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Friday, February 19, 2016
Inequality Will Not Go Away On Its Own. Here’s How to Close the Gap.
To ensure a future of shared prosperity, we need to rewrite the rules that protect the wealthiest Americans.
The immediate crisis may have passed, but most Americans still haven’t recovered from the worst economic disaster since the Great Depression. Wealthy Americans, on the other hand, are doing better than ever. In the three years after the recession hit, economist Emmanuel Saez has calculated, the top 1 percent captured an incredible 91 percent of the nation’s income growth.
This latest surge in inequality has not gone unnoticed. In 2011, the Occupy movement’s “We Are the 99 Percent” rallying cry thrust our nation’s great divide onto the center stage of American politics. In 2014, an international best seller from a previously unknown French economist, Thomas Piketty’sCapital in the Twenty-First Century, sounded the alarm about the global plutocracy that will emerge if current trends continue. In 2015, Black Lives Matter activists connected the dots between police crackdowns and the local revenue shortfalls made inevitable by tax cuts for America’s wealthiest.
The climate-justice movement, meanwhile, has highlighted the fact that our dream of unfettered economic growth imperils the very future of humankind on this planet, and that global climate change is hitting the poor and people of color hardest. To save our earth in its current form, we’ll need to start thinking much more seriously about sustainability and equitable distribution.
All of these currents have contributed to inequality’s unprecedented visibility in the 2016 presidential race. Senator Bernie Sanders has made America’s toxic concentration of wealth the centerpiece of his campaign. Hillary Clinton has also acknowledged that inequality is a serious problem. And a solid majority of Americans agree: According to polls, 75 percent support raising the minimum wage, and 68 percent support increasing taxes on people earning more than $1 million. Even 76 percent of our billionaires, aForbessurvey found, regard income inequality as a “serious societal problem.”
Unfortunately, all this rising concern has not yet translated into significant results. To be sure, a number of states and localities have raised the minimum wage. The Obama administration has also granted home-care workers the right to wage protections and expanded the number of workers receiving paid sick leave and overtime pay. The Dodd-Frank financial reforms have taken some modest steps to rein in CEO pay and protect ordinary Americans from reckless Wall Street greed. And there is increasing bipartisan support for addressing the policies of mass incarceration that have widened the racial divide. But the overall trend toward inequality is actually accelerating.
In fact, inequality has kicked into hyperdrive. America’s 400 richest individuals, according to the new “Billionaire Bonanza” report from the Institute for Policy Studies, now have more wealth than the bottom 61 percent of the US population. Our nation’s 20 richestindividuals—a group small enough to fit in a single Gulfstream jet—have more wealth than the bottom half of the entire US population.
These inequalities will not go away on their own. Hereditary wealth will soon dominate us, as Piketty has shown, unless we boldly intervene. But just how should we do it?
§ We need to see inequality as a deep systemic problem.Piecemeal interventions have not helped slow or reverse the pace of wealth concentration. We’ve now hit inequality warp speed. Inequality grew steadily between the 1970s and the early years of the 21st century, with the rules that govern our economy encouraging both wage stagnation and wealth updraft. But since the economic meltdown of 2008, even larger swaths of income and wealth gains have flowed to the top 1 percent.
§ We need to concentrate more on wealth concentration.Most of our national discourse on fighting inequality has involved income inequality. But the even deeper problem involves the maldistribution of our national and global wealth. We need to address both wage and asset inequality.
§ We need to go beyond “good government” reforms.Real democracy can never flourish alongside massive personal and business fortunes. As long as wealthy individuals and giant corporations can buy elections and dictate policy, we will never reverse extreme inequality.
§ We need to recognize the racial wealth divide.The huge racial gap in household net worth reflects a multigenerational legacy of discrimination in asset building—and requires a targeted set of interventions.
§ We need to understand the powerful narratives that justify inequality.Our political culture has internalized the classic justifications for social and economic injustice. Many of those at the bottom believe that they can get ahead—and even get rich—with hard work. Those at the top believe they’ve earned everything on their own. And many Americans see our raging inequality as a situation impossible to change.
§ We need to think globally.America’s über-rich and most profitable corporations think globally all the time. They regularly shift trillions of dollars into offshore tax havens, away from public tracking and taxation. Real change will require global action to track wealth flows and hold the awesomely affluent to account.
§ Most of all, we need game changers.If you’re playing in a game where the rules turn out to be rigged, you need to change the game. Americans of modest means face all sorts of rigged rules. But we’ll never truly change them until we engage and galvanize new hearts and minds. We need campaigns that empower large constituencies to fight for greater equality.
There are plenty of precedents. In the 1930s, the movement that won Social Security inspired millions of seniors across the country to press for federal safeguards against widespread elder poverty. And that successful movement left behind a stakeholder constituency strong enough to defend Social Security from repeal.
More recently, progressive tax advocates in Washington State linked revenue from an estate tax to an education legacy trust fund that finances K–12 and state higher education. Friends of the fortunate tried to repeal that tax with a ballot initiative, but the proposal won by a 62 to 38 percent margin.
As these and other examples make clear, game-changing campaigns can reduce inequality if they:
• Challenge entrenched wealth and power with policies that reduce the share of treasure at the top;
• Democratize power by limiting the influence of money in our political system;
• Expand opportunity and justice for those marginalized by structural racism and sexism;
• Create new narratives that connect redistributive rule changes to larger values and beliefs;
• Cut across single-issue “silos” and address racial justice, democracy, and peace;
• Respect planetary limits; and
• Mobilize movements by engaging constituencies that will fight for such policies and have a stake in their future.
The proposals that follow suggest the sorts of game changers that could begin to reverse runaway inequality. The movement-building groups that will drive the next era have already turned some of these ideas into viable campaigns to ensure a future of shared prosperity.