The social evils of laissez-faire economics continue to mount, with the shortage of affordable housing kicking off the political cycle this year. The rise in income inequality – and related squeezing of the middle class in New Zealand – is now coming into focus. Local journalist Max Rashbrooke’s upcoming book on income inequality looks like providing a solid platform for political debate on the subject here, in much the same way that The Spirit Level did overseas. Internationally, public awareness of this issue lookas like getting a major boost from Robert Reich’s new film Inequality For All, which was reportedly a surprise hit at the Sundance Film Festival a few weeks ago.
Reich, now an economics professor at UC Berkeley, used to be Secretary of Labour in the Clinton administration. He already has several highly accessible three minute films on Youtube that have been viral hits, such as this one called The Truth About The Economy and this one about the 2012 presidential election. Obviously, the 90 minute Reich documentary screened at Sundance, however, is a much bigger undertaking. It is being touted by the likes of the Observer as doing for income inequality what Al Gore did for the environment in An Inconvenient Truth. Namely, it takes an otherwise arcane subject that is of importance to everyone, and renders it readily comprehensible. Partly because of Reich’s gently humorous but pointed style of delivery. Here’s how the Observer put it:
[What] the film tries to do is thread together evidence that many people know about – the increasing struggle of the middle classes to just get by, the way that the top 1% of society has unshackled itself from the rest of us and has seen its income increase exponentially, and the ever-increasing cost of the traditional avenues of improvement, such as higher education – and weave it into a cohesive and convincing narrative…
Reich charts the three decades of increasing median income after the second world war, a period he calls “the great prosperity” and then examines what happened in the late 1970s to put an end to it. The economy didn’t falter. It kept on growing. But wages didn’t. The figures that Reich supplies are simply gobsmacking. In 1978, the typical male US worker was making $48,000 a year (adjusted for inflation). Meanwhile the average person in the top 1% was making $390, 000. By 2010, the median wage had plummeted to $33,000, but at the top it had nearly trebled, to $1,100,000.
Reich is not opposed to the existence of some inequality. That’s inevitable, he says, in that it is what makes capitalism tick over, as a system. Yet at what point, he asks rhetorically, does it become a problem? His conclusion goes like this:
[It is when] the middle classes (in its American sense of the 25% above and below the median wage) have so little of the economic pie that it affects not just their lives but the economy as a whole. Reich’s thesis is that since the 1970s a combination of anti-union legislation and deregulation of the markets contrived to create a situation in which the economy boomed but less of the wealth trickled down. Though for a while, nobody noticed. There were “coping mechanisms”. More women entered the workforce, creating dual-income families. Working hours rose. And increasing house prices enabled people to borrow.
And then, in 2007, this all came crashing to a halt. “We have exhausted all the options,” he says. There’s nowhere else left to go. It’s crunch time.
It’s a crunch time that many working families understand, but which governments – now running on just the neo-liberal fumes of an empty policy tank – seem unwilling, or unable to address. Worse, the outsourcing and contracting processes that are stripping jobs from traditional sources such as manufacturing are running hand in hand with punitive welfare policies aimed at scapegoating the victims for a misfortune not of their making. Income inequality at its current levels is bad for business, and bad for society. It benefits only the few in a position to benefit from what another economist, James Galbraith, has described as a predator state.
Hopefully, Reich’s film will be successful enough to gain a general release. If not, it could still be a prime attraction at this year’s International Film Festivals, especially if Reich himself – a magnetic and humorous speaker – could be persuaded to use his summer break to come down here to present the film, and the issue, to New Zealand audiences.
Arab Spring Hits Winter
Tunisia was the birthplace of the Arab Spring, but it has been in deepening economic and political trouble for months. Yesterday’s assassination of the left-wing opposition leader Chokri Belaid marks a significant new downturn. The killing looks like the handiwork of Salafist extremists hellbent on undermining the relatively moderate Islamist government elected after the overthrow of the dictator Ben Ali two years ago. Until Europe – Tunisia’s main export market – gets out of its current slump, there is no way that economic growth can help resolve the country’s current wave of political unrest. Here’s how the international press was already reporting on Tunisia a few days ago, even before Belaid’s assassination:
There is no doubt Tunisia is a democracy – the free elections of 2011 produced an Islamist-led coalition government and the media, unrestrained, is flourishing. Equally, there is no doubt that the most conservative Islamists, notably the ultra-puritanical Salafists, are making life miserable for some parts of moderate and secular society. The media has been full of stories of attacks on artists, journalists, prostitutes, abortion clinics, peaceful assemblies, secular politicians and female athletes.
But what worries [Tunisians] most is the drafting of the constitution, or lack thereof. When Ennahda, the ruling Islamist party that is an offshoot of the Muslim Brotherhood, won the 2011 election, it promised a new constitution within a year. That deadline passed four months ago. April has been set for the new finish date, but that could easily slip. Until the constitution is approved by the National Assembly, fresh elections cannot be held. In other words, the Tunisian revolution is stalled.
The killing of Belaid is already having the de-stabilising effect sought by the Salafists. Belaid’s family and supporters have blamed the moderate Ennahda coalition government for either instigating the killing or for – indirectly – enabling it to happen by failing to (somehow) eliminate the threat from the Salafists. That last bit is far easier said than done. In Tunisia, as well as in the developed world described by Robert Reich, it seems that the moderate middle is simply being squeezed out of existence.