’t being considered in this model, but rather the health of the company that they probably work for.
The economy as it serves now works for large corporations, not the people that are employed by them. As a nation we’ve all become so complacent with this that we immediately dismiss the thought of raising the minimum wage to a livable rate. One of the most prevalent arguments against raising minimum wage is that the economy couldn’t handle it, and many businesses will die out. Is this true? Does that equilibrium exist? Or is it only true because our policies and regulations are designed to benefit the larger corporations and not the mom-and-pop shops? Let’s say it were true, and the small businesses were to fail because they couldn’t sustain the wage – chances are that business wasn’t supplying a demand. And in this situation, we’re placing the health of a business organization over the health of our very own neighbors.
Let’s say the busines does survive. You’re now paying your employees a livable wage and increasing their disposable income. There are only so many places that the cashflow can go once it goes from the employer to the employee, but the majority of that you’ll see back in the economy. People will have money to pay their bills AND spend money to go out to eat, fix up their homes, purchase new clothes, invest in stocks, etc.
It’s important to add that this article isn’t to discount the work that entrepreneurs and capitalists put in. Many do put in endless hours to create their wealth. But that’s not really what we’re talking about here. We’ve heard the rags-to-riches stories a million times. What’s lacking, though, is the understanding of the bootstrap myth. The bootstrap myth says that all people, even if they face poor or challenging circumstances, can “pull themselves up by their bootstraps” and will be successful simply by working hard. If that were the case, wouldn’t the majority of people be in that top 1%? Wouldn’t YOU be in the top 1%?
When saying “the rich get richer while the poor get poorer” we shouldn’t be attacking the character of those who profit, nor should we be disgusted by those who continue to lose. Instead, let’s take a closer look at policies that may be having collective impact. A minimum wage that hasn’t been properly inflated at the same rate as expenses has an impact on education and literacy, community health, and general community welfare. This article is meant to provoke deeper thought, provide perspective and insight, and start a conversation. Further research is highly encouraged, as with any subject. I’ve linked a few resources below to help out.
Resources
https://www.investopedia.com/terms/d/dismalscience.asp
https://www.investopedia.com/terms/n/neoliberalism.asp
https://aflcio.org/what-unions-do/social-economic-justice/minimum-wage
