American Society Is in Jeopardy

Nobel laureate and Princeton University Professor Paul Krugman recently published an article thoroughly assessing the Occupy Wall Street movement, believing that the inequalities within American society have already turned into an "oligarchy, American style." Within the article were many ideas worth looking at.

First, the slogan "We are the 99 percent" is an excellent one. The Occupy Wall Street movement's adopted slogan, "We are the 99 percent,” is noteworthy, as it aptly defines the problem as one between the middle class and the elite, not the poor. The proportion of wealth owned by low-income individuals has shrunk, while income and wealth has become increasingly concentrated in the hands of a privileged minority elite. In this new gilt age, the big winners are but a small few wealthy people. Citing data recently released by the Congressional Budget Office, Krugman pointed out that the amount of total wealth accruing to the middle and lower classes had rapidly declined, with 80 percent of households receiving less than half of aggregate income in the country. Meanwhile, within the upper class, nearly two-thirds of income goes into the hands of an extreme minority representing 0.1 percent of the population. Within this 0.1 percent, entrepreneurs such as Steve Jobs are rare, with the vast majority being corporate executives and people who work in finance.

Second, the myth of America's classless society has been unmasked. Krugman thus questions whether the United States is still a "middle-class" society comprised primarily of the upper and middle classes. Since the late 1970s, the annual growth rate of real income for the most prosperous Americans reached 400 percent, while highly educated workers' wages have not increased at all since 2000, and the well-educated can no longer hope to obtain jobs with generous compensation. This is the landscape presenting itself in modern America — a relatively small upper stratum is increasingly taking hold of the country. The small wealthy minority interferes in politics, controls influence and causes severe distortions within the American political system. The heavy concentration of wealth is antithetical to a true democracy, and the “whole nature of [American] society is at stake.”

America is not a fair playing field. Relative to citizens of other countries, Americans have a greater tendency to believe that they live under a quintessential system, but this is only a delusion. In reality, American society is gravitating toward greater stratification, a distinguishing feature of which is the importance of family background. Those from the lower class have almost no chance to climb up to the ranks of the middle class, let alone the peak of society. Among wealthy nations, America has become the country in which economic and societal status are most likely to be inherited, and the myth of America's classless society has clearly been debunked.

Third, the growing inequality is the force behind political polarization in the United States. Since the '70s, American politics have evidenced a trend of increasing polarization, with the lines separating the Democratic and Republican Parties on the political spectrum becoming more and more distinct. There no longer exists any overlap between even the most conservative Democrats and most progressive left-wing Republicans. The current level of polarization within U.S. politics is almost identical to that before World War II and most especially the period prior to the Great Depression. The two parties continually pulling further apart is not just a reflection of Democrats moving to the left and Republicans moving to the right.

This kind of polarization in contemporary U.S. politics is inextricably tied with the growth in inequality and closely related to the increasing share of income held by the top percent of society. The reason is that the uninterrupted rise in income and wealth for that minority has bought the loyalty of a major political party. The Republican Party has turned more toward the right-wing stance it adopted a century ago, as those who benefit from that position are capable of using their economic clout to provide campaign funding and a safety net of sorts for politicians. Within the current economic crisis, the fierce political conflict between the two parties is detrimental to forming an effective policy response. As an example, the Obama administration had to bend over backwards to obtain the 60 votes in the Senate it needed to pass the stimulus package. It is thus clear that the extreme disparities in income have led to extreme political polarization, and this in turn has crippled any policy response to the crisis.

The author is an assistant research fellow in Marxist Studies at the Chinese Academy of Social Sciences.