Wealth Inequality and Societal Collapse

Economic inequality in the United States has been growing now for several decades – since the late 1980s. It has been fueled by right wing economic philosophy, which can be summed up by the phrase “trickle down economics”, which purports that the best way to grow an economy is to shower the rich with advantages that allow them to become ever wealthier. The theory behind that is that the rich know what’s best for us, so the more opportunities we give them to make more money, the more they will be incentivized to utilize their tremendous intelligence and abilities to benefit society. A phrase that encompasses this theory today is “job creators”. The rich are our job creators. Give them more tax breaks, subsidies, and deregulation, and they will create more jobs for us.

But the reality is that nothing could be further from the truth.

Such theories are nothing new in world history. The powerful have always sought to justify and increase their power over other people by claiming that all of society benefits from their disproportionate wealth and power: Kings claimed that their power was the will of God. Europeans settled the present day United States by displacing and nearly exterminating the native population, using every excuse in the book to justify that. They said that Native Americans didn’t deserve the land they occupied because they were "uncivilized". They claimed "Manifest Destiny" over the land they sought to occupy. Much of the early U.S. economic system was based on slavery. Again, this was justified for all the “best” of reasons, mostly involving claims that black people were inferior, uncivilized, savage, etc. etc. etc. The idea was also advanced that black people benefited from being slaves and owed their masters a debt of gratitude for giving them the chance to “serve”.

Let’s consider: 1) The obscene degree of wealth inequality in the United States today; 2) The economic effects of that wealth inequality, and; 3) The society effects of that wealth inequality. It is important to consider those things because right wing forces are doing everything in their power to make it worse. They are currently going after what is left of our social safety net programs as a way of enabling more tax cuts for themselves. This kind of thing will continue to get worse until they are stopped.


Wealth inequality in the United States today

By 2007, the wealthiest 1% of Americans owned more than a third of the country’s total wealth. Take a look at this chart to see how bad it was (and still is).



The wealthiest 1% of individuals own between 100 and 200 times more than the bottom 40% combined. That means that the average individual wealth of the top 1% exceeds the average individual wealth of the bottom 40% by about six thousand times. Income and wealth inequality was then greater than at any time in our recorded history, since such records began to be kept in the early years of the 20th Century. Because the Great Recession, which started in 2008, resulted in far more economic damage to the bottom 99% than the top 1%, economic inequality has worsened still further since that time.


The economic effects of income and wealth inequality

Here is a graph that shows the relationship of income inequality to the two worst economic catastrophes of our history: The Great Depression of the 1930s and our current recession. It is titled "Re-creating the Gap that Gave us the Great Depression":



The top chart plots income inequality, measured as the ratio between the average income of the top 0.01% of U.S. families, compared to the bottom 90%. Note that preceding the great stock market crash of 1929, which plunged us into depression, the ratio rose from about 250 at the start of the 1920s to a peak of about 900 by 1929. The ratio then plunged, and by the start of WW II it had declined to about 200, where it remained with some relatively minor ups and downs until the beginning of Ronald Reagan’s Presidency. It then began another precipitous climb, with a sharp decline beginning during the last year of Clinton’s Presidency, but then another sharp increase beginning at about the time that the Bush tax cuts for the wealthy first went into effect, so that by the end of 2006 we exceeded even the peak ratio of 1929 that preceded the Great Depression. The three green bars in the chart represent the stock market crash of 1929, the last pre-Reagan year, and the end of the time period represented by the chart, which shortly preceded the great recession of 2008, in which we are still mired.

It is similarly instructive to note that prior to this accelerating economic inequality our country had gone through about three decades (1947 to late 1970s) of what Nobel Prize winning economist Paul Krugman refers to as "the greatest sustained economic boom in U.S. history". In 1947, when accurate statistics on this issue first became available, median family income was rising at a remarkable rate. With the top marginal tax rates approaching 90% at this time (See bottom chart, above), median family income rose steadily (in 2005 dollars) from $22,499 in 1947 to more than double that, $47,173 in 1980. Are those who claim that taxing the wealthy hurts our economy utterly unaware of this, or are they simply willing to say anything to convince us that reducing their taxes is good for everyone?


Societal effects of income and wealth inequality

Epidemiologists Richard Wilkinson and Kate Pickett demonstrate in their book, “The Spirit Level – Why Greater Equality Makes Societies Stronger”, numerous troubling non-economic consequences of obscene income inequality that are independent of absolute income or wealth. These consequences include more mental illness, greater use of illegal drugs, higher imprisonment rate, higher infant mortality rate, more homicides, lower educational performance of our children, lower index of child well-being, lower trust in our fellow citizens, and lower status of women, among other adverse societal effects.

