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Class divides America -- and conflicts reflect a broader battle

A line in the sand of American politics is being drawn. It is a line that cut through Madison, Wis., last spring in the debate over unions. It is a line being cut through Wall Street over the role of banks and hedge-fund managers in destroying the American economy in 2008. And it is a line cutting though Washington, D.C., in Congress over how to produce jobs, regulate banks, reduce the deficit and debt, and provide health care to those who need it. That line is about class in America.

David Schultz
Courtesy of Hamline University
David Schultz

There is a basic belief in America that we are all in it together. We are one big happy middle class where the interests of the rich and poor are not in conflict. Rising tides lift all boats, as Ronald Reagan used to say. There are no class conflicts in this world. That what is good for GM is good for America, and that we live in a society where all of us can be winners with no losers in the economic marketplace. The promise of America is of a non-zero-sum game — some do not have to lose for others to win. The truth is far uglier.

           
America is a nation characterized by increasing class divides. In 2010 the Census reports the richest 5 percent of the population accounted for 21 percent of the income, with the top 20 percent receiving over 50 percent of the total income in the country. This compares to the bottom quintile accounting for about 3 percent of the total income.

Congressional Budget Office research found that the income gap between the top 1 percent of the population and everyone else more than tripled since 1973. After-tax income for the top 1 percent increased by 281 percent between 1973 and 2007, while for middle class or middle quintile it increased by 25 percent, and for the bottom quintile it was merely 16 percent.

Looking beyond income to wealth, the maldistribution has not been this bad since the 1920s. According to the Institute for Policy Studies, in 2007 the top 1 percent controlled almost 34 percent of the wealth in the country, with half of the population possessing less than 3 percent. The racial disparities for wealth mirror those of income. Studies such as the Survey of Consumer Finances by the Federal Reserve Board have similarly concluded that the wealth gap has increased since the 1980s.

Record numbers in poverty
Social mobility in America has ground to a halt. A 2010 Organization for Economic Cooperation and Development study found that social mobility in the United States ranked far below that of many other developed countries. Other studies, including those in 2005 and 2010 in the Economist similarly point to declining social mobility in the United States that makes it difficult for individuals to rise from one social economic status to a better one. In fact, there is better than a 95 percent chance that children will not improve their social economic status in comparison to their parents. Finally, the latest Census figures point to a poverty rate in 2010 of 15.1 percent, representing a record 46 million people in poverty. The numbers are equally grim when one looks at women, children, and people of color in poverty — all record or near-record numbers. Few really can move on up to live the American dream.
 
The reality is that America is a zero sum game. There are winners and losers. What is good for corporate America is not benefiting most Americans, and it is increasingly clear that in simple terms the rich are getting richer, the poor poorer. The reality is, we are not all in it together and class divides America. We see the divide in where individuals live, what they eat, and the entertainment they consume. It is seen in who votes, runs for office, and in political contributions. It is reflected in our tax code, criminal-justice system and educational opportunities.

Class exists. The problem is, few want to acknowledge it. And when someone talks of economic redistribution, bailing out homeowners and not banks, taxing millionaires, or blaming Wall Street and not the government for the economic problems that ail America, cries of class warfare are raised. Or worse — Herman Cain "McCarthyited" the Wall Street protesters as "Anti-American," invoking the ugliest of all political epithets to assail opponents.

Protests are symptoms
Yes, class conflict exists in America. Protests in Wisconsin over attacks on unions or on Wall Street to challenge the power of banks reflect this. But they are merely symptoms of the broader battle over a simple question: "Why government?" It is a debate over whether free-market fundamentalism prevails as a means to provide order and declare winners and losers in America versus letting the government correct the imperfections and errors that capitalism has produced. It is between saying that the direction of the country is decided by "one dollar one vote" or by "one person one vote." It a battle over whether the government serves the interests of corporations and the rich or the rest of us.

Class exists in America, as it does in all other nations of the world. Like it or not, there are diametrically opposed interests in this country and the real questions are whether the government and politicians should do anything about it and whose interests they should serve.

David Schultz is a professor at Hamline University School of Business, where he teaches classes on privatization and public, private and nonprofit partnerships. He is the editor of the Journal of Public Affairs Education (JPAE). Schultz blogs at Schultz's Take.

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Comments (19)

For two generations the Democrats have been the party of personal rights and freedoms, and all of the Roosevelt socialists have died off. As a party striving for economic justice, redistributive taxation, and power to the workers, the Democrats totally lost their edge long ago. Blame the baby boomers. Until they no longer hold the keys to power, the Democratic party will not have an effective political program for social justice. They've spent 30 years unsuccessfully trying to pretend that socialism and liberalism are the same things; well, they aren't and to argue it makes them hypocritical. Meanwhile, the Republicans keep their illiberal base happy by fighting long-lost fights that they can't win (e.g. abortion, school prayer, the drug war), while using the mantle of 'economic freedom' to attract enough of the liberal wing of the Democratic party to defeat any socialist initiative. The Democrats taught America to vote for freedom and rights. Reagan changed the definition of the words. We're all still voting for freedom, but for the foreseeable future that will mean voting against strong government, higher taxes, and a social safety net.

