History tends to agree with Hanauer. Whether you look at the French Revolution, where some of the royal ruling class infamously dismissed its starving populace, saying “Let them eat cake,” not long before that populace executed the monarchs, or America’s Gilded Age that lasted from the Civil War to just before World War I: an extreme gap in prosperity does not end well for either demographic.
Marketwatch sat down with Stanford University’s Roman History professor Walter Scheidel to discuss the brutal, cyclic nature of wealth inequality.
“…in his new book, “The Great Leveler,” says only the so-called “four horsemen” of war, disease, state collapse and revolution have succeeded in leveling income. And as soon as the devastation is over, income inequality builds again.”
Scheidel warns that throughout history, attempts at legislating our way out of inequality almost always fail as the elite time and time again thwart progressive legislation. Even so, he warns against “defeatism” and says that we must do what we’ve failed to in the past, as “violent shocks were critical at reducing inequality [in the past].” And once the unrest ends, inequality begins to build again.
But Scheidel has ideas for a solution, “In the U.S. there are certainly a lot of low-hanging fruit because income inequality has basically doubled over the past generation. So there are various things that could realistically implement: a wealth tax targeting capital gains more aggressively; fiscal measures that really target the upper-most-sliver of the 1%; that would certainly help, and greater investment in education would be another issue.”
Nick Hanauer expressed similar sentiments. “My theory of change in the early days was that all of the big challenges that America faced with rising inequality and poverty could solved if you just had a successful enough education system.” says Hanauer on NPR’s popular segment, Planet Money. “If this trend continues people are going to revolt. History shows that that level of inequality results in a police state or a revolution, or both.”
The American Left’s candidates for the 2020 Presidency have also noticed these worrying trends, and amid talks of universal healthcare, some are talking about introducing a ‘wealth tax’.
No matter what we think the solution is, what we do in the next few years will decide if the West can weather the coming storm, or will spiral into chaos. To make matters worse, Walter Scheidel predicts that humanity’s ever-advancing technologies will only add fuel to the fire. “A number of factors are pushing in the direction of even higher inequality, one is automation which is an open-ended story, nobody know how far it is going to go in the next decade, but it will go pretty far.” You don’t have to look hard to find thousands of researchers and business leaders pounding on the glass about the coming dangers of automation; at least one 2020 candidate, Andrew Yang, has jumped on board with a controversial solution. But wait, there’s more! “Then if you really want science fiction, the final frontier would be modification of people. Because at this point, we still have inequality amongst people but once we start changing people through genetic engineering or cybernetic implants, you might end up with a group of people who are inherently different, cognitively more capable, healthier, stronger and so on. And so the potential for inequality in that respect is enormous.”
In the recent past, inequality was staved off by a sense of shared prosperity; wealth was rising in most income levels at the same rate. “…real family income roughly doubled from the late 1940s to the early 1970s at the 95th percentile (the level of income separating the 5 percent of families with the highest income from the remaining 95 percent)” reads a study done by the Center for Budget and Policy Priorities, “…Then, beginning in the 1970s, income disparities began to widen, with income growing much faster at the top of the ladder than in the middle or bottom.”
Only time will tell how this latest cycle of inequality will end, but the 2020 election will be a big indicator of which direction the scales will tilt. Leftists and conservatives alike in the US are stockpiling supplies and weapons for what they fear is the inevitable conclusion.