Only cataclysm can cure inequality
Wide gaps between the haves and have-nots are as old as civilization itself. Ever since the end of the last Ice Age, every step forward boosted economic inequality — from the spread of farming and property rights to the Industrial Revolution and globalization. By contrast, substantial leveling has been exceedingly rare.
Throughout Europe’s long history, income and wealth disparities narrowed just three times: after the fall of the Roman Empire, when the Black Death struck in the Late Middle Ages, and during and right after the two world wars. In the United States, only the Great Depression and World War II managed to drive down inequality.
All these shocks were painful and often extremely destructive and violent. Severe epidemics killed so many that labor became scarce and workers’ wages rose while great fortunes shrank. The collapse of mighty empires swept away privileged elites. In the 20th century, total war cut deeply into income from capital investments and prompted governments to raise taxes to stratospheric levels and intervene aggressively in the private sector. Once hostilities had ended, these novel arrangements helped create generous welfare states. In less fortunate countries, above all Russia and China, communists nationalized the assets of the rich and imposed a command economy that compressed inequality.
Social activism and peaceful reform have failed to bring about similarly sweeping changes. Democracy cannot guarantee egalitarian outcomes. Education is forever locked into a race against relentless technological change, struggling to keep the less skilled from falling behind. Nor does economic growth solve the problem: Low inequality during the massive economic expansion after 1945 was rooted in wartime innovations from high taxes to powerful unions, not to mention a concurrent lull in globalization.
Meanwhile, inequality in the United States shows no sign of retreat. The Obama years did not make any dent at all in the share of income and wealth enjoyed by the “1 percent.” President Trump’s tax plan, were it implemented, would inflate it even further. However, day-to-day politics should not distract us from deep-seated trends toward rising inequality: globalization that selectively rewards winners, sophisticated automation that polarizes labor markets, growing residential and social segregation by income, the aging of our population.
Throughout history, peace and stability have often benefited the few more than the many. We must surely be grateful that the traditional violent leveling forces are no longer active in the world today, and appear unlikely to return any time soon.
There is no shortage of proposals to bring relief, ranging from progressive tax reform to improved schooling and even basic incomes for all. But are policy-makers and their academic advisers up to the challenge of figuring out how to put them into practice?
We have yet to learn how to carry out effective reforms in an environment that favors inequality in so many different ways. Populism is not the solution. Nor is well-intentioned advocacy that turns a blind eye to the lessons of history.
Walter Scheidel is a historian at Stanford University and author of “The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century.”