Wealth Disparity and Social Decline: Perspectives from the Book of Mormon

One of the Book of Mormon’s most distinctive features is its presentation of the “pride cycle” as a type of meta-narrative that describes how societies rise to prosperity through humility and righteousness, become convinced that this prosperity is the result of their own talent, skill, or effort (as opposed to viewing prosperity as a gift from God), then plunging into the depths of social depravity as a result of their unwarranted and un-Godlike pride in their own talent, strength, and ambition.  Rinse and repeat.

The juxtaposition of righteous societies and those ripe for God’s wrath, as presented in the Book of Mormon, could not be more stark.  A common component of both types of societies is the people’s relationship with wealth or “riches.”  Jacob encapsulates this comparison succinctly:

13  And the hand of providence hath smiled upon you most pleasingly, that you have obtained many riches; and because some of you have obtained more abundantly than that of your brethren ye are lifted up in the pride of your hearts, and wear stiff necks and high heads because of the costliness of your apparel, and persecute your brethren because ye suppose that ye are better than they.

Jacob 2:13

On one hand, Jacob uses riches to illustrate that “providence [had] smiled upon [the people] most pleasingly.”  And yet, in the same sentence he condemns those who, because of the providential gift of riches, “[wore] stiff necks and high heads because of the costliness of [their] apparel.”  Jacob also condemns the rich for believing themselves to be better than the less fortunate, or perhaps even those of means but who chose not to wear costly apparel.

Similarly, the Nephites living just prior to Jesus’ advent in 3rd Nephi displayed similar characteristics:

10  But it came to pass in the twenty and ninth year there began to be some disputings among the people; and some were lifted up unto pride and boastings because of their exceedingly great riches, yea, even unto great persecutions; 11  For there were many merchants in the land, and also many lawyers, and many officers. 12  And the people began to be distinguished by ranks, according to their riches and their chances for learning; yea, some were ignorant because of their poverty, and others did receive great learning because of their riches. 13  Some were lifted up in pride, and others were exceedingly humble; some did return railing for railing, while others would receive railing and persecution and all manner of afflictions, and would not turn and revile again, but were humble and penitent before God. 14  And thus there became a great inequality in all the land, insomuch that the church began to be broken up; yea, insomuch that in the thirtieth year the church was broken up in all the land save it were among a few of the Lamanites who were converted unto the true faith; and they would not depart from it, for they were firm, and steadfast, and immovable, willing with all diligence to keep the commandments of the Lord.

3 Nephi 6:10-14

A key element of this passage is the mention of distinct “ranks according to their riches and chances for learning” as well as the explicit reference to “inequality in all the land” that led to the break up and division of both the people and the Church.  It seems that for these Nephites, ranks defined by wealth and education produced  “persecution and all manner of afflictions.”

By contrast, 4th Nephi describes a people who “had all things in common.”

1  And it came to pass that the thirty and fourth year passed away, and also the thirty and fifth, and behold the disciples of Jesus had formed a church of Christ in all the lands round about. And as many as did come unto them, and did truly repent of their sins, were baptized in the name of Jesus; and they did also receive the Holy Ghost. 2  And it came to pass in the thirty and sixth year, the people were all converted unto the Lord, upon all the face of the land, both Nephites and Lamanites, and there were no contentions and disputations among them, and every man did deal justly one with another. 3  And they had all things common among them; therefore there were not rich and poor, bond and free, but they were all made free, and partakers of the heavenly gift.

4 Nephi 1:1-3

Later in 4th Nephi, as the people begin to fall away from godliness, they are described in similar terms as those utilized by Jacob.

42  And it came to pass that the wicked part of the people began again to build up the secret oaths and combinations of Gadianton. 43  And also the people who were called the people of Nephi began to be proud in their hearts, because of their exceeding riches, and become vain like unto their brethren, the Lamanites. 44  And from this time the disciples began to sorrow for the sins of the world.

4 Nephi 1:42-44

These references to wealth disparity in conjunction with societal moral decay deserve serious consideration; especially in light of current economic conditions in the United States and other countries around the world.  Just as in the Book of Mormon, wealth disparity is creating unnecessary and harmful divisions that threaten not only our collective moral sentiments, but also the foundation of representative democracy.

According to the 2012 Credit Suisse Global Wealth Report, average individual wealth (net assets, not income) per adult was $262,351.  Median wealth per adult was $38,786.  One does not need to have studied statistic to know that severe outliers are pulling the mean drastically upward.

The graph below shows the distribution of wealth in the United States in 2007:

U S Distribution of Wealth 2007

 

While the US Gini coefficient has remained relatively constant since the 1940s there has been a drastic consolidation of wealth in the hands of fewer and fewer individuals to a level not seen since before the Great Depression.

