By Jim Miller
While most of us were busy watching the Trump administration and their crack team of “populist” millionaires light the world on fire, a new study released by Thomas Piketty, Facundo Alvaredo, Lucas Chancel, and Emmanuel Saez underlined the fact that the steep costs of our historic level of economic inequality are being borne by those at the bottom of the economic system, particularly here in the United States. As the Market Watch story on this new research outlined:
In the U.S., between 1978 and 2015, the income share of the bottom 50% fell to 12% from 20%. Total real income for that group fell 1% during that time period.
That’s not the case elsewhere. In China — where there also has been a marked rise in income inequality — the bottom 50% saw their income go up by 401%, not surprising given the industrialization the world’s second-largest economy has seen. Even in developed France, however, the bottom 50% saw their income grow, by 39%.
On his blog, Piketty explains what this means for individuals more concretely: “the average annual income of the bottom 50% has stagnated at about 16,000 dollars per adult (expressed in constant dollars 2015), while the average income of the top 1% rose from 27 times to 81 times this amount, that is from a little over 400,000 dollars in 1980 to over 1.3 million dollars in 2014.”
If you were wondering why the U.S. numbers are worse than those in other countries, in the introduction to the study itself, the authors observe of rising inequality globally that “the magnitude of the increase varies substantially, thereby suggesting that different country-specific policies and institutions matter considerably.”
Thus, it is clear that decades of neoliberal economic policy in the United States carried out by a bipartisan elite have either done nothing to stop or, worse still, helped intensify the collapse of working peoples’ incomes while significantly aiding the cause of the rich.
What is to be done? The Market Watch story notes:
[The researchers] say the findings suggest “policy discussions about rising global inequality should focus on how to equalize the distribution of primary assets, including human capital, financial capital, and bargaining power, rather than merely discussing the ex-post redistribution through taxes and transfers.” They also call for policies to improve education and access to skills, reform labor-market institutions including the minimum wage and worker bargaining power, and “steeply progressive” taxation.
Unfortunately, with the new wrecking crew in Washington, D.C., clearly not only will these recommendations not be heeded but we will be racing in the wrong direction much faster as we await big tax cuts for the very rich and corporations, the decimation of collective bargaining rights, a full-scale assault on public education, and a Labor Secretary that will do anything he can to halt the recent progress made by the Fight for $15 and gut workplace regulations.
Neither the know-nothings in the White House nor the libertarian right wingers in Congress care about economic research. They have an unquestioned faith in the gospel of the unrestrained “free market” where largesse for the rich is welcomed while limits on their economic power are shunned as an assault on “freedom.” Driven by either naked greed or some perverse notion of “God’s plan,” the ideological rigidity of the current hegemony is not likely to change anytime soon.
What this means for the rest of us is that we can count on the kind of policy that will lead to the continued growth of deep economic inequality and all the social costs that come with it. The wall won’t stop it nor will tax cuts, trade war, or deregulation.
Just as denying climate change doesn’t change physics, believing that helping the rich will help the poor doesn’t make it true. And for that matter, neither has decades of Democratic policy that suggested that the only thing that could help address inequality was corporate education reform. That too needs to end.
Yes, we need to fight the right, but if the Democrats do so by offering up recycled neoliberal policy that’s “not as bad as Trump” we’ll never rethink our current economic course and, like the Titanic, our collective journey won’t end well. Visionless policy on the Democratic side is what made it possible for Trump’s bogus “forgotten man” rhetoric to take hold. Progressives have to offer something better, bigger, and bolder that can refocus millions of peoples’ anger at their economic distress.
Offering a starkly alternative vision from the wilderness would be a good way to begin building the future. What we need in this country is a new New Deal that rejects the failed policies that have dug the hole we’re presently in and offers up real solutions rather than telling folks that “America is already great.”
It’s not and we have the numbers to prove it.