A snowball of inequality
My first college tour was with my eldest son. In 1982, my own college search was conducted primarily out of Barron’s guide to colleges. That’s how I found Williams College, a tiny liberal arts college in the sleepy northwestern corner of Massachusetts. I’d never known anyone to go there, and in fact, I hadn’t even heard of it. I’d never even been to Massachusetts. It was probably its obscurity that afforded me the confidence to apply. My application list didn’t exactly lack ambition, but it was certainly tempered by the limits of my own expectations. Too intimidated to consider applying to Harvard or Yale, I applied to Brown as my Ivy League reach school.
Not having the opportunity to visit schools — and in the days before the abundant availability of information on the internet — I used resources like the Barron’s guides in my high school library and also made phone calls. I spoke to the coach of Williams’ swim team on the phone. I also had an alumni interview in Atlanta. We met at his home in Northeast Atlanta. I had been in the area before to eat in Buckhead or see a movie at Lenox Square, but the adjacent residential neighborhoods were distinctly unfamiliar to me.
I remember this interview as one of the first times I saw real money, old money up close. The house was a stately, sprawling ranch, set back from the road, nestled among old growth trees and mature landscaping. I remember there was an effortlessness to it that I envied. Wealth was displayed with a confidence and an ease that I’d never experienced. And his family was equally beautiful. I had an instant crush on his blonde, 16-year-old daughter who breezed in for a moment, still in her field hockey uniform.
My indoctrination into the world of wealth among the educated elite continued after my arrival at Williams. I learned about sports like lacrosse and rugby. I learned you could study something called art history. And I saw that among the other students from the Atlanta area, I was the only one from public school.
For its size and location, Williams College is a relatively diverse place today with more than 30% of students identifying as people of color; 20% represent the first-generation in their families to attend college, like I was. But that wasn’t the case in 1982 when I applied. A quick glance at my freshman facebook suggests something like 8% of my class might have identified as people of color. Accomplishing this change took purposeful effort and significant investment on the part of the college, but these changes aren’t reflected in the broader society. And we seem to be losing our resolve or our desire to fight for further progress.
Like its decision to overturn Roe v. Wade, the Supreme Court stands ready to dismantle affirmative action and other initiatives that have worked to level the playing field for poor and underrepresented groups throughout society. It bases these decisions, in part, on the fact that things have changed since these initiatives were initially put into place. Amy Coney Barrett has specifically cited societal changes — including the availability of contraception — as well as legal changes — like so-called safe haven laws permitting an unwanted baby to be abandoned anonymously and without fear of prosecution — that make abortion less justified and pregnancy less of a burden. The courts have made similar claims about affirmative action and race-based and social strategies, which they see as reverse discrimination with insufficient current justification.
These lines of argument ignore the significant evidence to the contrary — pregnancy poses obvious risks to women’s health that are in fact correlated with wealth and greatest where abortion is most restricted. Maternal mortality rates in the United States have actually increased in the last 30 years. In Mississippi, the home of Dobbs v. Jackson, the rate of maternal mortality, according to the Center for Mississippi Health Policy, is 22.1 per 100,000 live births, well above the national average of 17.47; for Black women in Mississippi, it’s 51.9, three times the rate for white women.
Similarly, we can credit the compounding effects of years of discrimination against women and mothers in the workforce that leave women earning 83 cents for every dollar earned by men. Yes, this is better than the 61 cents earned by women relative to the dollar earned by men in 1960, but progress has stalled in the last 15 years with little hope for progress without continued government intervention.
I’m left to wonder whether the long moral arc of history bending toward justice is actually stronger than the snowball of inequality that seems to benefit from its compounding force over time. We thought that abortion rights were protected by 50 years of precedence. As Justice Kagan observed during oral argument in Dobbs, the vast majority of American women have spent their entire adult lives under the protection of Roe. “This is part of the fabric of women’s existence in this country.” Were the past 50 years under Roe simply not strong enough to withstand the underlying force of society seeking control of women’s bodies since the beginning of time?
Similarly, can democracy, regardless of how long this American experiment has existed so far, withstand the ever-growing influence and power of concentrated wealth in our society? The rich get richer, the poor get poorer. Where does it end?
