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Angry Over the 1%? Pursue the Proper Equality.

This is one of the most contentious posts that I have written (originally posted at The Small “r”), and many may read it superficially and jump to incorrect or under-informed conclusions. Nevertheless, this realization does not hinder me from adding to such a vitally important debate in America….

The premise behind the phrase, “…all men are created equal,” was to distinguish the establishment of the United States from the then-common European belief in the divine rights of monarchies. Yet, the ideal of “equality” has caused no small amount of confusion within contemporary debates over the growing inequality in America. The very word “equality” is often used with varying implicit assumptions, a typology for which follows:

A Typology of Equality

Natural Equality – A positive equality addressed in the Declaration of Independence, that all of humanity is bestowed with intrinsic, inalienable and immutable natural rights.

Isonomy – A positive equality addressed by the ideal of equal justice under law.

Social equality – An equality that can be positive or negative, by respectively providing a sense of cohesiveness… or a sense of envy.

Perceived equality – A negative equality that turns natural equality into a materialistic equality.

Determined equality – A negative equality that emerges in response to perceived equality by attempting to force a material equality via distributive justice.

Natural equality: John Locke, in Two Treatises of Government, argued that all humans have the same natural rights, divinely given or naturally imbued if one is atheistic, to both self-ownership and freedom, as long as those rights do not subtract from the natural rights of others (i.e., license). Locke framed these natural rights as intrinsic, inalienable and immutable to a person for if they were otherwise, these rights would be bestowed externally to the person and hence in danger of being revoked by whatever governing body granted them.

Thus, all humankind is created equal in that all possess these same natural rights and that no external governing body or individual has the right to infringe on these rights. These natural rights, “among these are Life, Liberty and the pursuit of Happiness,” (“among these” indicating this is not an exhaustive list, but certainly a foundational one) are allowed to be protected through the U.S. Constitution’s Bill of Rights. In light of natural rights being intrinsic, inalienable and immutable, divinely given or provided by nature, any violation of these rights is especially egregious. Thus, underlying any discussion of small-r republicanism rests this implicit question that energized the political labors of America’s founders:

What adds to, or subtracts from, the dignity of the individual?

This ties in directly to an individual’s natural rights, for these rights define the dignity of the individual.

What some tend to forget is that with natural rights come responsibilities, the primary of which is to respect the natural rights (recognize the dignity) of others. Rights imply restraints upon what an individual may or may not undertake. No person’s natural rights allow him or her to impinge upon the natural rights of others using force, fraud, coercion, theft or infliction of damage to another person or property. Equality, then, requires one to recognize that others also hold the same natural rights and responsibilities. Otherwise, any intrusions upon the natural rights of others clearly violate life, liberty and the pursuit of happiness, and preventing or remediating such violations is the role of law.

This, of course, creates an open-ended line of debate: Does recognizing the natural rights of others dictate the operation of a vehicle or an air conditioner that requires generation by fossil-based fuels, thus infringing upon others’ right to clean air? Or spray chemicals on a lawn or farm field that may enter a ground water table relied upon by others? All of these considerations emanate from “Life,” a core natural right straight from the Declaration of Independence. The arguments, once extended, can be infinite, but they all revolve around protecting the sense of an individual’s dignity.

“Bear in mind this sacred principle, that though the will of the majority is in all cases to prevail, that will, to be rightful, must be reasonable; that the minority possess their equal rights, which equal laws must protect, and to violate would be oppression.” –Thomas Jefferson, First Inaugural Address, 1801.

Isonomy: Isonomy, in ancient Greece, referred to a type of government, in the same way that “republic” or “monarchy” is a type of government. Unlike democracy or monarchy, which implies the presence of a ruler or rulers, an isonomy represented a state with no rulers, in that there were no distinctions set between rulers and the ruled.

