The Dangers of Growing Inequality

We have seen in Chapter 1 the numbers concerning the growing Gini Coefficient in the United States and how those numbers evidence the increasing level of inequality in the world’s largest economy. Inequality has been growing in most developed nations, but as The Economist reported in 2011, globally the gap between rich and poor has actually been narrowing, as emerging nations have been rapidly growing their GDPs.1 That said, it must be noted that no nation has seen the growth of inequality comparable to the increase in the United States. Moreover, not only do Americans suffer substantially more inequality than 28 of the 30 other industrialized democracies, but the level of inequality itself has grown dramatically in the last two or three decades to levels almost unprecedented since records began. The start of the dramatic increase in inequality can be readily traced to 1980, the year Ronald Reagan began his eight years as President. The “supply-side economics” introduced by the Reagan administration would touch off a growth of inequality that would never be reversed. Increasing inequality can be a dangerous game. It has been astutely observed that “from the days of Aristotle, thinkers have believed that stable democracy rests on a broad middle class and that societies with extremes of wealth and poverty are susceptible either to oligarchic domination or populist revolution.”2