Inequality For All

On September 27th, a documentary film with that title hits the theatres. The little guy who the film revolves around makes the same argument he has been making in print for over a decade: the middle class is being squeezed, and their plight -- the harvest of right wing ideology -- is why the United States is being pulled apart.

Reich was interviewed this week for an article in The Tyee. Here are a few excerpts:

"Losers in rigged games can become very angry," he says in the documentary Inequality for All, which will be released in the U.S. on Sept. 27. "We're seeing an entire society that is starting to pull apart."

 "Unlike the 1930s, we haven't had the kind of reforms we need to change direction." In fact, he says, since 2007 economic gains have gone to the rich and inequality has increased.

He starts with something a little oblique, and asks the class where they think the $178 cost of making a 3G iPhone was spent. Students naively believe the majority of the money stayed in the United States. But the real surprise is how little went to China, where the phones are assembled. The breakdown? Japan was tops with 34 per cent, followed by Germany (17 per cent) and South Korea (13 per cent). The U.S. came in at six per cent and China at just three.

Before the crash of 1929, the tax rate charged against the biggest incomes was 25 per cent. Today, it's 35 per cent, although that's brought way down by compensation built around stock options and capital gains, which are taxed in the United States at a rate of 15 per cent. The surprise, though, is that under former Republican president Dwight D. Eisenhower in the 1950s, the top income tax rate was 91 per cent.

In 1978, the documentary asserts, the average middle class male made $48,302. Today (and all these numbers are adjusted for inflation) the same person makes $33,751. Meanwhile, top earners have gone from an average of $390,682 to $1,101,089. There are more shocking numbers -- an increase of 350 times in executive pay here, seven hedge fund managers making more than a billion dollars each over there -- but the broad decline in middle class incomes is at the centre of Reich's argument.

So, you think we're better off? We've just gotten into the game later than the United States. But Stephen Harper is convinced that we should follow the American lead.