Equality for All

No one should miss seeing Inequality for All, the documentary created by Robert Reich and Jacob Kornbluth. It is an unsparing depiction of how income and wealth in the United States have become concentrated in the hands of a tiny elite of super-rich individuals. The movie includes talking heads by Reich and glimpses of his academic lectures. Both are quite moving, as for example when he looks directly at the camera and rhetorically asks who is looking out for the American worker. His answer after a dramatic pause is, "no one." In addition, there are riveting onsite scenes such as Reich's interview with a married "middle class" couple who embarrassingly reveal that they have all of $24 in their savings account.

In an interview with Indiewire Editor-In-Chief Dana Harris, both Reich and Kornbluth said that their intent was to stimulate people to push back against the tide they have depicted. Kornbluth lamented that he was part of a generation that did not believe that it could change things. For him however this film was a "passion project," designed to spur activism.

The film is an important and valuable statement. But it is not likely to achieve the goals Reich and Kornbluth set for themselves. The difficulty is that it does not suggest how a reversal in the United States stampede towards inequality could be achieved. Indeed, there is the real risk that its clarity and effectiveness may have a perverse effect. In the absence of a delineation of what to do about the problem, its exhaustive listing of the sources of inequality -- ranging from globalization to the decline of unions and many stops in between -- may leave too many with the sense that the problem is so big that it is beyond correcting.

What is missing in the film is an examination of politics and the potential that resides in an activist government. It is true, as the film emphasizes, that an impetus to inequality comes from low wage countries putting downward pressure on wages. It is also true that advanced technologies used in production have had the same effect, requiring as they do fewer workers. But these tendencies need not be dominant. Governmental interventions, in the name of greater economic equality, could offset them. But this would require a political system that, unlike ours, is responsive to the victims of the inequality spread by economic development and technological change. Given the pro-wealth bias embedded in today's donor-driven political system, government policies designed to offset inequality are unlikely to be adopted. In our system, the wealthy use their campaign contributions and outside expenditures to produce precisely the opposite effect.

The perverse impact that wealth exerts politically is clear in the case of campaign contributions from the financial sector. This is the sector that politicians depend on more than any other to pay for their campaigns. The clout that Wall Street obtained with those contributions took the form of its success in obtaining the repeal of the legislation that had kept financial speculation under wraps (the Glass-Steagall Act of 1933). These same financial interests succeeded as well in blocking the adoption of new regulations to control derivatives and other exotic financial "products" that all but brought the economy to its knees in 2007/08. In this environment of lax control, the incomes earned by managers in hedge funds and other "shadow banks" ballooned, becoming an important source of growing inequality.

But while a politics driven by private money worsens inequality, this is not the only possibility. No matter what is happening with regard to technology, global competition, new sectors of economic activity, and other possible drivers of inequality, it is activism in the political realm that possesses the potential to push back against undesirable outcomes.

In this connection, Inequality for All is misleading when it cites the relative equality of the 1950s and 1960s as a period that could be replicated. During those years, China had not yet begun to industrialize and so downward pressure on the wages of manual workers from that source was not yet in evidence. Nor had the technologies that today reduce the demand for such workers become dominant. In fact, the relative equality that prevailed in those years reflected an American global economic dominance and a pattern of labor demand that will not ever be replicated. The tendency to inequality -- and the need to offset that tendency -- is stronger today than in the decade or so after World War II. What worked then will not work now.

Instead, what is needed today is a social movement that can democratize American politics. The biases associated with big campaign donations could be minimized with a system of public campaign funding. With such a democratizing reform, advocates of policies offsetting inequality would have a chance at convincing the electorate of their desirability. This would represent a fundamental alternation in our political system. No longer would office holders be primarily accountable to wealthy donors -- a system that today makes it unlikely in the extreme that legislators will adopt equality-promoting policies. Without a change in the way we pay for electoral campaigns, it is all but certain that Americans will continue to see their earnings fall behind those of the elite.

We cannot make modern technology become labor intensive. And we cannot prevent low wage countries from growing and increasing global competition. But the policies that emerge from our own political system can offset the inegalitarian consequences of these developments. That however will require a political activism that transforms the way we pay for political campaigns. It is unfortunate that this otherwise excellent documentary does not forcefully make that point.