2008 Top1percentUSA

A sharp decline in America’s middle class is a direct threat to a healthy and functional representative democracy just as growing poverty poses a serious threat to the middle class.  Political theorists have long known that a strong, large, and vibrant middle class is necessary for a functional democracy (mostly) free of corruption and cronyism.  A strong middle class is tied to many measures of societal health including higher levels of education and lower incidents of crime.  Perhaps most importantly, a large middle class benefits the poor.  “Trickle down” or “voodoo” economics is effective and does provide opportunity for the less fortunate.  But only if the trickle begins with the middle class and flows downward.

A vibrant middle class also perpetuates a healthy economy as more individuals have access to more assets to be invested or put towards other job and opportunity-creating activities.  As the middle class shrinks and great wealth is consolidated in the hands of a few, distinct ranks based on wealth and education (3rd Nephi 6) become increasingly pronounced.   Wealth disparity at the levels we see today is not only extremely unhealthy for our society but it also creates an economic environment that is unsustainable.

The current trend can be reversed.  Politicians will debate tax and monetary policy, as it relates to this issue, endlessly.  But there are things private citizens can do to help create a more healthy and sustainable economic and social environment.

Christians, and especially Mormons, should disavow any notion of the so-called “prosperity gospel.”  This is a pernicious concept that teaches individual righteousness will (not simply can) lead to earthly wealth.  What is especially troubling about this notion is that, much like the rich described in the Book of Mormon, it may cause adherents to look down upon the poor as lesser souls.  Simply put, the prosperity gospel is Social Darwinism at its absolute worst.

J.F. McArthur observes:

The waves of our indulgent, selfish, materialistic society have washed ashore on Christian theology in many forms, including the prosperity gospel. Although the Bible teaches that God is sovereign and man is His servant, the prosperity gospel implies the opposite. Teaching that claims we can demand things of God is spiritual justification for self-indulgence. It perverts prayer and takes the Lord’s name in vain. It is unbiblical, ungodly, and is not directed by the Holy Spirit.[1]

Great wealth disparity is destructive because it is inherently divisive. Righteous societies, as described in the Book of Mormon, are united and recognize the value of each individual regardless of wealth or education – even in the cases where the people may not have had all things in common.[2]  And, while I am extremely skeptical of non-organic and government-enforced communal societies and economic systems, I strongly believe that in the United States, and other industrialized nations, significant progress can be made towards equality of opportunity.

They key is proper interest alignment.  If the interests of the wealthy do not align with the interests of the poor (in a general sense), the poor will suffer.  The same holds true for all segments of society.  Too often we act as if we are playing a zero-sum or one-time game.  In reality, societal interaction – and in particular economic interaction – represents a type of repeated game where in order to be successful it is necessary to both consider and fulfill the needs of our game partner.  To continually pursue action that increases massive wealth disparity there are some who benefit, but they can only benefit for so long.  The wealthy need the poor.  The poor need the wealthy.  And everyone needs a strong middle class.  All are interdependent.

An example of proper interest alignment can be seen in business owners who compensate their employees, at least in part, through profit-sharing of other mechanisms wherein employees gain equity in the firm.  Consider UPS.  In 1995 UPS decided to allow employees to obtain equity in the firm as part of their compensation.  By 1999, 106,000 of UPS’s 126,000 shareholders were employees of the company.  Needless to say, when UPS went public in what is largely considered one of the most successful IPOs in US history, significant wealth was transferred to middle and lower-middle class employees.  Of course, the majority owners of UPS, including descendants of Jim Casey the founder of UPS who in 1907 borrowed $100 to start a shipping company – held a much larger stake in the firm and were compensated accordingly.  What UPS owners understood is that by providing their employees with an opportunity to become owners themselves, the interest in increasing the overall value of the firm would become mutual and therefore, owners and employees could more easily work together towards achieving a common goal.  The result being that both owners and employees obtained wealth together, rather than at the expense of one another.

The Book of Mormon does not condemn the pursuit of wealth, opportunity, or education.  Rather, it condemns the divisions these things often create.  Such divisions are spiritually, socially, economically, and politically untenable and unsustainable.  Latter-day Saints need not eschew the pursuit of wealth.  Rather, they can lead by example in showing how all members of society can work together for the benefit of all.

 


[1] MacArthur, J. F., Jr. (1995). Alone with God. MacArthur Study Series (43). Wheaton, IL: Victor Books.

