More Than Money
Issue #35

Money and Leadership

Table of Contents

“The Leading Edge of Affluence”

From Individual to Collective Decision-Making

Thoughts from Robert Reich 1

The Widening Wealth Gap
We are currently seeing, in the United States and in the world, a widening divergence of wealth, income, and opportunity. Two major forces are driving this gap: globalization and technology. If you are well-educated (with a college degree or above) and well-connected (with social and business networks), globalization is working to your benefit. You are increasingly able to sell your skills and insights, directly or indirectly, into a global market. If you are not highly educated and well-connected, you are probably being undercut by globalization. Companies can hire your labor more cheaply elsewhere.

Globalization doesn't mean there are fewer jobs-just a different allocation of jobs. Increasingly, jobs fall into one of two categories: 1) those that involve creative, problem-solving, symbolic, and analytic work; and 2) those that are routine and monotonous, involving hard labor or personal service work, such as in restaurants, hospitals, and hotels, or in child and elder care. In the second category, pay is going down and benefits are shrinking, while in the first, income and benefits are increasing (when there is not a recession).

Overall, globalization and technological change are generating a larger economic pie for society. This pie can be divided in whatever way we wish, with money being allocated, for example, toward health care, the environment, or education. However, both nationally and globally, these trends are not resulting in greater justice and equality but in concentrations of wealth and poverty. We are a society that is stratifying. Economic inequality is greater in the United States than in 1992 when President Clinton was elected to his first term.

The Ethical Dilemma
The ethical problem of the increasing wealth, income, and opportunity gap lies in our failure-individually and collectively -to develop opportunities and policies that enable everyone in our society to enjoy more of the advantages of a growing economy. We need to create opportunities for more people to use their talents in ways that enable them to live good, full lives. The heart of the dilemma is that, as each of us makes personal, individual choices to secede from the community-none of which are necessarily harmful in themselves-the collective effect is profound and disturbing.

We consider our decisions about job and career and living locations to be personal decisions, not social decisions. We shop where we can get the best deal. We settle where we get the best job offer and find the best schools-public or private. We shop for the best recreational services, the best health services, the best insurance against bad luck. We tend to socialize and marry within our own economic class. As individuals, our choices are rational and understandable, but collectively, these personal decisions exacerbate the wealth, income, and opportunity gap between the haves and have-nots.

When we move into an affluent community, the price we pay for our house is really a disguised coupon for public school tuition. When we who are welleducated and well-connected marry someone who is also educated and socially connected, that multiplies our own economic and social advantage. When we purchase low-rate group health insurance, we are furthering the segmentation of the insurance market into groups-with-risk and groups-withoutrisk. Increasingly, our individual choices create a sorting mechanism that is based on social and economic status.

We go to private health clubs instead of using the public pool. We buy books instead of using the public library. These are part of a downward cycle of publicness, in which society is becoming increasingly segmented by economic class-but we don't focus on the fact that we're participating.

When tax cuts that go mostly to those on top are instituted, how do we respond? The economically privileged are not sufficiently active to ensure that society is not becoming less just.

A Potential Solution
As we who are affluent, well-educated, and well-connected benefit from the trends toward globalization and increased technology, how will we respond? People typically choose one of two responses, either advocating that we preserve and protect the old jobs and old economic ways or that we let the free market take its course.

But there is another course open to us, and that is to embrace change and the larger economic pie that is generated through economic change. We need to use the riches generated by globalization to make our societies more socially just. To do that, we need to translate individual decision-making into collective decision- making.

As individuals, it is much harder for us to generate social change than it is as groups. We can have greater effect when we work as groups-and we're all members of all sorts of groups, through our places of business or worship, our families, and our communities.

What Can You Do?
What can you do, specifically, to make our social and economic system more equitable? Through your place of business or worship, you can develop social connections to people in communities that are fundamentally different from yours. These connections can serve as bridges, helping to overcome social gaps that separate us by class and race. You can run for local office, in your community or on your school board. You can volunteer to work on state and national political campaigns. Perhaps your place of employment has a retirement account; you can get together with others to be sure it is using your money ethically. You can focus some of your charitable contributions on efforts to decrease the system of privilege in society.

Our Ethical Responsibility
As the economic pie grows, the default mechanism is that the great social and economic divide widens, because those with power are the wealthy. I think most people are decent and have ethical principles, but to the extent that any of us are making personal decisions in our lives without considering the collective consequences, we are unwittingly allowing our portion of the economic pie to become larger at the expense of those who do not have the same choices available to them. We need to recognize that our personal decisions are ethical choices that have an impact on our society.

I see three major obstacles to taking responsible, ethical action in this area- and all of them are under our control: 1) Denial: not knowing or accepting the truth about what is happening or why it is happening. 2) Escapism: We may say, "Yes, the gap is getting worse, but it's not my problem. I'm fine and my children and grandchildren are fine." 3) Resignation or cynicism: We may say, "It's not going to change. That's just the way it is." I regard this last as the worst of the three. We must be active and positive about what can be done, or nothing is going to change. If we believe that nothing will change, it won't. If we tell ourselves we don't have power, then we don't have power. Affluent people in the United States have more power per person than almost any group in the entire world.

We can use our increased bounty for greater justice and opportunity for more of our people or we can allow the wealth, income, and opportunity gap to widen. It's our choice. The responsibility, ethically, lies with all of us.

1 From a lecture given at Harvard Divinity School's Theological Opportunities Program, "How Many Privileges Are Rooted in Economics?" October 23, 2003, excerpted and adapted by Pamela Gerloff, with permission from Robert Reich.

Robert Reich, J.D., is the Maurice B. Hexter professor of social and economic policy at Brandeis University. He served as U.S. secretary of labor during President Clinton's first term and as director of the policy planning staff of the Federal Trade Commission under President Carter. Formerly a faculty member at Harvard University's John F. Kennedy School of Government, Mr. Reich is also the founder and national editor of The American Prospect magazine. He is the author of ten books, including The Work of Nations , translated into 22 languages, and I'll Be Short: Essentials for a Decent Working Society . In 1993, Mr. Reich was awarded the prestigious Vaclav Havel Vision Foundation Prize by the former Czech president for his pioneering work in economic and social thought.


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