Way back in the middle of the seventeen hundreds, the French philosopher Jean Jacques Rousseau came up with the idea of “the social contact.” The simplified concept is that government represents a tacit contract between the people effectively to be governed and behave in order to escape the “natural state” [which Rousseau tacitly admits never existed, but that’s another story].
One of the interesting facets of his concept was that the social contract tended to break down if the income inequality between the rich and the poor became too great, which in fact is exactly what happened with the French Revolution several decades later in the last years of the century, and after Rousseau’s death. In point of fact, it’s rather interesting to note that in the more than 300 years since Rousseau made that observation, there have been more than a few revolutions and a great deal of social unrest in times of great income inequality.
At present, the United States is in one of those periods. According to Rousseau, the popularity of either Bernie Sanders or Donald Trump should scarcely be surprising, given that income inequality in the United States has now surpassed the income inequality of the previous period of greatest inequality in the 1890s, which was, of course, the time during which William Jennings Bryan ran for President as a fundamentalist/pro-silver/anti-big-money Democrat. After three years of economic depression, in 1896, Bryan carried 22 of the 45 states at that time and took almost 47% of the vote, despite being outspent by a five to one margin by McKinley.
Today, what is interesting is that the “establishments” of both major U.S. political parties are being challenged by those within the respective parties who feel economically and/or politically threatened or disenfranchised by the current political system. And, no matter how the next election turns out, the problem of income inequality isn’t about to disappear.
The greatest danger is, in fact, is if people think that the election resolves the problem, because then, nothing effective will be done, and most likely both income inequality and economic conditions will worsen.
It’s fairly simple. Right now, corporations and other institutions are literally sitting on close to a trillion dollars in uninvested dollars. These dollars are not invested because those holding them do not see a market for the goods or services that could be produced with them. The reason for this is that too many Americans are too poor to purchase anything but the basics. The idea that low taxes on high earners makes more money available to create jobs is, like a lot of simplistic “solutions,” half-right. It does make money available, but no one is going to use that “excess capital’ to create that many new jobs in the U.S. if a huge percentage of the population can’t afford the goods and services created by those jobs.
This is where a massive government-funded infrastructure development program would help, provided it’s designed right, and not merely a subsidy to the construction and technology industries. We have hundreds of thousands of unsafe and/or rapidly decaying bridges and tunnels, unsafe municipal drinking water systems, an air-traffic control system that verges on the obsolete and inefficient, a power grid that could be destroyed by a solar flare, thousands of miles of highways that are crumbling, national parks that have billions of dollars of delayed and deferred maintenance… and we do nothing about any of this, while nearly a trillion dollars of uninvested capital sit largely idle because unemployed or underemployed workers haven’t the money to buy anything except the extreme basics – if that.
Yet, as I’ve argued, and as have others, in the end, those ultra-high earners, the one tenth of one percent, could likely make even more money if they were taxed a bit more and those taxes put to work in improving infrastructure.
Will it happen?
I have my doubts. I suspect it won’t until the social unrest and economic stagnation become even worse, which they will, unless matters change in the mindset of the American political system. The problem is that, if matters get too much worse, we may face a revolution, rather than an evolution. I could be wrong, I’ll be the first to admit, but right now, the odds are in favor of pessimism.