I recently finished reading Ursula K. Le Guin’s book The Dispossessed, all about an ambiguous utopia moon based on anarchist economics and mutual aid that orbits an Earth-like planet dominated by both communist and capitalist-esque nations of propertarians and centralized bureaucracy. I loved the book a lot and 10/10 would recommend. I also watched Steve James’ 1994 documentary Hoop Dreams, about young inner-city athletes facing the pressure to achieve success for themselves/their families.
Both of these made me reflect a little more on economics and inequality than I normally do and, needing a substack post, I decided to dust off an essay I wrote last year that examines just how economic inequality functions in our modern world. The first half deals with economic inequality across time (generational inequality, dynastic wealth, structural racism) and the second half deals with inequality across space (effects of globalization, neoliberalism, climate change, etc.) I hope you enjoy it.
American discourse has not always directly acknowledged the fact that much of the nation’s wealth and economic prestige was built upon chattel slavery and the economic exploitation of people of color. As laborers of color, namely Black americans, fueled the economic machine, it has since gone on to produce exponential dividends for the white controlling class that benefited from its implementation. The mere outlawing of slavery does nothing to address how much of said dividends Black americans have not been compensated for over time.
The argument for reparations to Black americans is not just concerned with amending the horrors of slavery but also remedying the period since emancipation where Black laborers have still been denied access to markets and deliberately disadvantaged. Ta-Nehisi Coates describes in his The Case for Reparations article, “Now we have half-stepped away from our long centuries of despoilment, promising, “Never again.” But still we are haunted. It is as though we have run up a credit-card bill and, having pledged to charge no more, remain befuddled that the balance does not disappear. The effects of that balance, interest accruing daily, are all around us.”1 And as time marches on without a deliberate intervening policy to reset the playing field, the paths of advantaged and disadvantaged will continue to diverge at faster and faster rates.
1 Coates, Ta-Nehisi (2014, June). ‘The Case for Reparations.’ The Atlantic
The presence of inequality and racism fuels further inequality as it becomes easier and easier to economically exploit the ‘out’ groups on the margins. Heather McGhee notes this in her book The Sum of Us, which tackles the very American concept that one racial group’s success is perceived to come at the cost of another, “Individual racism gives greedy people the moral permission to exploit others in ways they never would with people with whom they empathized. Institutional racism... furthered this social distance. And then structural racism made it easy to prey on people of color due to segregation and eliminated the accountability when disparate impacts went unheeded.”2
Such processes bankrupt individuals and also leave a resource void for future generations that is felt across time. The absence of family wealth in the form of foreclosed homes, inaccessible education, lack of job opportunities and other physical assets to be passed down, takes its toll on ensuing generations, keeping people in perpetual poverty.
2 McGhee, Heather (2021). ‘Chapter 4: Ignoring the Canary’ in The Sum of Us. One World. pp. 86
On the other hand, for those that have benefitted from unequal systems and have wealth amassed, various legal precedents, loopholes, and tactics can be used to the opposite effect keeping one’s descendants in perpetual luxury at the expense of another’s labor. As Robert Reich writes, “Dynastic wealth puts economic power into the hands of a relatively small number of people who make decisions about where and how to invest most of the nation’s capital, as well as which nonprofit enterprises and charities deserve support, and what politicians merit their campaign contributions”3. This wealth gap is not static and will not become static in the future. It has grown dramatically over the years and will continue to widen if unchecked.
3 Reich, Robert (2019, May 14). ‘Why we need a Wealth Tax.’ Common Dreams
Proposed wealth taxes are economic investments that address present but also future factors of inequality especially if they tax wealth instead of income. As A. B. Atkinson writes regarding taxation ‘fairness,’ “Among the reasons for considering an annual wealth tax more favourably in the UK today than forty years ago are the much higher level of income inequality and the rise in the ratio of personal wealth to Gross Domestic Product. There have been major changes in this ratio over the postwar period.”4. Such a policy is just a beginning step to reform decades of largely unchecked inequality.
4 Atkinson, Tony (2015). Inequality: What can be done? Harvard University Press. pp. 200.
One such tax solution put forward by Atkinson is the idea of global taxation. This makes increasing sense in a world where inequalities are not just compounded by time but interconnected across borders.
Globalization has made world markets reliant on systems of inequality in order to function in international spaces. As the logical successor to centuries of colonialist economics, modern global markets are so interconnected in the supply chain and manufacturing network of multiple nation-states that consumers within countries that profess to have strong labor laws still benefit from products created by exploited and subjugated workers in other nations.
