It has long been a truism that economic inequality in the United States is among the most extreme in the industrialized world, and recent reports show that the ongoing pandemic is exacerbating the problem as millions lose their jobs, health care, and housing while a relative handful of capitalists grow ever richer.
Oregon illustrates the problem well. According to the Oregon Center for Public Policy, in 2018 the wealth of Oregon’s ultrarich
had reached new heights as the average income of the state’s richest 0.1 percent topped $5 million, which was five times their inflation adjusted average income of $930,000 in 1980. The top 1 percent also prospered, earning on average $1,139,000 in 2018 compared to $348,000 in 1980. In 2018 the top 1 percent earned as much as the bottom 54 percent of Oregonians.
While real income for the rich skyrocketed, median income for most people stagnated at $38,000, only $3,400 higher than in 1980, adjusted for inflation. While it is true that incomes were already grossly unequal in 1980, it is much worse now. If
inequality had stayed the same, a typical Oregonian today would earn 60% more and have a median income of $62,000 while a person in the top 1 percent would earn, on average, $608,000.
Covid-19 has only deepened the gulf between the rich and the poor as moguls such as Nike’s Phil Knight have increased their wealth by more than $16 billion over the past year while hundreds of thousands of Oregonians have slipped into poverty and many more have been pushed to the brink of disaster having lost their livelihoods and burned through their savings in a society with a “safety net” that provides paltry or no help for many.
Of course, it does not have to be this way. Many societies have shown that even under capitalism it is possible to promote greater equality by providing social benefits (e.g., universal medical care, public housing, etc.) to ensure that unemployment or illness does not result in impoverishment. Indeed, in many Western and Northern European countries such policies have mitigated the impact of the pandemic on standards of living, especially when governments have stepped in to ensure that workers continue to receive a high percentage of their salaries, even if they are not working. The latter policy has also fueled a discussion of governments providing all residents with an unconditional basic income (UBI) that would be sufficient for a person to live above the poverty line without any work requirement or other conditions.
Such a policy would be transformative. Paid for with taxes on income and wealth, income earners above a certain threshold would be net contributors to the system. Most existing public programs providing income support (food stamps, unemployment insurance, housing and utility subsidies, etc.) could be abolished as could minimum wage laws. Poverty could be eliminated and workers, no longer facing the whip of
unemployment, would be in a much better position to bargain with employers, organize unions, and build cooperative enterprises that could gain access to credit and compete in the capitalist market. Small businesses and small farms would be more viable and those who wished to pursue their artistic inclinations could do so without fear of impoverishment.
As Eric Olin Wright has argued, UBI would not create a socialist society but, by eliminating poverty, reducing inequality and fundamentally altering the landscape of the labor market, it would be one of the core building blocks of a democratic socialist economy.