System Defects Lead to an Increasingly Unequal American Society

In the U.S. social inequality is deepening, the middle class is declining, and social mobility is decreasing — all of these current social crises have led to widespread unease. For many, the “American dream” has become increasingly out-of-reach. Amy Traub, senior policy analyst of New York-based think tank Demos, told this reporter that “America’s social contract — a promise to create opportunities and economic security for the hardworking and responsible — has been fundamentally shattered.”

The shrinking middle class is related to implementing the “neoliberal” economic system. The exacerbating wealth polarization in the American society is not only demonstrated through countless statistics, for this reporter often witnesses the “struggle” of the average American. Thirty-year-old Lucas is a lawyer who graduated from George Washington University 10 years ago and since then has gone through four different jobs. Last month, at an event organized by a Washington, D.C. think tank, Lucas told this reporter that that day was his unemployment anniversary, “a sad anniversary.” Nowadays he frequently attends seminars in DC in hopes of finding a new job, which not only allows him to meet new people, but also gets him a free lunch.

His words may have a trace of American humor but also reveal a hint of distress. His story is nothing special in the U.S.; not long ago this reporter went to interview at Washington, D.C.’s largest homeless shelter and discovered the place to be overflowing with people. Those who inhabited the place included the homeless and professionals such as lawyers and accountants who are employed but cannot afford rent.

During the interview, Amy Traub said that from post-World War II to the early 1970s, U.S. wages grew simultaneously with labor productivity. However, in recent decades this no longer holds true: From 1979 to 2012, labor productivity has increased 74.5 percent, but wages have only increased a mere 5 percent.

In regard to the worsening wealth inequality in the U.S., Li Xiangyang, dean of the Chinese Academy of Social Sciences National Institute of International Studies, said that America’s capitalist economic system itself has made the rich-poor gap inevitable, as exemplified by centuries’ worth of developmental history; Karl Marx also made a profound analysis on the nature of capitalism in his “Das Kapital.” In recent decades, the growing rich-poor gap and declining middle class in American society are correlated with the implementation of the “neoliberal” economic system since the 1980s. Beginning with Ronald Reagan and up until the outbreak of the international financial crisis in 2008, former U.S. presidents have all upheld “neoliberalism,” deeming it a significant guidance system for the development of the U.S. economy. However, “neoliberalism” overemphasized the role of the market; in the course of promoting economic development, efficiency is more valued than equality.

Li Xiangyang pointed out that after the implementation of “neoliberalism,” capitalists and laborers in the domestic U.S. saw a widening gap in shares of revenue: Capitalists’ gains increased while laborers’ gains decreased; this was evident in corporate governance. On the one hand, along with the launch of reform programs such as managerial stock ownership and business acquisition, the income disparity between management and ordinary employees continually increased. On the other hand, U.S. laborers’ bargaining power with management continually decreased. U.S. workers used to be able to go on strikes to demand better treatment, but with the implementation of “neoliberalism,” employers were able to seek out cheaper labor worldwide by outsourcing jobs. This in turn caused a steady fall in the number of U.S. unions and union members, thereby enabling increased welfare insecurity for ordinary workers.

Furthermore, Li Xiangyang said that “neoliberalism” limited government intervention such as tax regulation. It can thus be said that whether it is corporate governance at the micro level or tax regulation at the macro level, the U.S. government did not play its rightful role.

“With U.S. Politics in the Hands of the Rich and Corporations, Social Mobility Has Weakened”

Even though wealth disparity continues to grow, most U.S. political leaders either have little power to resolve, entirely evade, or are afraid to touch on social equality issues such as income redistribution. A widely reported example would have to be during the 2008 presidential campaign — Barack Obama said to voters in Ohio that he wanted to “spread the wealth around,” which quickly attracted criticism.

“State of the American Dream: Economic Policy and the Future of the Middle Class,” co-authored by Amy Traub and Demos President Heather McGhee, highlighted in particular the shortcomings of the U.S. political system. “Evidence abounds that the U.S. political system is increasingly dominated by wealthy interests.”

U.S. elections may be limited to one vote per person, but this does not hide an unequal political voice. Traub and McGhee said that “the affluent are over-represented among both donors and voters (not to mention lobbyists, media influencers and other categories with outsized influence in [the U.S.] political system.” The voter turnout in the 2008 U.S. presidential election is a noteworthy phenomenon; the higher the income, the higher the voter turnout rate. “Significant differences between the wealthy and the general public exist in such areas as tax and budget, trade and globalization, regulation of business, labor, the social safety net, and the overall role of government. The general public is more open than the wealthy to a variety of policies designed to reduce inequality and strengthen economic opportunity, including: raising the minimum wage … providing generous unemployment benefits.” The affluent, however, are against these stances.

Associate Dean of the China Institute of Contemporary International Relations Yuan Peng pointed out during this interview that the American society’s wealth polarization is largely correlated to its political system, as reflected in two main aspects: First, conflict between the two parties has caused the “polarization” of U.S. politics; stances are taken based on parties. The U.S. political system calls for a rotation of power between the two parties, which originally intended to achieve complementary policy making. However, it has now evolved into a struggle between the two, especially when it involves major issues — the two parties are never able to reach a conclusion, causing many beneficial policies to be dead on arrival. The most typical example is the health care reform pursued by President Obama and the Democrats. When the bill was passed by Congress, not one Republican Congressman voted in favor, which is extremely rare throughout the world.

Yuan Peng said that second, there is the polarization of federal and local governments, making it impossible to implement many federal policies at the state level. As the result of long-term confrontation between the two parties, 40 out of the 50 states can be grouped based on party stance and only the remaining 10 are neutral. Therefore, it can be said that the presidential election is just a competition for these 10 states. This phenomenon of federal and local government polarization has led to the strengthening of many interest groups, but also a society that lacks vigor.