According to the Congressional Budget Office (CB0) for the last 30 years real average after-tax income grew by 275% for the top 1% wealthiest income group in America. But for the middle 60% of Americans average incomes remained relatively flat or has declined. Poverty has deepened in this country over the last decade as 15% of Americans were below the poverty line in 2011. This is a big contrast to the post-World War II era where median income levels doubled during a 15 year period from 1947 – 1963. Richer and poorer Americans were closer together throughout the 1950s and 1960s and some observers at the time thought class segregation had ended. But that would not be the case as we hit the 80’s.
The gap between the have and have nots in America began quickly widening in the 80’s. The Gini Index ( the most common measure of income inequality– an index between 0 and 1 where 0 implies an egalitarian distribution and 1 indicates that all wealth is concentrated in the hands of a single person) after remaining relatively stables throughout the 60’s and 70’s, trended down to a troph of .350 in ‘65 and began to spike in the 80’s. It has been climbing ever since reaching a high .460 in 2010. We could get into all the causes of how we got here – trickle-down Reaganeonomics, the inequality of schools and education, healthcare and housing, crime and incarceration, voting and campaign finance, health and longevity – but that’s not the focus of this article. The focus is to bring attention to Peter Turchin, a historian and a scientist who studies population dynamics at the University of Connecticut in Storrs, and why he hypothesizes that the growing threat of income inequality in America could be of grave concern.
Peter Turchin’s latest hypothesis is that the widening wealth gap between rich and poor in this country is heading us towards a period of social unrest, perhaps even anarchy at the end of the decade. What does he base this on? Turchin uses a scientific approach called “Cliodynamics” (after Clio, the ancient Greek muse of history) – a system of collecting historical data including things like population numbers, prices and real wages, elite numbers and incomes, state finances, sociopolitical instability, and then uses mathematical analysis of how these variables interact. Then drawing on sources like historical databases, newspaper archives, and ethnographic studies, Turchin and his colleagues mathematically plot these proxies over time and look for trends, hoping to identify historical patterns and markers of future events.
Turchin’s model shows a cycle of social and political instability that results in widespread violence roughly every 50 years in America. It highlighted economic disparity in 1870, race riots around 1920 and high-profile assassinations and domestic violence in 1970 as previous examples. So the question begs? Is America about to experience another age of political instability and social disintegration? According to the model, we are heading toward that point again and will reach it at the end of the decade.
But do we really need a scientific model to tell us that there is a “class war” going on in America and average Americans have just about reached the tipping point? I think not. Americans are angry and getting angrier by the day. We have the top 1% of this country controlling 70% of the money as they ship American jobs to China. Then we thought that after the Wall Street meltdown, which amounted to a criminal enterprise that ran wild, we would have had the type of legal recourse and regulatory changes that would have made things fairer but they haven’t. We have a President who is on the right track with the implementation of the Dodd Frank law that provides stricter guidelines and rules on Wall Street but a reckless Republican Party seeks to repeal the rules and oversight that he implemented. Mitt Romney and the GOP are intent on protecting the super rich and Romney is part of that wealth that has been consolidated within 1/10 of 1% of the population (which by the way amounts to a staggering 39 trillion dollars, and 6.3 trillion in offshore accounts). Indeed, a small percent of the national population is running away with national wealth in an obscene and unprecedented fashion.
Are we disparaging “ALL” the rich? No. But the fact of the matter is that a very small but very wealthy fraction of the population has rigged the rules, have bought off the politicians, have rigged regulation and tax policy, and have changed the game to favor themselves – as America’s middle class disappears. Fifteen hundred Americans earned over a million dollars last year and didn’t pay anything in taxes. Mitt Romney earned $421.6 million in income in 2010 and paid 13% of that amount in income taxes. Then we have greedy corporate raiders and vulgar employers that would close down profitable companies and send the jobs of Americans to China to make more profits. At the same time, we have a GOP that wants to give those same employers more tax breaks funded by deep cuts in the Social Security and Medicare of the people they fired! So do we really need Cliodynamics to figure out that average Americans are so angry and fed up with this rigged sham that they could revolt?
Peter Turchin’s 2020 timing just may be spot on. When you talk about giving more tax breaks to the rich while you talk about making deep cuts to the Social Security or Medicare of average people, they will rebel. When you talk about taking the ability of a student to go to college, they will rebel. When people can’t afford to go to the doctor because you have taken away their Medicare savings, they will rebel. When people have children that they can’t clothe or feed, they will rebel. When people feel mistreated and unjustly cheated buy greedy employers or vulture bankers, they will rebel. When they have nothing more to lose, people will rebel and they will fight.
The danger America faces today is that the 1% pulls away from everyone else and pursues an economic agenda that will increase that gap even further — ultimately destroying the open system that made America rich and allowed its 1% to thrive in the first place. But Turchin insists that the violence is no more inevitable than an outbreak of measles. Just as an epidemic can be averted by an effective vaccine, violence can be averted if society is prepared to learn from history. That’s to say for example, if the US government creates more jobs or acts decisively to reduce inequality. Many of the richest Americans in this country have been riding the gravy train at the expense of the rest of us for far too long. Making them pay their fair share of taxes would be a good start to help lessen that gap between the haves and have nots and help level the playing field where very American has a shot at success.
That said, today’s no-tax pledge taking and “entitlement” cutting Republican Party will do everything it can to stop that from happening, so the poor and middle class in America may indeed have a date with destiny in 2020. Is the march to a civil war already set? “The peak should occur in about 2020, Turchin says, and will probably be at least as high as the one in around 1970. “I hope it won’t be as bad as 1870,” he adds.