COMMUNITY DEVELOPMENT CORNER - It’s the Inequality Stupid
Written by SP Editor
Who Gets What and Why and How Surging Inequality Threatens Democracy
Income and wealth inequality seem almost as certain as death and taxes, at least since the 1970s. Persisting patterns of such inequality convey a sense that this is just the natural order of things. For those who came of age during these years, it is difficult to blame them. But there is nothing natural about this order. It has evolved in response to a series of specific public policy decisions and private industry practices. But that which was created by such decision-making can be undone by other approaches. And we are beginning to see what some of those might be.
The study of inequality has long been at the core of the social sciences in the U.S. In his 1966 book Power & Privilege, American sociologist Gerhard Lenski succinctly defined what he referred to as social stratification as the phenomenon of who gets what and why. Unfortunately, American culture has ignored what Lenski wrote about power and has long exhibited an individualistic bias in its understanding of such inequality. Those who get ahead, we are told, worked hard, learned how to defer gratification and developed appropriate entrepreneurial skills and related human capital. Those who fell behind lacked these qualities. But as another American sociologist, C. Wright Mills, famously taught us in his 1959 book The Sociological Imagination, context matters.
In other words, in addition to understanding the characteristics of the players, we need to understand the rules of the game. And these rules are increasingly written by and for those who are at the top of the economic pyramid. The point is not that individual traits do not matter but rather the traditional narrative ignores the way those at the top benefit from structural realities and wealth defense support mechanisms that tighten control over valued resources as inequality surges. The primary cost of such inequality, therefore, is not the morality or equity of any particular distribution of resources, but rather the growing power that accrues to a narrowing group of people at the top. Chuck Collins 2026 book Burned by Billionaires shows the way.
Surging Inequality
The number of billionaires in the US grew from 15 in 1983 to over 800 in 2024. According to Collins these are the drivers of inequality, a group that constitutes .01 percent of the world’s population. This is the group that writes and enforces laws that are rigged in favor of the wealthy. A few numbers illustrate the pattern. In 1980 the ratio of CEO pay among the Fortune 500 and the pay of the average worker was 42 to 1. This grew to 268 to 1 by 2023. The richest 10 percent of US households owned 93 percent of stock market wealth in 2023. And 15 percent of households had zero financial reserves, many of whom had negative net worth. For Black households this was 25 percent. Hence the K shaped economy many have come to understand.
Collins points to three economic forces generating these patters; 1) suppression of wages; 2) a surging stock market, and 3) massive tax cuts for the wealthy. None of this reflects the relative entrepreneurship, work ethic, or any other characteristics of individual participants in the nation’s economy. In fact, Collins cites a 2023 UBS study showing that new billionaires are more likely to have inherited their wealth rather than created it through a family enterprise.
Rules
The Koch family provides a pointed example for how these patterns were created. It spent $20 million lobbying for the 2017 Trump tax cut, which saved the family $1.4 billion. And they are not alone. Many of Trump’s friends have received lucrative sole source federal contracts, favorable regulatory reviews, pardons, and more in return for campaign contributions. The Koch family, like most billionaires, generate their wealth from capital gains rather than wages. And earnings from capital gains have long been taxed at lower rates than earnings from wages, a policy that facilitates and maintains concentrations and inequalities of wealth. And it is not just federal taxes where such inequities prevail. As Collins reports, the percentage of income paid for local and state taxes by lower-income taxpayers is 60 percent higher than what the top 1 percent paid. Trump’s “one big beautiful bill” has extended this tradition.
In the US we have long looked to education as the equalizer. But as long as public K-12 education relies on local property taxes for funding, schools will serve more as an instrument to perpetuate inequality than as a vehicle for upward mobility. We are still waiting for schools to serve as “the balance wheel of the social machinery” as the famed Massachusetts educator Horace Mann called for in 1848.
