“What is happening? Why? And is it a problem?” The documentary Inequality for All opens with former secretary of labor under Bill Clinton and current professor at UC Berkeley Robert Reich posing these three questions to his students that attack the core of the one of the most polarizing issues in America today: income inequality.
Last Thursday evening in the Lick Wilmerding theater, the documentary Inequality for All was screened as part of a nation-wide viewing in honor of the release of the film. Over 700 different locations throughout the country held viewing parties, the goal being to spark a massive discussion of the movie all across the US and inspire viewers to take action.
Using the three questions, Reich begins to unravel the sources of the income gap, starting with what he calls “the suspension bridge graph.” This shows the percent of wealth concentrated at the top tier of wage earners (CEO’s, etc). Since 1913, when the income tax was first instituted, there have been two huge peak years of wealth concentration, 1928 and 2007. He points out that a substantial financial crash ensued following both of those peak years. Coincidence? Reich thinks not.
Reich argues that one of the reasons for these financial collapses was the wages of working class Americans during those periods. Companies were able to keep wages low, but productivity growing. That sounds great, but what Reich points out is that if middle class wages are too low, people cannot afford to buy the products these companies are selling. Companies then have to downsize, causing tax revenues to decrease. This leads to a shortage of money in the government, meaning the government has to cut programs and spending, usually on education. With less people getting an education because of the shallow funding, more workers go unemployed. Deficits increase, which means companies have to cut wages again, and the vicious cycle repeats itself.
He prefaces his findings by saying: “Some inequality is inevitable. If people are going to have proper incentives to be productive to work hard, to be inventive—that’s the essence of capitalism and capitalism does do a lot of good things.” But he notes”: “The question is not inequality per say, the question is, when does inequality become a problem.