When the bottom half of the country owns basically none of the country’s wealth, they can’t self-insure themselves against these risks. Instead, they must lead a relatively perilous life in which one misstep or mistake could wreck them and their families.
The reason why Wall Street continues to push the austerity line also has to do with a) class psychology and b) how elite conventional wisdom is shaped.
Think about the days of feudalism. Back then, nobody bothered to justify their position in an egalitarian ethical framework. Instead, there was the “natural” superiority of the aristocracy, which allowed landlords to pillage the peasantry without even a scrap of justification. Concepts like meritocracy or equality were barely even considered; most people simply accepted their place in society.
At the loftiest heights of the income pyramid, American meritocracy is broken, replaced by the shameful self-dealing of the superrich.
All of us recognize the way the breakdown in meritocracy is playing itself out closer to the middle class. In theory, capitalism provides equal opportunities to every individual, allowing him or her to use innate talent and ambition, combined with more than a dash of luck, to achieve economic success. Also in theory, economic failure is supposed to be justly earned, a product of a deficiency of talent, ambition, and luck.
The reality, of course, is very different — and becoming more so with every passing year. We start out our lives profoundly unequal. Some Americans grow up impoverished, attending chaotic, academically worthless schools, and exposed to an enormous range of social and cultural obstacles to achievement both at home and in the local environment. Others, by contrast, receive a world-class education at school, continual emotional and scholastic support at home, access to tutors, test-prep, and even pharmaceuticals to compensate for a range of cognitive and behavioral deficits.
First of all, the “rich” are not a homogeneous minority group. Rich people come from all kinds of ethnic and gender backgrounds, sexual orientations, age groups, and political beliefs. And they are not in any way unrepresented in power. Rich people by definition have access to wealth, and thus political influence. This by definition makes them a political and economic powerhouse. Over half of the people in Congress are millionaires, compared to less than 10 percent of Americans generally.