Coincidentally, in 1982, when I was applying to college, Forbes magazine published its first Forbes 400 list. At that time, there were only 13 billionaires on the list, and a net worth of $75 million secured a spot on the list. The 1982 list was equivalent to 2.8% of US GDP. In 2021, the 400 accounted for $4.5 trillion in wealth, nearly 20% of US GDP that year. Evidently, even billionaires suffer from the concentration of wealth with the top 20 accounting for 40% of total wealth among the group. It’s hard to keep track of billionaire wealth; it both fluctuates dramatically and grows very quickly. An analysis earlier this year showed that the country’s 735 billionaires saw their collective wealth soar by 62% over the past two years while worker earnings nominally grew just 10%, gains that are quickly eroded by inflation and rising costs of living.
Income inequality is blamed on many factors, such as, technological change, globalization, decline of unions, eroding value of minimum wage, and deregulation. Each of these factors is in different measure responsible for slow wage growth at the bottom, concentration of wealth at the top, or both. And because these factors tend to represent unrelenting trends, inequality becomes a vicious cycle that feeds itself. The rich get richer, and the poor get poorer.
The intergenerational accumulation of wealth is a significant contributor to income inequality, a literal snowball of wealth and privilege growing exponentially. Forbes developed a “self-made” rating scale from 1 to 10 to differentiate those who have become ultra-rich by their own efforts. By their account, 70% of their 400 is self-made. Like Donald Trump’s claims that he turned a “small” $1 million loan from his father into an empire or Mitt Romney’s claim that he “inherited nothing,” however, this scale turns out to be uber-rich with irony and inflated self-worth.
According to Forbes, on its scale, “a score of 1 to 5 means an individual inherited their wealth, while 6 to10 indicates they built their own company or established their fortune on their own.” So everyone with a score above a 6, is credited with being self-made. But in a closer reading of the scale, a score of 7 means that someone “got a head start from wealthy parents and moneyed background.”
Billionaires in this category (with a score of 7) include hedge fund manager Bill Ackman and Netflix founder Reed Hastings. Ackman’s father is Larry Ackman, a real estate entrepreneur who led the Ackman-Ziff Real Estate Group, a successful privately-held company founded by his own father and uncle. The elder Ackman is noted for his role in the development of the mortgage brokerage industry. Hastings, for his part, has a family tree rife with connections to presidents, prestigious schools, and East Coast high society. These men may have contributed greatly to their wealth but to credit them with being self-made is laughable. By its analysis, the Institute for Policy Studies concluded that “over 60 percent” of the 400 “grew up in substantial privilege,” affording them a critical head start.
When I applied to Williams, I completed the FAFSA form myself. I remember that my parents’ combined income was roughly $50,000. Both of my parents worked full-time, but as I recall, about 75–80% of that was attributable to my father’s income. My parents considered themselves middle class; like the leftist teen I was, I smugly pointed out that they were, in fact, in the upper echelon of earners. According to the Bureau of the Census, median family income in 1982 was $23,430 (in nominal 1982 dollars). With roughly $36,000, you broke into the 80th percentile, and with $60,000, you broke into the 95th (also in nominal dollars).
My parents were relative middle class success stories, despite humble beginnings quite different from Ackman or Hastings. My adopted father grew up in Iowa and Nebraska, one of seven children. He used to tell us about Christmas on the prairie, when he would be happy to get an orange, a pair of socks, and a toy rifle. He recently shared with me a story of the time their house was wiped away by a tornado, while his family was inside, leaving them homeless. Out of high school, he served in Vietnam. My mother was raised in central Pennsylvania. Her father, who I’m told had a predilection for forgery, disappeared when she was quite young. Her grandmother was unsympathetic to her mother’s situation. Feeling pressure to provide for my mother, she eventually married the first man willing to accept her package deal, even though he wasn’t much interested in being a father to my mother.
My mother and adopted father each left marriages to be together. My birth father left, allowing my brother and me to be adopted. Before they were 25, my newly-married parents had two children at home along with child support and alimony responsibilities from my adopted father’s prior marriage. Neither had gone to college. This is the opposite of a financial “head start.”
Like many families, my parents fought about money, money management, and financial pressures over the years. In general, although my father was the primary breadwinner, my mother managed the money. Her income was less than his but was obviously important in enabling us to live the life we lived. I remember the value of my mother’s financial contributions coming to a head during a heated argument about whether they would purchase life insurance for her. I watched these discussions about money, and I felt the tension that money brought into the house. I yearned to live a life where those tensions didn’t exist. But at the time, I suspected these were the tensions that existed in most American households.
