Is wealth inequality immoral?

Is wealth inequality immoral?

  • Income and wealth inequalities in the United States have soared steeply over the past four decades
  • Bill Gates, Mark Zuckerberg, and other ultra wealthy individuals’ philanthropic exhibitionism is abysmally insufficient
  • The International Monetary Fund contends that there is a substantial correlation between declining unionization and income inequality

Income and wealth inequalities in the United States have soared steeply over the past four decades and have reached levels that are unparalleled in the postwar period. Although economic inequality is one of the most salient issues of modern US history, it is also one of the most contentious and convoluted one to study and interpret.

Is inequality the result of economic growth and therefore justifiable and a necessary evil? What degree of inequality is tolerable in a democratic society?

While about a quarter of a million of Americans, which constitute the top one-quarter of 1 percent of the nation’s employed population, were the fortunate recipients of unprecedented gains in income and wealth in the last few decades, the salaries and wages of the average American worker sadly languished.

Liberal and conservative economists both agree that income inequality is a critical issue and ignoring it would eventually damage the nation’s social fabric. Economists are divided over public policy and whether the government should intervene to rectify some of the income inequalities. Some economists even insist that inappropriate government action might worsen the status quo.

More disconcerting is the average rate for federal income taxes paid by the nation’s top 400 income earners. Although the rate increased from 16.7 percent in 2012 to 22.9 percent in 2013, it is undeniably inadequate and does nothing to address the pivotal issue of tax avoidance and evasion.

Furthermore, people making between $150,000 and $200,000 pay effective tax rates comparable to much higher earners. The super rich’s modus operandi is to cash in on tax strategies that tremendously benefit the affluent class.

Bill Gates, Mark Zuckerberg, and other ultra wealthy individuals’ philanthropic exhibitionism is abysmally insufficient to deal with the colossal needs of tens of millions of Americans and billions of individuals abroad.

The middle class, considered the linchpin of a democratic society, is contracting and its economic and political power dwindling. Pope Francis, President Obama, and other world leaders are deeply concerned with this paramount issue. Most would like to keep the fundamental tenets of capitalism and free market mechanism intact. Unions are gradually losing membership and power.

Furthermore, the International Monetary Fund contends that there is a substantial correlation between declining unionization and income inequality, meaning the share of the wealth pie going to the top one percent is expanding.

There is a latent and ongoing class warfare against America’s oligarchy and plutocracy. When a couple of individuals (the Koch brothers) have the financial resources to set political agendas and fund political organizations and campaigns commensurate to the financial strength of a major political party, it demonstrates the vulnerability of the American political system and its subservience to the super rich.

There is definitely a pressing and immediate need to counterbalance the gigantic power and influence of the moneyed class. Unfortunately, the most potent force to counterpoise this sheer lunacy is often vilified.

Unions represent a countervailing power, a sort of checks and balances so cherished in the United States. We might not agree with some of the questionable practices and objectionable approaches of the unions. Supreme Court rulings are mostly divisive and controversial too. So are the domestic and foreign policies of the president. Unions are indispensable to the financial and political power of the middle class.

Moreover, economic inequality causes disunity and distrust among members of a society.

Furthermore, there is a strong relationship between low income inequality and high levels of social well-being. Available and affordable healthcare and adequate educational access are key factors in contributing to high levels of social well-being.

Reports about tax evasion and avoidance are widespread. The amount of money that American firms and individuals transfer overseas to avoid paying taxes is staggering. Every year, tax evasion costs the US government approximately $150b. This amount represents the budget of the Department of Veterans Affairs. This behavior is unacceptable and the US government needs to take immediate action to remedy this outrageous situation.

READ: 62 people own the same as half the world, reveals Oxfam Davos report

What are the moral and theological implications of this income disparity?

Other than being a utilitarian concept and a rational choice model, economic inequality carries moral and theological connotations. Pope Francis and the Catholic Church tradition have stressed the principle of the common good and have repeatedly pointed out the abysmal levels of economic inequality.

Humans are created in the image of God. They have intrinsic values not based on abilities and merits.

Ruinous avarice may be considered the root cause of humanity’s inability and/or unwillingness to share what is freely given to all human beings. Even Adam Smith, considered the father of modern capitalism, propounds the idea of “fellow-feeling.” This expression fundamentally means putting yourself in someone else’s dire circumstances and showing some sympathy and eventually lifting him/her up.

Adam Smith wrote:

“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should be themselves… tolerably well fed, clothed, and lodged.”

According to Christian tradition, God became poor through Jesus. Christian moral imperative (Jewish, Muslim, and other religions do not differ that much) demands that all human beings participate in the fight against poverty and despair. Helping people reach a minimum level of livelihood that gives rise to an embryonic hope should not be left to individuals only.

Systemic and relational transformations are critical if we want economic imperialism to retract its overreaching and destructive tentacles.

Christians should cooperate with like-minded people all around the world, including here in the United States, to partake in building a more equal and just society (no one is promoting Soviet-era communism) and realizing human dignity.


About the author

Vahe Tcharkhoutian is the founder and editor of Los Angeles Intelligence. He holds a Master of Arts degree in Political Science [American Politics] and a Master of Arts degree in Educational Administration. He currently teaches in Glendale, California.