As bad as all these consequences are, much worse is the total collapse of entire societies. Perhaps the most comprehensive explanation I’ve ever read on that subject appears in a book by Jared Diamond, “Collapse – How Societies Choose to Fail or Succeed” (Chosen as “Best Book of the Year” by The Boston Globe, the Los Angeles Times, The Washington Post, the San Francisco Chronicle and others). Diamond’s book describes the causes of past and present failed societies, such as the ancient Easter Island civilization, and compares them with other societies that have succeeded, in order to identify the causes of failed societies. The theme of his book can be summarized as:

Environmental crisis + failure of society to address it ==> societal collapse

Diamond’s reason for writing his book was to make the point that we humans have it within our power to either fail to address the problem, which will lead to world-wide catastrophe, or to avoid catastrophe by addressing the problem while we still can.

Diamond identifies several general factors that contribute to the equation of whether or not societies succeed or fail in response to the environmental crises they face. The common denominator in most or all of his examples is a combination of environmental crisis leading to depletion of vital resources with an inadequate societal response to the crisis. The inadequate response to the crisis usually or always involves an elite ruling class that is far more concerned with preserving their own short-term wealth and status than with the long-term effects on the society that they rule. Diamond’s examples are well worth considering:

Easter Island
It is estimated that the first human settlement of Easter Island occurred around A.D. 900. The estimated maximum population was 6,000 to 30,000. Easter Island is perhaps best known for its huge stone statues, 887 which have been identified, weighing as much as 9,000 tons (including the base).

The primary reason for the demise of Easter Island society was deforestation, which was virtually complete somewhere between the start of the 15th and the 17th Century. Without trees a major source of wild food disappeared; fuel for warmth virtually disappeared; fish consumption substantially declined because of the absence of canoes; and agriculture was severely disrupted because of soil erosion. Easter Islanders had to turn to cannibalism to survive. Europeans, who began frequenting Easter Island at least by 1722, no doubt contributed to their final demise by spreading disease and kidnapping them. By 1872, only 111 Easter Islanders remained.

Massive amounts of statue construction, fueled by competition between clans, contributed greatly to resource depletion on Easter Island in two respects: the work required vast amounts of rope and wood products (ladders, sleds, levers, etc.), which led to the deforestation; and it also required huge additional amounts of food for the people who built the statues. In sum, a very fragile environment, combined with a culture that was characterized by massive consumption of vital resources, led to the demise of Easter Island society.

The Anasazi
The Anasazi resided in current day Southwestern U.S., including parts of Utah, Arizona, New Mexico and Colorado. This area first became populated with humans around 11,000 B.C., though agricultural societies in that area did not arise until about A.D. 1. Anasazi civilization lasted from about A.D. 600 to 1200.

Chaco Canyon was the capital of Anasazi civilization. The Anasazi were a highly hierarchical society, such that a well fed elite living in luxury came to occupy Chaco Canyon, while the peasantry did all the work and produced the food that supported the elite. Diamond notes that “Chaco Canyon became a black hole into which goods were imported but from which nothing tangible was exported. Into Chaco Canyon came those tens of thousands of big trees for construction…”

The final blow was a drought in about A.D. 1130. Chaco Canyon became abandoned as many probably starved, people killed each other, and others fled the region.

Mayan civilization
The Maya were the most advanced civilization in pre-Columbian America, and the only one with extensive preserved writing. They occupied parts of Mesoamerica, which extended from present day central mid-Mexico to Honduras. The so-called Classic period of Mayan civilization began around A.D. 250. The Mayans were a highly hierarchical society. Diamond explains:

As with other failed societies, environmental problems played a large role. But more instructive than that was the societal response to those environmental problems. Diamond has this to say about that:


The Greenland Norse
While 99% of Greenland is uninhabitable, there are patches of it that are suitable for agriculture. A settlement from Norway was established in A.D. 984, which lasted approximately 500 years before completely dying out. The fate of the Greenland Norse is especially instructive because another society, the Inuit (Eskimos), who occupied Greenland before the Norse arrived, continue to live there today.

Greenland’s very cold climate, with very short summers, makes agriculture a precarious undertaking. But the Greenland Norse inherited a farming culture from Norway, and they stuck with it. Unlike the Inuit, they never learned to hunt whales, and they had a cultural taboo against eating fish. Thus, when their cows and sheep overgrazed their pastures, farming became an even more precarious undertaking, and lacking adequate alternative food sources, the Norse starved in the midst of plenty. The Greenland Norse was a very hierarchical society. Diamond explains:


The underlying cause of failed, collapsed societies
Each of these examples of failed societies involved a small proportion of the population that had a very disproportionate amount of political power and wealth. In those types of societies, the rich and powerful often make decisions that benefit themselves to the great detriment of the vast majority of other people. Environmental degradation often means little to them, as long as it increases their wealth and power. Significantly, Diamond found not a single example of a society that collapsed because too small a share of resources went to the ruling elite.


