Transcript: Thom Hartmann & Ron Ross: "Inequality in Perspective". December 14, 2011
Thom Hartmann: Ron Ross is on the line with us. He’s an author, an economist, the author of “The Unbeatable Market." Writes over at the Spectator, Spectator.org, the American Spectator. His most recent piece, “Inequality in Perspective." Ron, welcome to the program.
Ron Ross: Thank you. Glad to be here.
Thom Hartmann: Glad to have you with us. I’m a little baffled by this article where you say, “liberal thinking is all we need to know about life’s fundamental unfairness. The heart and soul of liberalism is economic egalitarianism, making this a policy objective. Liberals never seem to take the effort to analyze or diagnose the sources of what they see as problems. Their concern rarely penetrates the surface. Liberals see income leveling as a cash cow." Do you really believe that stuff?
Ron Ross: Well, I, yes I do. I only write what I believe.
Thom Hartmann: Are you familiar with the research that Richard Wilkinson and Kate Picket have done over the last 30 years in the UK at the Equality Trust? They wrote, they’ve written two books about it, “Why Equality Matters" and “The Spirit Level." Their website is EqualityTrust.org.uk?
Ron Ross: No, I haven’t read those. I’ve read several columns like the one I referred to in the article in Mother Jones and places like that.
Thom Hartmann: Well I’m not talking about Mother Jones, I’m talking about real economists, real epidemiologists. Their actual, their numbers suggest that if, and they’re looking at the OECD countries. And they graph out on a horizontal access income inequality and on a vertical axis a variety of indices, okay?
Ron Ross: Right.
Thom Hartmann: Life expectancy, math and literacy, infant mortality, homicides, imprisonment, teenage births, trust, obesity, mental illness, drug and alcohol addiction, social mobility, sexually transmitted diseases. And what they find, and this, at the bottom of Income Inequality of course are Japan, Sweden, Norway, Finland, the Netherlands, Belgium, Denmark, Switzerland, Germany, Austria and Spain. And then at the top of income inequality is the U.S., and just slightly behind that Portugal, the UK, and New Zealand.
And what they find is that if, just looking at income inequality, if our country, if the United States, was to reach income inequality levels that are seen by most of the European countries like for example Germany, Denmark, Belgium, Finland, Norway, Sweden, the Netherlands, Switzerland, Spain that our murder rate would half, our mental illness would be reduced by 2/3, our obesity rate would half, our imprisonment rate would reduce by 80%, our teen births would reduce by 80%, and our level of trust among people between each other and within society, and this is an interesting thing that I was on Fox yesterday about. 65% of Americans, 64% of Americans now say they don’t trust big government. Our level of trust would increase by 85%.
So, you know, looking at the, just core scientific evidence that unequal societies do poorly and more equal societies do better on these basic standard of life indicators, why would you be in favor of policies that make societies more unequal or against policies that make societies more equal, pretty much regardless of what they are, in the abstract?
Ron Ross: Well, I, to begin with I don’t think that more equality would be the panacea that you’re talking about.
Thom Hartmann: I’m not calling it a panacea, I’m calling it a, reducing murder rates by half is not reducing them by 100%, that’s not panacea.
Ron Ross: You made it sound like, you know, we’d have peace on earth, goodwill to man if we only had equality, more equality. And I’m not against equality, but one of the main lessons of economics, maybe the main lesson of economics, is that life consists of trade-offs. And that there is a price to pay if you just go towards equality without really having a plan or looking at what the cost would be.
Thom Hartmann: Well we had a much more equal society in the United States during the ‘50s, ‘60s, ‘70s, and ‘80s when the top income tax rate was between 74% and 91%. When corporations were paying 35% of the total federal budget, now they’re paying 8% or 9%. We had a much more equal society. And we have actually a Petri dish here in the United States. And this is again, researched on, you can find it at EqualityTrust.org.uk, I encourage you to check it out. This was done in the United States, state by state. And they’re looking at just one index for example. And I can give you, you know, any of these that I gave you the list of before, but let’s just look at education for example.
The lowest income inequality in the United States is Alaska, okay. Alaska has the fewest number of very rich people and the fewest number of very poor people and the highest number of people in the middle in the United States. They also have the lowest number of people dropping out of high school.
The highest income inequality in the United States is Mississippi. Mississippi has more, very, more people who are super rich and more people who are super poor and a smaller middle class than any other state in the United States. And Mississippi also has, while Alaska’s high school drop out rate is 11%, Mississippi’s high school drop out rate is 28%.
And I can give you all the states in between. But when you put them on a scatter graph, you can draw a line right through them. Alaska is the most equal state in the United States followed by Utah at 12%, very low income inequality and only 12% high school drop out. On the other end, below Mississippi is Louisiana, with 25% high school drop out, another very unequal state.
The most unequal states are Louisiana, Mississippi, Alabama, Kentucky, West Virginia, Texas, California, Tennessee, Arkansas, South Carolina, Rhode Island, Georgia and Florida, and they all have high school drop out rates above 20%. The most equal states in the union, where you have the fewest very rich people and the fewest very poor people and the largest middle class, are Alaska, Utah, New Hampshire, Iowa, Wisconsin, Minnesota, Nebraska, Vermont, Wyoming, Montana, Washington State, Maine, Idaho, Delaware and Indiana and they all have high school drop out rates below 15%. So just looking at a simple index like that which is the best predictor of the future of our nation, wouldn’t you say inequality is destroying the future of our country?
Ron Ross: Well, I’m not going to argue that. And I’m not going to argue any of your data there. I think you’re probably, all that’s probably correct. But, so how do you do that? How do you make Mississippi more like Alaska, for example?
Thom Hartmann: Well I would do it by going back to the policies that we had, the ‘50s, ‘60s, ‘70s, and ‘80s, and, you know, raising taxes on the top, and having corporations pay their fair share.
Ron Ross: What would you raise the top rate to?
Thom Hartmann: Anything over 50%. History shows that when the top rate is over 50% you don’t have bubble economies and when it’s below 50% you end up with bubble economies. So I think going back, I’d roll back the Reagan tax cuts, I’d take it back to 74%.
Ron Ross: Well…
Thom Hartmann: And then use that money to build schools in Mississippi.
Ron Ross: When the rates were at 70% and 90% hardly anybody paid that. There were, there were so many loopholes and so many tax shelters that those rates were basically fictitious. And you know the president’s committee on then debt reduction advocated a flat rate of 23%.
Thom Hartmann: But in 1960, the top 1% paid 42% of their average income in taxes. And right now they pay, the top 1% pay 17.6% of their average income in taxes. So I’d say tax rates do matter.
Ron Ross: Okay and so you think…
Thom Hartmann: And I would cut that. But Ron, I’m sorry, we’re out of time. And I didn’t mean to nail you with the last word here, please come back and I’ll give you the last word next time. Ron Ross. Hang on just a second Ron. Dr. Ron Ross, Spectator.org, you can read his work. Ron, thanks for being with us today.
Ron Ross: You’re welcome.
Thom Hartmann: Thank you very much.
Transcribed by Suzanne Roberts, Portland Psychology Clinic.