“To help the poor, study economics”: income inequality, justice, and economic theory
Part 1
“The 1%” is a shorthand designation that points to the vast disparity in levels of income in America and other developed countries. The World Economic Forum, in its annual Global Risks report for the 2014 conference in Davos, Switzerland[1], called inequality the greatest immediate threat to the world, not only economically, but also politically.[2]
That was then. This year’s report focused on the rapidly deteriorating environment. It lists “severe threats to our climate, along with ‘economic confrontations’ and ‘domestic political polarization’” as major risks. “Without urgent attention to repairing societal divisions and driving sustainable economic growth,” the report warns, “leaders cannot systemically address threats like the climate or biodiversity crises.”[3]
That was before a new virus appeared. The propagation of COVID-19 has a great deal to do with climate changes, and the resulting economic dislocation has made income inequality even worse. Already, the number of the world’s wealthiest people owning 50% of the world’s wealth had dropped from 380 in 2009 to just 28 in 2018. The 1% of Americans own 42.5% of the nation’s wealth; among all other developed nations, the highest percentage is 28%.[4]
The virus has given inequality a high fever: since March, the richest in the world have seen their assets grow even higher, while millions have been thrown out of work.
In her book This Changes Everything: Climate vs. Capitalism, Naomi Klein, the well-known economics journalist, had argued at great length and with hundreds of examples that, in fact, without a complete reversal of present global macroeconomic policies, the damage will be irreversible and cumulative after … 2017.[5] The World Economic Forum seems to have caught up to this realization a bit late.
The way human communities have always survived day to day and in the long term — two different but related activities — is to build an economy together. It is clear from statistics that humans are not living together economically, but separately — and unjustly. It is common sense that if 28 individuals own the same amount of wealth as 3,350,000,000 human beings, that is, if one of these persons has on average the total net worth of 119,642,857 other people, there is something desperately wrong. While some boast that globalist capitalism has brought greater wealth to humanity than any other economic system, it begs the question of justice. If the daily amount that the poorest 1,000,000,000 people have to survive on has doubled from $1.00 to $2.00, while a very few now receive daily over two thousand times that amount, where is the justice in that?
From the scriptures
The Holy Scriptures have much to say about disparities between rich and poor. On the one hand, there is no prohibition on gaining wealth, the values of work are extolled, and debt is to be avoided (e.g., Proverbs 22). Exploiting the poor is universally condemned and God will punish it, e.g., Proverbs 21:13; 31:9; Hosea 12:7; Amos 5:11–12. One is to provide for the poor, for example, leaving the corners of fields unreaped so that the poor could glean from them (Lev. 19:9–10; Deut. 24:19–21). God blesses those who help the poor (Prov. 19:17).
The Sabbath tradition provided a serious economic condition that essentially undid various contracts, allowing the poor to regain means by which to get out of poverty. First, the weekly Sabbath meant that all would rest on the seventh day, including slaves and animals (Exod. 20:8–11, 23:12; Lev. 23:2; Deut. 5:12–15). The Sabbath year, falling every seven years, included rest for the land and the cancellation of debts (Exod. 23:10–11; Lev. 25:1–7; Deut. 15:1–18). Israelite slaves were to be given their freedom.[6] The Jubilee Year, every half-century, returned property to original owners, essentially re-shuffling the basis of the agrarian economy (Lev. 25:8–55; 27:16–25).
Whether these laws were actually obeyed or not, they were powerful reminders to God’s people that while work is good and the accumulation of wealth is acceptable, the installation of permanent wealth inequality was not only condemned, but its mechanisms were to be regularly undone. Dismantling the grounds of inequality is, I would argue, the main purpose of the Jubilee Year.
The prophets assert that God’s blessing will bring about a certain standard of living[7] for all. For example, Isaiah’s vision of the new earth to come is one of a peaceful, plenteous life, with hearth and home, children, food and drink, and satisfying work (Is. 65:17–23). Doing Torah brings good economic results, but only if the people remember that all good things come from God (Deut. 28: 11–14). Jesus’ teaching in the Sermon on the Mount clearly follows this:
“No one can serve two masters; for a slave will either hate the one and love the other, or be devoted to the one and despise the other. You cannot serve God and wealth.
“Therefore I tell you, do not worry about your life, what you will eat or what you will drink, or about your body, what you will wear. Is not life more than food, and the body more than clothing? […] Therefore do not worry, saying, ‘What will we eat?’ or ‘What will we drink?’ or ‘What will we wear?’ For it is the Gentiles who strive for all these things; and indeed your heavenly Father knows that you need all these things.” (Matt. 6: 24–5, 31–2, NRSV. Cf. Luke 12: 22–30)
Need a realistic theory
In making qualified moral judgments about income inequality — Is it immoral? How much inequality is immoral? — there is the problem of the means of judgment. In other words, income inequality being an economic phenomenon, it will require first, an adequate understanding of how the inequality developed, and second, a practical remedy. Inequality is a symptom, not a cause.
Making economies for surviving and thriving is part of being human, in fact. I posit that the measure of justice in economic terms is whether every person can be an actor in his or her economy, and thus have some share in its fruits. The present colossal levels of income inequality derive from the systematic exclusion of the vast majority, and so are unjust.
Along with an applicable moral judgment, measuring income inequality and prescribing its remedy requires a working economic theory that ordinary people can apply. This series will introduce a scientific approach that incorporates not only a sound practical economic theory but the necessary resources for moral judgments, as well.
Go to Part 2.
[1] See http://www.weforum.org
[2] See http://www3.weforum.org/docs/WEF_GlobalRisks_Report_2014.pdf. Emphasis mine.
[3] https://www.weforum.org/press/2020/01/burning-planet-climate-fires-and-political-flame-wars-rage
[4] https://inequality.org/facts/global-inequality/
[5] See Naomi Klein, This Changes Everything: Climate vs. Capitalism (New York: Simon & Schuster, 2014)
[6] Here I prescind from the questions about slavery in the Bible. As with every other human civilization, slavery was an economic practice in Israel.
[7] See below in the series for the importance of this term.