While I agree with Schultz's analysis (actually I wrote an op-ed in the Strib a couple of weeks ago on the same subject), I am frankly confused by his question at the end: "should government and politicians do anything about it?"

Damn right they should...and must...and now. Throughout history, tension between classes (the haves and have nots) has always been greatly exacerbated when the differential between the rich and poor reaches a breaking point. The tipping point in America in the 21st century is not far from that now. The "occcupiers" are the tip of an iceberg that can either get larger, or be mitigated; and only ogvernment can do it. The private sector has no incentive to change, and no history of doing so voluntarily.

The government has many tools, taxation policy and social programs among them. We are far down the path of income unbalance already; and if not addressed in some fashion soon, it will be bad for democracy...capitalism...and America.

Yes Virginia, there are, always have been and always will be class divisions.

Wealth is one indicator of class, but despite what the left would have us believe, it is education that truly defines ones position in life. The United States (and the world) is divided into the educated and the uneducated classes.

And while many, myself included, blame the usurpation of our public school system by (primarily leftist) special interest groups one cannot ignore the role the collapse of family life and trade labor unions in this country have had in the widening class division.

It is those "Roosevelt socialists" which David writes of so nostalgically of that first introduced America to the permanently dependent class, and it is the new left, with trade labor union muscle that has kept that ball rolling.

The days when we can expect to shoot spit-wads all through our "free" K-12 educations and expect to slide into a comfortable union backed career down at the widget factory are long, long gone kids.

Predictably, the spit-wad artists have now come to depend on the fact that our generous "social safety net" has picked up where the widget makers union left off....it's just another hand to hold.

Trust me here, stoned college kids eating pizza and sleeping Downtown in tents are not the answer.

When people realize that a good education is what determines not what, but *if* we and our kids eat; and when we realize that a good education does not ride on the whim of the latest special interest groups agenda, we'll see some progress.

Thomas
You insult the intelligence and awareness of the American people. First I doubt that these are "stoned college kids", but you are likely correct that these "revolutions" often start with the young. The young, the bold, the gutsy, the rebels. But the history of these movements changes rapidly, and the history of the Wisconsin movement proved this. Soon the "kids" were joined by mainstream types who were just plain fed up. So it will be with this movement, just like the Arab Spring...the protesters of the Robber Barons...the French Revolution...well, you get the idea. These movements are legitimate complaints, and as such will have "legs' well beyond the "stoned college kids" you have just insulted.

The person generally credited with originating the “a raising tide lifts all boats” quote is Democrat President John F. Kennedy. Of course, this does not fit conveniently in the ardent leftist Prof. David Schultz’s argument for a more socialistic America, so he instead cites Reagan. The scariest part to me is that local TV news stations and other Minnesota media frequently rely on Schultz as an “objective” source when analyzing political events. Liberal bias in the media takes many forms.

There's still an erroneous conflation between "socialism" and "liberalism."

Socialism calls for public ownership of the economy, with all citizens employees of the government.

Liberalism favors a mixed economy, with the private sector being the country's wealth builder and provider of jobs the produce goods and services sold at a profit. We then "socialize" those goods and services that work more efficiently with central management (the armed forces, the interstate highway system, the national parks and other protected lands, etc.)

Franklin Delano Roosevelt was no more a socialist that Ronald Reagan, but he was one of the best liberals our country has had the privilege to elect. Would that we had 535 like him in the Congress right this minute to solve our problems of inequity and poverty.

What the Left ignores or refuses to accept is that in a free society where people are free to pursue wealth and happiness or not, there will be winners and losers. That's the "price" of freedom.

A democracy simply means one-man, one-vote to choose your own leadership. It doesn't mean guaranteed equality and certainly not guaranteed outcomes.

Those who suggest that the government correct the "imperfections and errors that capitalism has produced" are really suggesting that there are government-correctable errors in who is free in a free society, which is total nonsense.

If there's anything we learned from the world's nations that have been ruled by the Left is that when governments attempt to control the economy for the good of the people, they end up controlling the people for the good of the economy. Which is antithetical to the founding principles of this nation.

So amid everything else I had to say, you felt the burning need to step up to defend the stoned college kids...

My point, myles, was education: Lack thereof..thanks for helping me make it.

Dennis
You are correct when you say we are all free to pursue wealth. The problem with laissez faire capitalism is that it just does not work. The experiments of the Chicago School of Ecomonmics which introduced it into various countries proved, that in the end, the wealth will literally end up in a few hands. Wealth begets wealth.

To me, some restraints on capitalism (and a fairer distribution of wealth) actually makes the system more robust. If nothing else, it is a consumer-driven economic system, and without purchasing power, the less advantaged cannot buy, and the system declines. Kind of like what is happening now.

Re Thomas, yes I get your point; I guess at 78 I better try to get educated a bit more.

You are never too old to learn myles; I'm here to help.

Why no discussion of singularity?