And this is done deliberately, with the status quo frequently enforced. As Matthew Sparke writes, “advocates of neoliberalism have sought to harness the national state to the project of securing transnational conditions for market rule... whether this happens through peaceful transnational agreement on crossborder development, or through draconian national reforms, or through violent military interventions, we repeatedly see national governments enabling market forces to govern through the extension and entrenchment of neoliberal policies.”5 Many of the players are the same in this globalized system, with Western European nations and adjacent countries like the US, Canada, Australia etc. reaping the rewards of labor and manufacturing in developing nations that utilize methods deemed illegal in consumer countries.
5 Sparke, Matthew (2013). ‘Chapter 1: Globalization’ in Introducing globalization: The ties that bind. Wiley-Blackwell. pp. 19.
To find economic inequality across spaces doesn’t require visiting multiple continents or countries but can also be easily found within the borders of a country like the US. In examining the proposal for the Green New Deal it becomes apparent that as climate change becomes a more pressing concern, its economic impact on the US will not be distributed evenly. As the proposal states, “climate change, pollution, and environmental destruction have exacerbated systemic racial, regional, social, environmental, and economic injustices (referred to in this preamble as “systemic injustices”) by disproportionately affecting indigenous peoples, communities of color, migrant communities, deindustrialized communities, depopulated rural communities, the poor, low-income workers, women, the elderly, the unhoused, people with disabilities, and youth (referred to in this preamble as “frontline and vulnerable communities”);”.6
As well as being a threat to public health and national defense, the legislative proposal also recognizes that climate change will perpetuate already existing inequalities in economics and beyond.
And more so than just mitigating the harm of climate change for communities, the proposal could also offer an economic boon to those same struggling communities. As author Naomi Klein writes, “Every part of the world that has invested heavily in renewables and efficiency has found these sectors to be much more powerful job creators than fossil fuels... The accelerated timeline of the U.S. Green New Deal will turn it into a jobs machine. Even without federal support — indeed, with active sabotage from the White House — the green economy is already creating many more jobs than oil and gas.”7 The potential solution to one problem becomes the solution to another as well and one that could be implemented with economic justice policies included in it from the start.
7 Klein, Naomi (2019, September 20). ‘The economic case for the Green New Deal.’ One Zero
Regardless of government intervention, individual people are not immune to the effects of economic decisions made thousands of miles away from them. In an increasingly globalized world, instances such as high tariff trade wars or global pandemics mean that virtually every average citizen will feel the ripple effects. In the case of Trek bicycles, the ability for supply chains to be derailed or disrupted by geopolitical events illustrates the risks in spreading the process of production to different corners of the globe. As COVID-19 spread through Asia, lockdowns derailed their supply chain. Bikes, like a lot of other products, stopped getting made. It has been the latest in a series of disruptions to global supply chains that has pushed companies like Trek to reevaluate how and where their products are getting made... In response to the recent disruptions to global supply chains, Carmen Reinhart, the chief economist of the World Bank, recently said, "COVID-19 is like the last nail in the coffin of globalization.”8 The economies of today are so interwoven that for middle to large companies around the planet many issues are local issues due to the nature of doing business.
8 Rosalsky, Greg (2020, August 25) ‘What Bikes Tell us about a Changing Global Economy.’ Planet Money
Indeed, lower and middle class people often bear the brunt of shifting global economic trends. And this is not new information as Duflo Esther and Banerjee Abhijit write in Good Economics for Hard Times, “Economists and policy makers were blindsided by the hostile reaction to free trade, even though they have long known that, as a class, workers were likely to suffer from trade in rich countries and benefit from it in poor countries.”9 There is a prevailing notion that workers should adapt to changes without government assistance or foreknowledge of global trends. These workers should just find new jobs, gain new skills, or simply ‘work harder’ in a world where to not do so is seen as a moral failing.
The expansion of economic systems, compounded by time and space has yielded incredible innovations in everything from technology to medicine to consumer luxury goods. Our products are produced faster and faster and our appetites for them grow larger and larger. But as dizzying as the free market’s heights are, a disturbing underside has always existed and the exponential growth of economic systems predicated on inequality can only serve to make the problems worse.
9 Banerjee, Abhijit, & Duflo, Esther (2019). Good economics for hard times: Better answers to our biggest problems. Penguin UK. The Pains from Trade pp. 97.