Right wing plutocrats and the austerity myth that will ruin our economy if we let them

Thus it is that our current situation in which right wing oligarchs and the politicians that they buy are attempting to amass ever more wealth and political power at the expense of everyone else is nothing new in the context of world history. To convince Americans to give up the social safety net programs that have sustained the poor and built a strong middle class since President Roosevelt’s New Deal of the 1930s, they claim that the predominant problem facing our country today is our federal deficit. This is their excuse for privatizing Social Security and Medicare. They want us to forget that private corporations are in business to make a profit, whereas the purpose of government programs (such as Social Security and Medicare) is to serve its citizens. Where do people think that corporate profits are going to come from if not from the people who need the programs?

Not coincidentally, it is the same right wing oligarchs and politicians who try to scare us about the federal deficit who also continuously push for tax cuts for the rich, and tax cuts, deregulation, subsidies, and bailouts for powerful corporations. Our news media should – but repeatedly fails to – hold them accountable for their hypocritical message that we need to cut vital social safety net programs to reduce our debt, while at the same time arguing that we need to cut their taxes and increase military spending.

Their message about our federal debt is grossly misleading. The significance of the federal debt should be measured as a percentage of our nation’s GDP, rather than as an absolute figure. Here is a graph that looks at federal debt as a percentage of GDP:



Note that as a percentage of our GDP, after many years of reduction it began to rise substantially during the Reagan years, when “trickle down economics” came into vogue and tax rates on the wealthy were greatly reduced. Our national debt (as a percent of GDP) then decreased during the Clinton years, when tax rates on the wealthy were modestly increased, but rose again during the Bush years simultaneously with Bush’s tax cuts for the wealthy.

William Greider demonstrates our misplace priorities in an article titled “Economic Free Fall”. In that article Greider discusses how Congress has claimed to ameliorate our economic crisis by providing economic assistance to the wealthy, while generally ignoring the rest of us.



Right wing plutocrats and the destruction of our planet

The human weaknesses that led to previous societal collapses have not changed much during the course of world history. Too much wealth and power in the hands of a small elite lead to tyranny and societal collapse, just as it always has.

But there is an important difference today, as compared with the past. Because of rapidly accelerating technological advances, the confluence and environmental crises with inadequate human response is now intertwined in ways that have never previously existed on our planet. It is now likely that future environmental crises will be primarily man-made rather than natural. Thus, too much power in the hands of an irresponsible ruling elite actually leads to the creation of environmental crises, which the elite then not only fails to respond to, but actively prevents others from responding to. And unlike the past, today’s environmental crises threaten the whole planet, rather than a single society at a time.

Brian Fagan describes the catastrophes that are likely to befall humanity if climate change is not adequately addressed, in his book “The Great Warming – Climate Change and the Rise and Fall of Civilization”.


The U.S contribution to climate change is greatly out of proportion to its population. It is responsible for approximately one quarter of all the world's carbon dioxide emissions. Yet, in 2001 President Bush pulled the United States out of its international commitment to the Kyoto protocol, leaving us and Australia as the only two industrialized countries uncommitted to the international effort to respond to the climate change threat.

Effects on small islands are already being seen. In December 2006, the first inhabited island, Lohachara Island, disappeared beneath the sea. Several nearby islands have been affected as well, with tragic human consequences. Several other islands face catastrophic consequences in the immediate or foreseeable future if global warming isn’t soon halted or at least slowed considerably. For that reason, many small island nations made evacuation plans.

The National Oceanic Atmospheric Organization reported 111 major hurricanes in the tropical Atlantic from 1995 to 2008, a 75% increase over the previous thirteen years. A researcher at the National Center for Atmospheric Research noted that “Storms are not just making landfall and going away like they did in the past… Somehow these storms are able to live longer today”.

The Center for Research on the Epidemiology of Disasters conducted research that gives us an indication of the magnitude of the increase in severe weather events. That research found that there was four times the number of weather disasters in the last thirty years as in the first 75 years of the 20th Century.


In conclusion

In conclusion, a nation’s level of income and wealth inequality is not God-ordained, nor is it the natural consequence of a society arranging things for the benefit of all. Rather, a high level of national income and wealth inequality generally means that its elites have been successful in arranging its laws and policies to enhance their own wealth and power at the expense of their fellow citizens.

Our elites have formed themselves into giant powerful corporations that have demanded and received all the rights of “persons”, with few or none of the responsibilities of ordinary persons. The result has been to substantially widen the gap between rich and poor and to give to the few the license to enrich themselves at the great expense of the many. If nothing is done to stop them we will not be able to solve the environmental crises that threaten to make our planet less and less habitable for human life.