Inequality is Weakening Social Security. Here’s How We Fix That.
When Congress set the cap on Social Security contributions in 1983, they didn’t anticipate forty years of rising inequality. And it’s cost us — a lot.
You might want to rethink all those really nice things you’ve been saying about ‘equality of opportunity.’
By Bob Lord and Sam Pizzigati
Dear Top 1 Percenters,
Rampant economic inequality in America today, many of you seem to believe, shouldn’t particularly concern us. America, you insist, has always been about equality of opportunity, not equality of outcomes.
If we understand you correctly, America wouldn’t be America without equality of opportunity. But taking any steps that would make our nation’s actual distribution of income and wealth more equal would essentially be unforgivable socialism.
Have you thought this through? Do you really support true “equality of opportunity” for all children, yours included?
Imagine if we did have that true equality of opportunity. Your children, in such a society, would have the same opportunity to prosper as all other children. They’d have a chance to make it into the top 1 percent, just as you have.
What would that chance be, if we had true equality of opportunity? Each child of yours would have the same likelihood of ending up in the top 1 percent as any other child: 1 percent. And if you have three kids, the odds that all three of them would end up in the top 1 percent would stand at one in a million.
In fact, if we had true equality of opportunity, your kids each would be ten times more likely to end up in our poorest 10 percent than in our richest 1 percent.
You doubt that? Well, consider for a moment what true equal opportunity would mean. Take that exclusive private school your kids attend. If we had true equality of opportunity, only 1 percent of elite private school seats would go to the children of top 1 percenters. The other 99 percent of elite private school spaces would have to go to, well, the other 99 percent.
True equality of opportunity would entail some other inconveniences for your family. If everyone had the exact same opportunity, your children would only have a 1 percent shot at getting to that dear old elite college you attended. You wouldn’t be able to pull strings to get your kids admitted.
Or think about that cushy executive position in the family business that you’re holding for your oldest? To have true equality of opportunity in America, you would have to hire for that position strictly on the merits. Your son or daughter would still, of course, have a chance to win that slot, but so would every other family’s child.[pullquote]If we had true equality of opportunity, only 1 percent of elite private school seats would go to the children of top 1 percenters.[/pullquote]
That multi-million-dollar inheritance you’re planning to drop on your kids? You’d have to forget that in an America really about equality of opportunity. In a real equal-opportunity society, your kids would get no more of a financial head start than any other kids.
But none of this should give you any pause, if you truly mean what you say when you pledge your eternal support for “equal opportunity.”
With all respect, we suspect that you don’t really mean what you say. If you really did believe in meaningful equality of opportunity, you would be voluntarily be leaving 100 percent of your estate to charity. But you’re not. Even the most philanthropic of wealthy Americans make a safety net for their children their top priority in estate planning.
And almost all of you top 1 percenters don’t hesitate to use your wealth to give your children a leg up over other people’s children.
So we doubt that you support perfect equality of opportunity, or even something close to that. But you do have an alternative. A modest inequality of opportunity would be perfectly tolerable — to the vast majority of Americans — if we had as a nation more equality of outcomes.
Back a half-century ago, we did have more “equality of outcomes” in the United States than we do now. We had a much narrower gap between rich 1 percenters and everyone else. If you didn’t make it near the top 1 percent in those years, you could still be doing okay. We had a robust and growing middle class.
Contrast that to the situation today. Families that don’t make it close to the top face a life of economic insecurity — and watch the kids from that top start their lives off with a huge head start over everyone else. Do you consider that harsh reality a prescription for a safe, stable, healthy society? We don’t.
So faced with the choice between true equal opportunity and a less extreme inequality of outcome, what would be your pick?[pullquote]In a real equal-opportunity society, rich kids would get no more of a head start than any other kids.[/pullquote]
Behind Door Number One, a world of true equality of opportunity and extreme inequality of outcome, sits a private jet for you, with the risk your children might wind up poor.
Behind Door Number Two, a mid-20th century level of inequality of opportunity and outcome, sits no private jet for you. But you do get a seat in first-class, along with the comfort of knowing your children will enjoy financial security even if they don’t have the ability to create it for themselves.
Despite your rhetoric, wouldn’t you really prefer Door Number 2?
Bob Lord, an Institute for Policy Studies associate fellow, practices law in Phoenix. Sam Pizzigati edits Too Much, the Institute for Policy Studies online monthly on excess and inequality. His latest book: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 (Seven Stories Press).