America the Unequal

PARK CITY, UTAH – The last documentary film that used dry charts and statistics to make an abstract argument about a global issue and nonetheless became a pop-culture hit was Al Gore’s An Inconvenient Truth. But the hit of this year’s Sundance Film Festival was a low-key affair called Inequality for All, in which Robert Reich, a labor secretary in the Clinton administration, explains how rising income inequality and the demise of the middle class is causing so many Americans to suffer.

With President Barack Obama recently taking up some of these themes in his second inaugural address, it is worthwhile to examine the message of Inequality for All more closely. The film’s charts are not boring, but actual showstoppers: Reich makes the point that the mid-1940’s to the mid-1970’s were decades of relative income equality, which corresponded with overall affluence. (The last time that income inequality in the United States was as deep as it is now was immediately before the 1929 stock-market crash.)

But the last 20 years have witnessed a spike in the difference between the top earners and the middle class: the “1%” really are living in a stratospheric bubble. As the journalist Chrystia Freeland has recently argued, a meta-class of global “plutocrats” is emerging – people who have little in common with the rest of us.

Inequality for All makes the case that the wealthiest 1% simply cannot consume enough, no matter how hard they try, to generate the revenue that an affluent middle class could. The secret to a strong economy is to invest in education, strengthen household incomes with a decent minimum wage and strong unions, and raise skill levels, thereby generating sustained consumer demand. This, Reich argues, is the “virtuous cycle” that we see in strong economies such as Germany, in which workers are highly skilled and educated, unions are protected, and the middle class has leisure and money to spend.