Today, isonomy refers to “equality before the law,” “rule of law” or “equal justice under law,” as is inscribed on the pediment of the U.S. Supreme Court building. Equal protection under the law is constitutionally guaranteed in the 14th Amendment of the U.S. Constitution. For example, “The equal protection clause of the Fourteenth Amendment does not take from the State the power to classify in the adoption of police laws, but admits of the exercise of a wide scope of discretion in that regard, and avoids what is done only when it is without any reasonable basis and therefore is purely arbitrary” (220 U.S. 61, 78). In the general case, courts presume the validity of a state statute if there is any rational basis for it, subject to a rational basis test (a recognized legal methodology).

In certain instances, a court can subject a law to strict scrutiny, which assumes the law violates the equal protection clause unless the state has a compelling interest that can only be satisfied by enactment of the law in question. One situation where this has occurred is with a statute that singles out, for special treatment, a class of persons that the court finds suspect classification. This class must be “saddled with such disabilities, or subjected to such a history of purposeful unequal treatment, or relegated to such a position of political powerlessness as to command extraordinary protection from the majoritarian process” (411 U.S. 1, 28).

Ironically, in light of this “strict scrutiny,” it is the 14th Amendment that established the personhood of corporations in the United States; see The Aristocracy of Monied Corporations on Scribd for more details (available for viewing at no charge for a limited time). Yet reason cannot concede “disabilities” or “political powerlessness” to corporations, nor do corporations possess a conscience, a foundational moral and legal definition of an individual.

It must be understood that isonomy is an ideal, but not always realized in fact within the justice system.

Social equality: Alexis de Tocqueville discusses “equality” at length and throughout in his work Democracy in America, but his definitions change, dependent upon the context. In many instances, he defines equality as a lack of social hierarchy, that is, an absence of fixed classes that would be found in an aristocracy, a definition referred to here as “social equality.”

From Tocqueville’s writings, as well as from his contemporaries, we know that social and economic conditions in the American Republic were very incremental, that the differences between the wealthy and the less-than-wealthy were not as great as the differences that exist today. The hierarchy tended to be rather flat. Americans identified with one another, a sense of “we’re all in this together” that blossomed during the American Revolution and the early years of this nation’s founding.

Heading into the mid- to late-19th century, as urban areas enlarged, the sense of community and cohesiveness unraveling, and the American Industrial Revolution taking hold, we start to see the substantive emergence of abject poverty, a permanent class. Likewise, the forces that could provide extreme wealth began to emerge. Positive social equality started to erode as Manifest Destiny and wealth-waiting-to-be-seized replaced temperance, frugality (regardless of actual wealth), and a sense of the sublime devolved into negative social equality, i.e., a rising sense of envy.

Tocqueville saw envy arising in these developments:

“(W)e encounter in the hearts of men a degenerate taste for equality which inspires the weak to bring the strong down to their own level” (Vol. 1, Part 1, Chp. 3).

Envy certainly exists, and Tocqueville possessed the prescience to foresee that future battles amongst socioeconomic classes would be waged over property. But there is also an alternative scenario to consider: The lack of role models upholding and pursuing ideals that motivate others to aspire. Rather, those who should serve as role models readily degrade themselves by infringing on the natural rights of others, by using power and asymmetrical information to obtain underhanded advantage. Once this underhanded advantage is seen as a “necessity” to gain power or material wealth, the negative role model is set and all within a society start to emulate this anti-social behavior. Envy may remain with the disadvantaged, but it’s handed to them on a silver platter.

The ensuing disregard for natural rights debilitates social, political and economic frameworks, but this is not merely a simple case of envy of, or attack on, authority from the bottom up, but authority’s own diminishing ability to muster legitimacy. This provides citizens with a justification to follow their own vices. After all, if political and economic leaders exempt themselves from virtuous behavior, how can virtue be expected from other citizens?

“In proportion, as the powers of governments increase, both its own character, and that of the people become worse… (Such a government) is compelled to multiply punishments for crimes which it causes, and to defend itself against punishment, for having caused the crimes which it punishes.” – John Taylor of Caroline, An Inquiry Into the Principles and Policy of the Government of the United States, 1814, Sec. 6

The lack of effective leadership also arises from political leaders’ obtuseness over what citizens experience in everyday life. Even the educational institutions that are supposed to train individuals for leadership positions have become so removed from the realities of daily life that they can no longer instruct on the metrics that matter.

