In the Documentary Inequality for All

In the Documentary Inequality for All, scholar Robert Reich dissects the staggering facts on an unequal distribution of wealth between classes and its shattering effects on the American economy. He focuses on the fact that our middle class, which makes up 70% of our economy, is being kept on a tight leash from the wealthy that only make up the miniscule 1% of society, making the same amount of income as half of the country. He begins explaining how In the late 1970s inequality became a prominent issue, not necessarily on a declining economy, in contrast he clarifies that the GDP (gross domestic product) kept on increasing. The problem arises from the unparalleled income of the American workforce compared to the increasing prices of health care, housing, college and everyday costs of living. As expenditures increased for American households so should of workers wages, but instead many dropped or remained the same throughout the economic boom and even until now in our current date.
This “huge gap” as Reich describes, between wages and rising economy became a problematic concern to all Americans constituting the middle class. The economy entered a vicious cycle as Reich explains it to be, a cycle on which low wages cause low consumer spending thus leading to a troubled economy for all. At first the middle class leaned on to borrowing from banks to get through their struggle balancing high living prices and low wages, another coping mechanism that kept the middle class going for a while was that women began entering the workforce to aid in the responsibilities of their households. Yet, these efforts weren’t enough for the two underlying issues; globalization and new technology whom were responsible for contributing to the flattening wages since 1970. An example of this can be seen with Amazon.com, a company that is responsible for taking out of the market many small businesses.
The businesses that once performed the same work that Amazon.com does now, did so with many more workers, thus, propelled many more jobs than what amazon provides currently. With higher living standards and not enough disposable income the middle class go through daily struggles, only enough to make it on to next day while the wealthy keep storing away unimaginable sums of money that they themselves have no clue what to do with. With the raising inequality on the middle class, they are constrained to battling hurdles that make their efforts of moving upwards in life all the more difficult. Reich suggest that the attention needs to be shifted towards the working class, primarily with their education; “prosperity generates prosperity. Preparing our workforce to specialize and become well-educated individuals will just add on to a thriving stable economy; making education affordable and investing on them expands the middle class as well as the success for both the wealthy and the working class.
The rich believe they do enough since they see themselves as job providers, and think that if it weren’t for their role in creating jobs, that our economy would be much worse. With this they argue on issues such as getting taxed too much and how the “job creators” are being attacked. In reality they are not making any genuine effort on balancing out our economy. The wealthy making over six figure salaries a year manage to pay 15% on taxes while the average middle class male that makes anywhere from $25,000 to $75,000 a years will get taxed double, paying an average of 30% or more on their taxes. In the U.S., when income inequality was at its lowest (1950s), the top marginal tax rate was highest (91%). Prior to the Reagan administration, the top rate was always above 70%. The current rate is now 39.6%, and income inequality is at all-time highs. Currently, as Warren Buffett explains, the “tax code is tilted towards the rich and away from the middle class.” It’s actually upside-down – those with more pay fewer taxes, than people with less. Though the top rate for wage-based income is 39.6%, the rate for income from investments (capital gains) is only 20%. That means wealthy people pay a lower tax rate than the rest of us. Examples from the film include Buffett, whose tax rate is about 17%, while the people who work in his office were paying an average of 32%; Mitt Romney paid 13.9% while Ladd and Nancy Rasmussen paid 33% (or more); and Nick Hanauer paid 11% on an eight-figure income. Hanauer says, “When you give rich people tax breaks, all in the name of job creation, all that really happens is that the fat cats get fatter, and of course that’s what’s happened over the last 30 years. It’s the signature feature of the economy.” Robert Reich adds that,”Taxes are the price we pay to finance the things we can’t do individually.” If the wealthy don’t pay their fair share and the middle class is stagnant, you’re going to have a budget crisis. That leads to cutbacks in government services and programs on which the middle class relys, which contributes to the ‘Vicious Cycle.’ In addition to tax policy, the wealthy are also favored by financial practices, including charging lower interest rates and fees to those with more funds. Instead they keep accumulating money and invest in other things that give them a profitable return to themselves but not to the rest of the economy. With big companies such as General Electric (ge) who prioritize on making a profit rather than good jobs, by creating overseas jobs rather than providing them to laborers in America.
Maybe the best political change the U.S. can make is to get rid of immigration quotas. Allowing someone to move from a poor country to a rich country, even if we provide no assistance beyond letting them earn their own living, massively improves lives and costs us less than nothing.
Probably the best thing an individual can do is to regularly donate to the most effective charities. The huge wealth inequality in the world means that there are big opportunities to help those at the bottom. For instance, in really poor parts of Africa it’s still very common to suffer and die from malaria (spread by mosquitos), and through the charity AMF, who distributes bednets, a life is saved for approximately every $2,838. The average American can leverage their position on the top-end of world inequality and save many lives per year. We should also hope for more tax-funded foreign aid to highly effective programs like this.
For specifically reducing inequality among Americans, an effective (and direct!) policy would probably be just raise taxes on the wealthy and increase wage subsidies for the poor (either by expanding the EITC or along these lines). I suspect better monetary policy, like NDGP targeting rather than