[2] It is important to note that communal economic systems such as socialism are not necessary pre-conditions for righteous and successful societies. Economic systems, in themselves, are amoral.  Therefore, laying blame for inequality, oppression, and social division on any economic system is to ignore how people within those systems choose to behave.  Capitalism and free enterprise can be powerful tools in raising the standard of living for all members of society.  The same is true of socialism.  In this post I focus on capitalism for two reasons.  First, it is the predominant economic system in the industrialized world – although all modern capitalist systems have adopted elements of socialism.  Second, it is the system with which I am most familiar.  So, while I may personally prefer capitalism, I do not disparage socialism.  In fact, blended economic systems have shown themselves to be effective at meeting disparate social needs.


Comments

Wealth Disparity and Social Decline: Perspectives from the Book of Mormon — 13 Comments

  1. I think it is important that it isn’t simply about economic inequality, but the distinctions that is often caused by it (as you note). Ultimately, if interest alignment took place at the individual levels of society, the distinctions or need for various economics -isms would disappear (much like the -ites did in the BoM).

  2. The study the video is based on is Michael I. Norton, Dan Ariely, “Building a Better America–One Wealth Quintile at a Time,” Perspectives on Psychological Science 6:1 (2011): http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20press.pdf

    Ariely has done some great research on irrational behavior and has collaborated with Norton on things like the “IKEA effect.” Norton has his own impressive array of publications on generosity and the like.

  3. Good article, though any discussion of wealth inequality and spiritual-moral trajectory seems incomplete without an allusion to the likes of Chesterson and Social Justice theory.

  4. Seth, can you recommend a course of action for restoring the middle class? Or is the middle class, once destroyed, impossible to restore through peaceful means? One of my biggest concerns is that with 85% of the wealth in the hands of 20% of people, those 20% will be able to defeat any attempt to rebalance the distribution. Theoretically money shouldn’t = power in a democratic system, and an impoverished majority should be able to vote for initiatives that will benefit themselves and rebalance the distribution of wealth. But the reality is that the wealthy can use their resources to either convince the poor to vote against their own interests or to make sure that no candidate or initiative that would be in the interests of the poor ever gets put up for a vote in the first place.

  5. @Walker

    Thanks so much for commenting. I completely agree and fully agree. And this doesn’t need to be some pie-in-the-sky hope for the absence of selfishness. Individuals need to learn the interests of others and find ways to work in concert in the pursuit.

    @Chris

    Wow. Great questions. I don’t fancy myself a pundit or a policy wonk but I do have some ideas.

    First, I don’t believe that once the middle class is gone that it is gone for good. However, recovering it will be incredibly difficult. Take a look at India. For years India was the exception to the middle class rule. They had a functional democracy even with only two classes — the wealthy and the very poor. Today, you see a growing Indian middle class. A lot of this has to do with US outsourcing but it also has to do with India’s promotion of higher education — especially in engineering and the sciences. I can’t think of any examples of where a middle class was eradicated and then brought back. Plenty of examples of it shrinking and then enlarging but perhaps you are right that eradication of the middle class leads to revolt/violence.

    I think there are a few things the US could do in terms of tax policy to help grow the middle class. Trickle down economics actually works … if the trickle starts in the middle class. The middle class tax burden, in relation to both the rich and poor, is pretty hefty. All of the tax breaks given to high-income or high-net-worth individuals should instead be given to middle class folks to start businesses or enlarge existing business. This reduces unemployment and provides great opportunity for employees (who are likely in the lower class). Tax policy should always be crafted in such a way as to move people from the lower class to the middle and from the middle to the upper.

    I don’t oppose tax cuts for the wealthy as long as those cuts go towards job-creating activities. Getting a $400k tax break and buying corporate bonds or stock in the secondary market can theoretically raise employment and income levels but this investment activity is so many levels removed from any type of real job creation that it simply makes no sense to give the tax break because there is no real benefit. Now, if we get more specific and say that the $400k tax break only exists if that $400k is used in direct job and income creation (opening a new business, expanding stores or adding new locations etc..), then we are getting somewhere. Again, this is why I say trickle down works if the trickle starts in the middle class. Middle class people are more likely to use funds to increase their own wealth by engaging in job creating activities. What incentive do the ultra-wealthy have to do that? $400k is a fortune to a middle class business owner. It is lunch for Warren Buffet.

    Middle class earners make just enough to be ineligible for Federal grants but not enough to afford college tuition (without huge loans). Add to that the fact that the tax deduction for student loan interest goes away once an middle class hits a certain income. Neither of these policies promote education within the middle class.