Perceived equality: Another type of equality implicitly used by Tocqueville relies very much on the individual’s perception, measured in the mind of the beholder. When “equality” is held up as an ideal, citizens perceive the differences largely in terms of materialism, possessions and wealth, not in natural rights, which cannot be measured. Equality, then, becomes linked to materialism, and accumulation of status and wealth substantiates one’s “worth.” Today, this is better known as “keeping up with the Jones” or “Jonesing the neighbors.”

In aristocracies, a citizen’s place in society is largely fixed. In a democracy, Tocqueville observed, citizens are free to find – or lose – their wealth. One might add that this ebb and flow of fortunes becomes particularly fast paced in a society with access to easy credit, which creates a fleeting facade of virtual wealth, a troubling development. While freedom to pursue one’s material prosperity provides opportunity, it also produces anxiety in the individual, fearful of falling behind or losing out on perceived (materialistic) equality.

Those who have live in fear of losing their wealth, and those who have not find themselves in an endless pursuit of wealth. This constant battle to preserve or pursue wealth isolates the individual from his or her fellow citizens (as individuals overstretch their budgets, life gains a singular focus on income and work), and allows perceived equality to be cherished over liberty, over natural rights, over natural equality.

“In despotic states, each household is a separate empire. Therefore, education, which comes mainly from living with others, is quite limited there; it is reduced to putting fear in the heart…” Montesquieu, The Spirit of the Laws, 1748, Part 1, Book 4, Chp. 3, (emphasis added).

Montesquieu understood that learning came primarily from living, from interacting with one’s fellow citizens, from discovering how to work with others despite differences. Liberty requires an effort from the citizen to uphold, to participate in or to challenge the political process to maintain one’s (and others) natural rights.

Tocqueville also feared that perceived equality would trump liberty, on the individual level:

“But while man takes delight in this worthy and legitimate search for prosperity, the fear is that he will finally lose the use of his most sublime faculties and that, in his desire to improve his environment, he may debase himself” Democracy in America, 1835, Vol. 2, Part 2, Chp. 15.

Thus, equality as perceived by a democratic society becomes tangible (via materialism), while liberty, natural rights and natural equality are intangible, and thus less desirable to uphold. This is why Tocqueville observed that “Men… prefer (perceived) equality in a state of slavery to (perceived) inequality in a state of freedom” (Democracy in America, Vol. 1, Part 1, Chp. 3). According to Tocqueville, one can count on the citizen growing indifferent to liberty, natural rights and natural equality.

There is also an alternative reaction to perceived equality: Those who recognize the futility of this materialistic race, but instead of reacting positively by championing liberties and relying on their sovereignty to engage the political system, react negatively with a growing sense of powerlessness and despondency. Here, one can count on the citizen growing indifferent to the political process, trending towards apathy and an overwhelming feeling that some historical determinism is the law of the universe. The citizen, in the stead of engaging the political process, pursues the trivial.

Between aimless materialism on one hand or the surrender to despondency on the other, one effect is common to both: the cynical forfeiture of any and all concern for the future. This neglect for the long-term future can be seen everywhere, from short-term obsessions on quarterly results in business to the lack of savings on the part of individuals to the inability of government to legislate for the long term.

Cynicism also takes another form, questioning everything and anything, since a country’s leadership, management and citizens become bereft of meaningful guidance for the future. As nothing can be determined, all must be surrendered. The individual “puts up a poor defense of his opinions or abandons them,” Tocqueville writes, “and, as he despairs of ever resolving by himself the greatest problems presented by human destiny, he beats a cowardly retreat into not thinking at all. Such a state cannot fail to weaken the soul, strains the forces of the will, and shapes citizens for slavery. Not only do the latter allow their freedom to be taken from them, they often give it up.” (Democracy in America, Vol. 2, Part 1, Chp. 5, emphasis added).