Costs
The ethics and morality of various patterns of inequality have long been debated. But today life on earth as we know it is threatened by these surging patterns. As Collins reports, 16 percent of the world’s CO2 emissions are accounted for by the wealthiest 1 percent, more than the bottom two-thirds of the global population. Flying on a private jet creates over ten times the emissions per passenger than commercial flying. So lifestyle as well as policymaking reinforce the costs of inequality, costs which all groups ultimately experience.
Health care is compromised in several other ways. For-profit hospitals have enriched the rich while undercutting traditional health care facilities and the health of ordinary people. Big Pharma and private health insurance policy and practices have yielded similar outcomes.
Access to health insurance and medical care are not the only factors that shape health outcomes. Health and life expectancy are adversely affected by the meritocratic narrative that is conventionally accepted as the underlying cause of inequality. So called “deaths of despair” (deaths due to suicide, alcoholism, and drug abuse) have risen in recent years particularly among the white working class. In their book Deaths of Despair and the Future of Capitalism, Anne Case and August Deaton demonstrate the health consequences of job loss and social isolation. In a society where success and failure are defined largely in individualistic terms, such dislocation causes great stress as many blame themselves for what they see as personal failure, ignoring the context in which those dynamics play out. That stress leads to a range of physical and mental health issues including suicide.
Ameliorating Inequality to Preserve Democracy
Collins offers several fixes. Tax systems should be reformed. Anti-trust laws need to be enforced. Money currently going to rich families and their heirs could be going to various public needs. But he persuasively argues that the overriding goal is not just to soak the rich to raise revenue but rather to deconcentrate wealth in order to preserve democracy. Forms of economic democracy include cooperative credit unions, worker-owned firms, publicly owned utilities, community land trusts and more; entities in which more than 100 million Americans already participate as reported by The Democracy Collaborative, “an action-oriented think-do tank building Community Wealth and the democratic economy.” (democracycollaborative.org) To get fairer rules requires dismantling current structures of rulemaking. It is often said that if you are not at the table you are probably on the menu. Expanding the pool of those who get to the table requires democratizing ownership of resources so all affected by the rules have a say.
Mirage of Meritocracy
Common sense narratives of who gets what and why have long been more common than sense. Individual traits such as hard work, grit, entrepreneurship, and more have long been overstated. The overall context and specific rules and structures of inequality have not received their due. The successful point to their own character to justify their place and point to victims’ personal faults for their plight. The wealthy, celebrating a perverse notion of individual freedom, rarely note various sources of support for their success or how their behavior contributes to the struggles of others. As Joseph E. Stiglitz observed in his 2024 book The Road to Freedom: Economics and the Good Society, quoting Isaiah Berlin, “Freedom for the wolves has often meant death to the sheep.”
Former South Carolina Senator Fritz Hollings often told the following informative allegory.
“A veteran went to college on the GI Bill, bought his house with an FHA loan, saw his kids born in a VA hospital, started a business with an SBA loan, got electricity from the TVA and later water from an EPA project. His parents on Social Security retired to a farm, got electricity from the REA and had their soil tested by the USDA. When his father became ill, the family was saved from financial ruin by Medicare, and a life was saved with a drug developed by the NIH. His kids participated in the school-lunch program, learned physics from teachers trained at an NSF program, and went to college with guaranteed student loans. He drove to work on the interstate and moored his boat in a channel dredged by Army engineers. When the floods hit, he took Amtrak to Washington to apply for disaster relief, and spent some time in the Smithsonian Museums. Then one day he got mad. He wrote his congressman an angry letter: ‘Get the government off my back! I’m tired of paying for all those programs created for ungrateful people.”
When James Carville famously asserted that “It’s the economy stupid,” implicit in that message was the role of inequality. Many readers of Social Policy may already be familiar with the outlines of this story. Perhaps they could share this with their conservative Republican friends. They are not stupid. They can understand the causes and consequences of inequality. And they will have a better understanding of who gets what and why in the US.
Gregory D. Squires is a Research Professor and Professor Emeritus in the Department of Sociology at George Washington University