    We also have to end crony capitalism. It has happened in both D and R administrations and it is a complete affront to market dynamics. Whether it is Halliburton, oil companies, Google, or GE — it has to stop. These firms *must* compete in an open and fair market. For the government to give them a significant tax advantage by essentially eliminating the “expense” of corporate tax is not just market disruption, it is market destruction.

    I think we also need to reduce the corporate tax rate across the board as it is one of the highest in the industrialized world. If we want companies to come here and create lower and middle class jobs we have to give them an incentive to do so. Many European countries have learned the trick. You tax corporations less but increase either a consumption tax (sales tax) or personal income tax rates. As it stands the US is double-dipping. It taxes corporations at 35% and then taxes employee income in addition — sometimes at rates above 35%. A lower corporate rate would bring more jobs to the US and increase wages pushing people into the middle class.

    I share your concern about the influence of the wealthy on US politics. Ultimately, however, people vote. Corporations and super PACs don’t. Look at the last election. Romney’s super PAC raised and spent an unheard of amount of money. But Obama won. Why? Because he got out the vote. Not because he outspent Romney. Another example is from a few years ago when President Bush was pushing for a path to citizenship for illegal immigrants. I supported the plan. Business supported the plan. Everyone supported the plan except the far-right build-a-fence-first folks. These folks organized, lobbied, and played smart politics. Unfortunately they eventually won out and so here we are again, some 5-6 years later, debating the same issue. So I guess what I’m saying is that folks concerned about enlarging the middle class need to organize politically. We have been far too polite.

    I’m cautiously hopeful.

    Seth

  6. “I can’t think of any examples of where a middle class was eradicated and then brought back.”

    The Soviet Union.

  7. Allen,

    What time period are you speaking of?

    Was there a Russian middle class before Bolshevism? I thought it was mostly an agrarian society prior to the revolution.

    I suppose you could argue that members of the Party constituted a soviet middle class of sorts.

    Seth

  8. One could argue that “the poor will always be with you” if we take the U.S. Census Bureau’s approach to measuring poverty:

    “The current poverty thresholds do not adjust for rising levels and standards of living that have occurred since 1965. The official thresholds were approximately equal to half of median income in 1963-64. By 1992, one half median income had increased to more than 120 percent of the official threshold.” (pg. 1)

    Due to rising standards of living, poverty must become relative to the surrounding standards:

    “Adjustments to thresholds should be made over time to reflect real change in expenditures on this basic bundle of goods at the 33rd percentile of the expenditure distribution.” (pg. 2)

    See: http://www.census.gov/prod/2011pubs/p60-241.pdf

    This is actually great news that so much progress has been made that we have to start taking relative measures. The bad news is that these relative measures distort our perception.

  9. “What time period are you speaking of?”

    There was a middle class in late Tsarist Russia. In fact, many of those targeted by dekulakization fall under such a rubric, at least in its rural form. They were the more affluent farmers and landholders (though who was a kulak was entirely subjective and even relatively poor peasents might have ound themselves classed as such if they crossed the wrong people), and they had their urban equivalents in the lower-level nobility, ecclesiastics, civil servants, doctors, academics, and merchants. My wife’s great-grandparents were part of that vanished middle class (and were next-door neighbours of Chekhov), and as such, were dispossesed and sent into exile. Various attempts (such as NEP, and later in the thirties) were made to recreate the middle class, but these were curtailed by the war. It wasn’t until the Khruschev and Brezhnev years that a middle class reemerged, though it too fell apart in the 90s.

  10. Allen,

    Thanks so much for that information. Very interesting and something I need to read more about. A bit unique to have a middle class in an agrarian society (mostly) pre-industrialization.

    From what you describe it sounds like the revolutionaries may have known that the middle class would pose problems for heavy-handed government actions so it is interesting that it was brought back under Khrusschev and Brezhnev.

    Seth

  11. Thanks for the response, Seth. I agree that education, middle-class tax breaks, and incentives for small-businesses are some of the best things we could do. I also really liked your last line about how we’ve been too polite.

    I’m less sanguine than you are, though, about Obama’s victory having represented a triumph of lower-class manpower against Money. That’s certainly the Obama narrative, but it doesn’t seem to be an entirely honest one. Obama actually raised more money than Romney, and he spent only slightly less than Romney did. The recent fiscal cliff deal was packed with corporate pork and handouts, and the Obama administration reportedly insisted that these be in the bill. Obama does seem more inclined to help the middle-class than Romney, but that’s not saying much. I’m also concerned that the presidential race has become such a circus that no one in the middle or lower classes pays attention to the Congressional races anymore, thus making it incredibly easy for Congress to be co-opted. Even if we could get a real champion of the middle class as our executive, there’s not much he could do with a corporate Congress blocking his every move.

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