Perceived equality in materialism is often framed as a zero-sum game: if one gains, then another must lose. In reality, this does not hold, for if material equality truly was a zero-sum game, then entities such as capital surplus, savings, warehouses, and a labor surplus could not exist in our society, only absolute scarcity. Therefore, materially speaking there is room for some gain without infringing upon the rights of others. Only at its extreme, absolute scarcity, would a zero-sum game exist, such as in a post peak-oil world. Yet we should remember humankind’s capacity to find solutions to intractable problems, which clearly elevates us above the need to participate in zero-sum games.

Consumption-by-planned-obsolescence is materialism pursued past the basics of food, clothing and shelter. Consumers buy, often as not on credit, goods that become quickly outdated, outdated before the debt incurred is paid off: think off the VCR to DVD to Blu-Ray to 3D arc, or the 2G to 3G to 4G smartphone lineage.

Yet, consumption-by-planned-obsolescence does not ensure contentment. Incomes above the subsistence level do achieve some level of additional happiness by providing opportunities, but by how much? And it must be understood that opportunities should not equate to possessions, but to experiences in life.

So at what point do we reach diminishing returns on our efforts of accumulation versus contentment? It is a very subjective discussion but this can easily overlook the critical point: Debates over perceived equality quickly devolve into a focus on income and wealth, rather than what can be gained by income and wealth. At its best, debates over equality should focus on who we are, rather than on what we own.

Determined equality: Implicit in the American ideal of equality is a meritocracy, wherein citizens are judged solely on their merits. We recognize that merit should not or cannot depend solely on luck, extraordinary natural talents, inherited property, and/or bestowed status. Ideally, equality would be leveled by the rise and fall of generations. Thomas Gordon framed this sentiment most eloquently:

“Nature is a kind and benevolent parent; she constitutes no particular favorites with endowments and privileges above the rest… opportunities that (individuals) find, degrees of power and names of distinction grow amongst them, and their natural equality is lost… Thus nature who is their parent, deals with men. But fortune, who is their nurse, is not so benevolent and impartial; she acts wantonly and capriciously, often cruelly; and counter-plotting justice as well as nature frequently sets the fool above the wise man, and the best below the worst… (T)he most part of the world… confound fortune with nature, and too often ascribe to natural merit and excellency the works of contrivance or chance… Whoever pretends to be naturally superior to other men, claims from nature what she never gave to any man… All the arts and endowments of men to acquire pre-eminence and advantages over one another, are so many proofs and confessions that they have not such pre-eminence and advantages from nature; and all their pomp, titles and wealth, are means and devices to make the world think that they who possess them are superior in merit to those who want them.” – Cato’s Letters, ? 45 (emphasis added).

In the best of meritocratic worlds, we would host a level playing field for all. Yet, there are other issues lurking behind merit, particularly socialization. Little doubt childhood environment and enculturation affect reading and mathematical skills. The very context of impoverished neighborhoods may teach its residents that the surrounding living conditions are beyond their control, thus taking away any sense of dignity or willingness to achieve. Even such issues as the ability to extract certain levels of property tax revenues in a given geographical area influence educational opportunities.

Yet, behind these inequalities lurks a good-intentioned act of government gone awry. The welfare state, in its attempt to rectify inequalities, instead creates massive dependencies on government. Recipients become “indentured voters,” with an implicit contract between politicians and voters that states: “Vote for me and I will provide government-backed ‘equalities’ for you.” Political equalizations develop deep and enduring dependencies; new inequalities emerge and the old ones are maintained. Recipients (and non-recipients) of the largesse are determined, and the recipients’ sense of dignity seriously damaged.

Material gain, if unearned by one’s labors, does not provide the recipient with a sense of achievement or a justification for dignity. Material gain, if unearned by one’s labors, does not provide others a sense of respect towards the recipient. It does, however, create a psychology of dependence. It also creates a disincentive in non-recipients of political largesse to attempt achievement if such distribution of material equality is widespread within a society. Our socialization should include a sense of responsibility, of accepting consequences for our decisions, and the need to achieve without infringing upon the natural rights of others. When such socialization fails, a society fails.

