Among the most often quoted phrases in President Obama’s second Inaugural Address is this one, sounding a theme regularly repeated during his campaign for reelection: “For we the people understand that our country cannot succeed when a shrinking few do very well and a growing many barely make it.” Painting a picture of a nation sharply divided by economic inequality, this statement amounts to something of a novelty in presidential rhetoric. Only three other sitting presidents — Andrew Jackson, and Theodore and Franklin Roosevelt — took occasion to address the issue so explicitly. And this is despite the fact that inequality has been a stubbornly persistent feature of American life (albeit in varying degrees) throughout our history.
In the case of the Roosevelts, and also now in Obama’s, what made the difference was the combination of an unusually high level of inequality and the fact that it was both linked to and made all the more visible by hard times. Indeed, with those conditions in place, the subject of inequality could acquire what amounted to a life of its own — as evidenced by Occupy Wall Street, which materialized wholly outside existing political channels.
Nonetheless a year later a significant part of Occupy’s message found a sturdy perch at the center of the President’s reelection campaign, and soon afterward was powerfully echoed in his victorious effort to raise taxes on the rich. In both situations, however, he avoided simply bashing the rich in favor of emphasizing unfairness, especially as it affected the middle class. How long will he continue to sound these notes? And as an issue in American politics, just how much staying power will inequality have?
Some of the answer will depend on the state of the economy going forward, and how adroitly the Democrats and Republicans maneuver regarding the questions that continue to divide them: the size and role of the federal government, the deficit, and the continuing increase in the national debt.
Also at stake, however, is a peculiar balancing act in American values between our abiding faith in egalitarian democracy and — paradoxically — our admiration of the works and achievements of the very rich. In Democracy in America Alexis de Tocqueville noted how strongly both beliefs were held by Americans, but hinted that the apparent conflict between them was blunted by the speed with which wealth changed hands in the United States. “Experience shows,” he wrote, “that it is rare to find two generations in full enjoyment of it.”
If that observation was true in Tocqueville’s day, much has changed since then. Of those individuals appearing over the last several years on Forbes magazine’s annual list of the 400 richest Americans, nearly one third — and some of the wealthiest members of the group — inherited all or part of their billions.
But if Tocqueville’s arithmetic was shaky, two other beliefs have served to resolve the tension between our devotion to equality and respect for the wealthy: that the rich play a vital role as job creators, and that they give with extraordinary generosity to worthy causes.
My own research and writing have concentrated chiefly on the second of these claims. With regard to the first, though, several things are worth noting if only in passing. Yes, the wealth of the rich is often invested in ways that result in job creation. But there are also some caveats. As has been asked more than once, exactly what does the wealth of hedge fund managers or their clients contribute to job creation? If, too, the wealthy can be seen as job creators, what happens when, for the sake of their profits, companies downsize by cutting thousands of jobs or shipping them overseas? Also, recognizing that financially the rich have tended to recover from the recent economic implosion much more quickly and fully than the rest of the population, why don’t we see more jobs being created than we do at this point?
As for philanthropy, there is one salient feature that makes it a very different sort of boon from job creation. In most cases the latter occurs in the normal course of events when collectively investors decide to put money into businesses. Philanthropy, on the other hand, stands out as a matter of individual choice. And studying it on that level also yields some interesting conclusions. (1) It is indisputably true that some very rich Americans have been strikingly forthcoming in supporting projects that contribute to the greater good. (2) Beyond their wealth and generosity, however, such people tend to be quite unlike one another. They earn their money in different ways, they give it to different causes and for different reasons. They also give at different times in their lives. In short, it is difficult to generalize about “the good rich.” What can be said, though, is that taken together they constitute a distinct minority of our wealthiest citizens.
This last point is especially important because, as a nation, we tend to assume that the very rich are, in effect, uniformly generous. Yet study after study has shown that this is not so. If some rich individuals give away a great deal of money for philanthropic purposes, many do not. As for why we get the statistics wrong in this case, the answer could be obvious. We do so because we want to, and we want to because doing so helps support our democratic ideals in the face of the palpable — and at times unacceptably high — levels of inequality in our midst. A Gallup poll taken last year indicated that 63% of the American population believes “the United States benefits from having a class of rich people.”
This is why, even in today’s climate, liberal politicians (Obama chief among them) carefully steer clear of outright attacks on the rich, working instead to frame the issue in terms of fairness. Unquestionably that is a prudent thing to do. There is a powerful headwind countering any effort to sustain political action on inequality. Serious social and economic inequality would seem to call for serious and perhaps not altogether appealing change. In a difficult presidential race, campaigning simply for changing the rules a bit here and there was certain to seem both simpler and more comfortable.
But unless the gap in wealth and income truly begins to close — whether through more significant levels of job creation, or further tax hikes on the wealthy, or greatly increased philanthropy — the issue of inequality is unlikely to go away soon. Expect the public to continue to care about it tomorrow, next week, and next year. At the same time expect Obama to continue struggling with it, even to the point of pulling fewer of his punches in the future.