Huffington Post reports that inequality in the U.S. is at a wider point than it has been since the Great Depression. Does this mean that we’re on the way to a new crash? I hope not. HuffPo points to the popularity of Thomas Piketty as a reason for hope. The problem I see is that too many Americans have been trained to think all taxes are bad. The super-rich and large corporations have used their lawyers and lobbyists to game the tax system. I don’t see any way that will change any time soon. Americans are too easily distracted by “crisis” stories like Ebola and ISIS. Income inequality affects all of us, especially those under 35. Maybe a crash is the only thing that will wake up Americans.
Writing in Daily Kos, Laura Clawson examines the debate over extending unemployment benefits. What she finds is that there was no debate when George W. Bush was president. During a time when the unemployment rate was lower, the House approved 5 extensions, each of which was not paid for. Now House Republicans are insisting that the benefit which workers contributed to be paid for. Wouldn’t it be great if they asked for the same kind of responsibility from large corporations that pay no taxes and still receive government benefits? As Clawson points out, this policy also makes no sense because it takes buying power out of the economy. Of course, that is a common theme when it comes to how the GOP thinks about working people, as we have also seen in the debate over raising the minimum wage.
Do some poor people cheat through programs like unemployment and food stamps? Sure. So do upper income people cheat – legally – through tax dodges and estate planning. The problem is that poor people don’t fund the campaigns of the politicians who make the laws and tax policy. What poor and working class people can do is vote. Hopefully, they will remember and get to the polls.
Check out this short (150 second) video in which former Labor Secretary explains inequality. It could be argued that his explanation is not inclusive, but it helps us see where too much of our money is going. The video shows how job loss is connected to corporate schemes to make more money for investors. It is worth your time.
A report in Common Dreams examines a survey of economists about the impact of inequality in the U.S. Economists across all political ideologies agree that pushing money to the top earners limits the ability of those in the middle and working class to spend. The report cites Paul Krugman, who writes: “On average, Americans remain a lot poorer today than they were before the economic crisis. For the bottom 90 percent of families, this impoverishment reflects both a shrinking economic pie and a declining share of that pie.”
Economists agree that inequality is a problem. Too many politicians, however, fear the charge of “class warfare” and ignore this problem. They are also ignoring that wealth has been redistributed for the last three decades. It has been taken from the many and given to the few. This issue should concern everyone who works for a living.
Former Labor Secretary Robert Reich is a great economist. That said, I hope his latest column misses the mark. Reich says the American economy has “stalled.” He attributes the problem to cutbacks in government spending, which we have also seen in several European countries. Then Reich digs deeper: “But widening inequality is the underlying culprit here. As long as almost all the gains from economic growth continue to go to the top, the vast middle class doesn’t have the purchasing power to boost the economy on its own.” This argument makes sense. Still, I hope he’s missing something.