Similar accusations can be directed towards corporate welfare, where profits are privatized and losses are socialized, i.e., covered by the American taxpayer. Again, recipients of governmental largesse are determined, this time on a budgetary scale far larger than those dependent on the social safety net. Such high-level determinancy helps foment class warfare, not to mention creates moral hazard, in the minds of the recipients, towards the future.

At what level, and for what duration, does a society provide – or is even required to provide – such determinations for establishing a materialistic equality? At its most extreme, providing equal opportunity at all costs could lead to an Orwellian nightmare, such as found metaphorically in Animal Farm. In the end, America’s 99% has to take some slice of responsibility for its willingness to transfer trillions of dollars in wealth to America’s 1%. How? With the accumulation of consumer debt.


As Japan pursued a failed policy of propping up its large banks, and just as we have ignored those lessons in our current economic crisis, so, too, are American policymakers ignoring another critical lesson from Japan: It can be found in the lower 80 percentile of household incomes, wherein the last two decades have produced single-digit percentage increases in household incomes, versus triple-digit percentage increases in consumer debt. This trend could not continue indefinitely.

A brief set of tables compares annual U.S. household income to total household indebtedness from 1989 to 2004. The income comparisons between 1989 and 2004 track closely, indicating a tendency towards stagnation at most percentile levels. However, the 2004 debt levels rise precipitously above the 1989 debt levels.

(Tables can be found here.)

Comparing annual household incomes to total household indebtedness on a dollar basis is not particularly meaningful, as any household has more than one year to retire its total indebtedness. What is important are the vast differences between the rate of household income increases versus the rate of total household indebtedness increases, the single-digit versus triple-digit upswings mentioned above.

The U.S. economy was sustained by nothing more than a credit bubble, a mirage that carried us for some 20 years until the American consumer could no longer shoulder additional debt loads. Eventually, in the second half of 2006, American consumers started to close in on the brick wall. That it occurred in the subprime mortgage market is simply identifying the trigger point, and should come as no surprise: Of all types of household indebtedness, mortgage and home-equity loan debt climbed at the highest rates from 1989 to 2004.

In addition, those in the lower income brackets – those that make up the majority of subprime mortgage holders – would have felt first the financial stress of large debt loads. Under these conditions, the subprime mortgage market would be the most vulnerable to any massive deleveraging of consumer debt.

As the lower 80 percentile of household incomes stagnated, this segment substituted meaningful income increases with debt. This stagnating income/increasing indebtedness cycle was akin to fighting off a hangover with more alcohol. The binge could not last forever, but it transfered trillions of dollars upwards, to the 1%.

So do we feel the need to right the wrongs? To level the playing field once again? The answer is simple: Stop or minimize the pursuit of consumption using credit. Just the act of shredding credit cards and closing these accounts would cause banks to crumble. Walk away from material comparisons. Let go of the envy. Stop the Jonesing. There are more important things in life than the latest 60-inch flat-panel TV. In this realm, the 1% cannot touch you.

To what degree society or individuals are responsible for our natural equality, divinely given or naturally bestowed, is above debate for, as previously mentioned, such rights are intrinsic, inalienable and immutable. The equality that emerges due to our natural rights serves to remind us of our common humanity. Our natural equality compels us to recognize the dignity and respect deserved by others.

Without this sense of natural equality, we are not only subhuman, but sub-animal, as animals of the same species do indeed assist each other in their survival within nature. Isolated from others, we fail to appreciate each other’s differences, yet these differences are merely variations within the same species, that is, homo sapiens. In this sense, all wars are civil wars, and all envy is based on perceived equality, not natural equality. It is, therefore, imperative that we pursue the proper equality, ensuring we correct the right wrongs.

“Every history of the creation, and every traditionary account, whether from the lettered or unlettered world, however they may vary in their opinion or belief of certain particulars, all agree in establishing one point, the unity of man, by which I mean that men are all of one degree, and consequently that all men are born equal, and with equal natural right….” – Thomas Paine, Rights of Man (from Part 1, author’s emphases).


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E.L. Beck

E.L. Beck