Book on income equality highlights need for mutuality in advanced economies
In The Vanishing Middle Class: Prejudice and Power in a Dual Economy, author and MIT economist Peter Temin contends that W. Arthur Lewis’ theory of separate and unequal economies, one for the rich and upwardly mobile and another for the rest of society, has become the norm in the U.S. He notes that the trajectory for highly-skilled individuals in finance, technology and electronics is rising rapidly relative to those in the so-called low-wage sector. However, Temin believes the rationale for such a dual economy isn’t just rooted in financial terms alone, but must also be filtered through the lens of race.
Many poorer Americans live in conditions resembling those of a developing country, with lower levels of education, substandard housing and few employment opportunities. Temin points out that although half of African-Americans are poor, the majority of the poor are not people of color. However, a common strain of political rhetoric would have many believe poverty isn’t a “white” problem, Temin says, adding institutional structures in U.S. society are also stacked against non-white populations. Incarceration rates are much higher among African-American and Latino-American populations, removing them as potential generators of incomes, not only during their time behind bars but over their entire lifetimes. One sobering statistic Temin cites is that the sum of all government spending for incarceration ($50 billion) is approaching that for post-secondary education ($75 billion).
Temin suggests remedies for the current situation of diverging economies and a shrinking middle class. It starts, he argues, by providing equitable educational opportunities to those whose socio-economic standing leaves them at a disadvantage. He also advocates for greater investment in public schools and public universities to provide a basis for achieving greater equality.
Others may see alternative solutions to the issue, but the most interesting element from our perspective is Temin’s economic data and analysis that reminds us that the challenge to develop a more mutual economic framework is not limited to the developing world. Mutuality is relevant in the most advanced economies as well.