I spent last week at the Geological Society of America meeting at the Mpls Convention Center. I had a few occasions to walk past and through the orderly demonstrations. No one appeared to be stoned. Dress was casual, but clean and relatively neat .
To write this protest off with sleazy attacks on the demonstrators is typical of the poorly educated and unSwift.

#8: "The experiments of the Chicago School of Ecomonmics which introduced it into various countries proved, that in the end, the wealth will literally end up in a few hands. Wealth begets wealth."

That may be true, myles, but in a free society, that's none of your business. Even Marx realized that he had to allow for the *creation* of wealth before he could re-distribute it.

The problem with people on the Left is that they fear and resent their own freedom and so their mission is to make everyone as fearful and resentful of freedom as they are.

Bernice-Do you really think our public goods are produced by a socialist government? Consider these examples:

In 2006 Plymouth residents used local government to administer their desire to expand the trail system-the Northwest Greenway- by voting in favor of a $9 million referendum to acquire land. I doubt anyone in Washington took note of the event.

Mary Jo Copeland didn’t get a call from a centralized government to start Sharing and Caring Hands some twenty-five years ago. She is an entrepreneur who saw a need and decided to fill it.

And just last week Sharon Shmickle reported how a private citizen- Janet Lewis Muth - organized community members to become more efficient in the delivery of local services.

In each of these examples citizens were able to operate because we live in an open, democratic and free society. There was demand for trails, food for the homeless, and services for newcomers to our area. Private citizens saw the need and either used government administration or private support to fulfill the need. Janet Lewis Muth reacted to a decline in resources to regroup her community and to continue to provide the services more economically.

Public goods are subject to supply, demand and limited resources in the same way as private goods.

Governor Dayton's People's Stadium seems to illustrate David Schultz's column. Why it's a teachable moment right here in River City.

The Lake Woebegone-Ramsey County Commissioner's have contracted with the Viking's to build a billion dollar stadium for the benefit of a New Jersey Billionaire's private corporation with $675 Million of the People's money, taxed away from them over 30 years on purchases large and small.

This new sales tax for Viking Entertainment will, according to the contract worked out behind closed doors by Ramsey County's elected public officials, without so much as an inconvenient public hearing, will be accomplished without a People's Referendum in Minnesota's only Charter County.

So much for Progressive self government when the govering elite declares with impunity that they can sign away the County Charter, and pre-empt the Statutory rights of citizens to a People's Referendum, on a sales tax and bonding scheme worth $675 Million to be levied on the People for the exclusive benefit of one man and his private corporation.

No trip to Wall Street is needed to see this Minnesota-Made abuse of power. The Governor has committed three days of his schedule this week to Zygi's deal.

Occupy Minnesota should move their camp to Governor Dayton's Capitol Reception Room for explanation of how he can dare call this a People's Stadium.... and keep a straight face. Time is growing short Gov. Dayton has a Let's Make A Deal deadline of November 21-23, 2011 for the Legislature to buy this project...without any consent from the People required.

OK Dennis, you can believe the distribution of wealth is"none of our business". That is, UNLESS you want to live in ahealthy, tranquil, and "fair" society. Frankly, that is the one I prefer, and to do it, some regulation and restraint of commerce is needed.

Not a Darwinian dialectic:

I understand there is a book out next month..."Survival For Dummies" and authored by Us and Them and Me Too; and a heck of a lot of others who probably think putting a political label like a giant Post-It on another man's face, will solve or dissolve anything and

...with that focus in mind, and with "Occupy Wall Street" coming to Main Street a little bit further every day; crossing barriers; inhabiting public places to achieve something, I could fantasize again with nothing to lose but my credibility I suppose and...

...sprinkle a little impossible fairy dust here and suggest Congress should disband for the sake of, or lack of any active participation and let "Occupy Wall Street" find a warm place to convene. At least they may succeed where our elected representatives have failed.

Otherwise we will be forever, merely embracing our own insular viewpoints; hugging them so passionately like a swaddled baby; so tightly we strangle them in the process and 'Change' becomes a bad dream extended?

Victoria (#14) I did not say that "a socialist government" produced our common goods.

I said that the cost of some aspects of the common good are socialized (paid for by all with tax dollars instead of being left to a private sector that may not even want to supply them).

Mary Jo Copeland, for instance, has done hugely admirable work and has made a difference for thousands of poor and homeless people. But she would not be capable on her own of creating a national park system or an interstate highway system. And nor would G.E. or CBS or any other corporation.

Bernice - Sorry for the confusion. I saw “socialized” and “central management” in close proximity and assumed you meant in decision making not funding. I agree that the administration of the public goods that are shared nationally, such as national defense (the most commonly used textbook example of a public good) and national parks, should be administer at a national level.

But the National Parks were initiated by private citizens. Galen Clark and John Muir are credited for bringing Yosemite to the attention of the US Government, which led to the concept of a national park system. I haven’t done any research, but I would guess that the interstate road system was initiated for commercial reasons.

I used local examples of public goods because most all of the public goods that affect Minnesotans are traded right here in church communities, families, work places, greater metropolitan areas and so on.