A 2010 Princeton University study once provided the definitive answer to the question of whether money can buy happiness. It found that money can, in fact, make you happier, but only up to $75,000 of annual income. Then in 2021, Matthew Killingsworth, a senior fellow at the Wharton School of the University of Pennsylvania, published somewhat contradictory findings from his own study. Using a different methodology and rating scale, Killingsworth concluded that money actually correlated with happiness at all income levels, although at diminishing returns.
Importantly, it also appears to matter what we do with our money. Buying experiences, exchanging money for time, and giving away our money all apparently provide more happiness than things. It makes sense. Unlike things, these purchases just keep giving. When we take a family vacation, for instance, not only do we purchase an experience, we purchase time with the people we love; we purchase memories of those experiences; and we purchase stories for our family history that we continue to enjoy through retelling over years.
There is also the age-old question of relative wealth, which is where inequality comes into play. Does inequality affect our happiness? Apparently, there are dueling forces at work — upward wealth inequality aversion (jealousy effect) and downward wealth inequality inclination (pride effect). It turns out that the jealousy effect is stronger than the pride effect due to loss aversion. People focus more on a loss in relative status than an increase in relative status. So, people are less happy when they see people making more money than themselves.
I’m often surprised at how that unhappiness manifests itself. For instance, one might think that middle class unhappiness might be directed at the wealthier classes who take advantage of laws, status, tax structures, and the like to further their advantage. But instead, middle class people more often seem to direct their unhappiness at the poor and near poor who are seen as taking advantage of government assistance. In a 2001 NPR survey on attitudes about poverty and the poor, a plurality (48%) believe that the poor not doing enough to help themselves is a bigger cause of poverty than other circumstances beyond their control. Even 39% of the poor themselves agree with this statement. Fully 70% of respondents see drug-use as a major cause of poverty.
The January 6th siege on the Capitol provides a window into this middle-class rage. More than half of the Jan. 6 insurrectionists were white-collar workers such as business owners and professionals. Unemployment among the rioters was a relatively low 7%, near the national average at the time. If the insurrection had been fueled primarily by right-wing extremist groups, you might expect to see a high rate of prior military service (40%) and a high rate of prior arrests (64%). The Capitol rioters, however, were lower on both counts — 15% and 30%, respectively. The rioters were also older than typical extremists, mostly in their 40s or 50s.
While these feelings of unhappiness and anger that fueled the insurrection on the Capitol are present in the fringes of right-wing extremism, they are also widespread among a broad swath of whites at the median of American society — median income, median education. And while the causes of their frustration are almost certainly rooted in the causes of income inequality, their anger is directed at racial minorities and the poor — and ultimately at those political and intellectual elites who have favored policies to assist those groups in ways that seem to be at the expense of the middle class.
Unfortunately, their anger may not be entirely misdirected. Many policies favored by the political mainstream to help the poor or to level the playing field for black and brown workers have likely come at the expense of the white middle class, while the wealthy have remained largely insulated from the costs of these policies. This anger is at the core of the racist white replacement theory promoted by Tucker Carlson and others.
In explaining this anger, President Obama took significant heat in 2008 for his observation that many rural voters “cling to guns or religion … or anti-immigrant sentiment or anti-trade sentiment.” In the repetition, right-wing partisans purposely delete the context and the words that preceded this quote: In “a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing’s replaced them.” Obama observed that rural Americans embraced increasingly fringe political views “as a way to explain” their economic “frustrations.” His comments were prescient and predicted the rise of Trumpism before Trump.
In total, the top 1% of Americans have taken $50 trillion of wealth from the bottom 90% over the last 45 years. This shift has not only eviscerated a once-prosperous middle class but it has left almost all Americans in the bottom 90% with stagnated wealth and income growth, a dynamic that Trump exploited by scapegoating immigration and trade as well as racial minorities and the poor, and ultimately blaming all of this on the left. If we can’t coalesce around policies that solve these crises in ways that fundamentally reduce income inequality rather than exacerbate it, we’re in for another January 6th — or worse.
We all want opportunity. We all want fairness. Don’t we? Politicians decry class warfare when we’re asking the rich to pay their fair share — and instead push compromises that pit everyone in the bottom 90% against each other. The answers seem straightforward enough — basic investments in middle class prosperity, like affordable healthcare, quality education, manufacturing jobs in growth industries, livable minimum wage. We did it before, we can do it again.