“Too Much Capital In Too Few Hands”: Populist Backlash Will Keep Increasing As Inequality Continues To Rise
Listen to a typical center-left Democrat, and you’ll hear rosy things about the economy. GDP growth is solid, unemployment is low, and even wages are starting to rise. The Clinton campaign and the Democratic Party generally will be touting these achievements even as they focus on issues of structural racism and sexism while offering government support in areas like childcare.
But there’s a big problem: overall, inequality is still rising at an astonishing rate to unprecedented levels:
Financial inequality became even wider in the United States last year, with average income for the top 1% of households surging 7.7% to $1.36 million.
Income for the richest sliver rose twice as fast as it did for the remaining 99% of households, according to an updated analysis of tax data by Emmanuel Saez, an economics professor at the University of California, Berkeley.
It’s true that the 99% is doing better than it has since the 1990s, but the gains are relatively modest. Furthermore, basic cost of living has gone way up, particularly in the areas of tuition and housing. Housing in particular is a major problem driven by inequality itself: with accumulation of capital comes the need for places to store it, and real estate is a popular piggybank for wealthy investors. This in turn drives up the cost of housing, making it more difficult to afford housing in the urban areas where most jobs are located.
The bigger problem is that America already tried the 1990s approach to prosperity, assuming that rising inequality isn’t a problem as long as everyone is doing OK. What does it matter if the rich are getting much much richer, if the fortunes of the poor and the middle class are also improving even if at a slower rate?
The answer is that it’s unsustainable in both the short and long term. Over the long term high rates of inequality shrink the middle class and increase political instability. In the short term, too much capital in too few hands leads to speculative bubbles, that in turn lead to big recessions. Recessions tend to wipe out the wealth of the middle class in a much more devastating way than that of the wealthy who have more ways to protect their money. More importantly, the wealthy recover their position much more quickly as asset values balloon back, but the jobs that sustain the middle class and the poor return more slowly–often at permanently lower wage levels when adjusted for inflation.
Automation and globalization are likely to inexorably drive the trend toward rampant inequality, exacerbated by tax policy designed to protect the wealthy and overgrown financial sector. Merely tackling structural racist and sexist inequalities will do good in their own ways for women and minorities, but they will do little to address the overall problem. Targeted government programs to help citizens with childcare and other needs will help somewhat but won’t do much to fix what’s fundamentally wrong.
Only much more aggressive policies that give workers a greater say in how companies are run to “pre-distribute” wealth, as well as much more progressive graduated tax policies that distribute uneven gains more equitably, will ultimately tilt the balance back toward the middle class where it belongs. Until then, expect to see increasingly virulent strains of populist backlash from both the right and the left until something changes. Incrementalism may be all that is possible politically, but it’s not an answer for the problems that beset us and give rise to anxious backlash. As long as inequality rises, Donald Trump, Brexit and ISIS will be just the beginning of the world’s back-to-basics nativist woes.
People don’t just want the 99% to do better. As the 1% continues to outpace everyone else, a great many people in America and the world actively want the 1% to do worse. And it’s hard to blame them for that sentiment.
By: David Atkins, Political Animal Blog, The Washington Monthly, July 4, 2016
“The Politics Of Greed”: It Is Really Important That We Get This One Right
In his op-ed titled Here’s What We Want, Bernie Sanders wrote this:
What do we want? We want an economy that is not based on uncontrollable greed, monopolistic practices and illegal behavior.
Throughout the primary, Sanders has talked about the need to eliminate greed — especially the kind exhibited by Wall Street. That is a sentiment that is embraced by all liberals — especially in an era when the presumptive Republican presidential nominee espouses exactly the opposite.
But the question becomes: what is the role of politics (or government) when it comes to eliminating greed? It is the same question we would ask Christian conservatives who want to eliminate what they consider to be sexual immorality. And frankly, it is similar to questions about how we eliminate things like racism, sexism and homophobia. These are questions about the overlap of politics and morality with which we all must grapple.
At one point during the primary, Hillary Clinton was challenged by members of the Black Lives Matter movement. She said something that goes to the heart of this question.
Look, I don’t believe you change hearts. I believe you change laws, you change allocation of resources, you change the way systems operate. You’re not gonna change every heart. You’re not. But at the end of the day, we can do a whole lot to change some hearts and change some systems and create more opportunities for people who deserve to have them to live up to their own God-given potential: to live safely without fear of violence in their own communities, to have a decent school, to have a decent house, to have a decent future.
It is really important that we get this one right. Just as we don’t want a government that tells us who we can/can’t have sex with, we need to realize that we can’t have a government that calibrates how greedy one is allowed to be. I don’t think that is what Sanders was suggesting. He went on to say this:
We want an economy that protects the human needs and dignity of all people — children, the elderly, the sick, working people and the poor. We want an economic and political system that works for all of us, not one in which almost all new wealth and power rests with a handful of billionaire families.
That echoes what Clinton said about racism. What we want from government is a focus on lifting up those who are affected by things like greed and racism — in other words, to level the playing field.
Personally, I believe that greed — like racism and sexism — are learned. Short of informational campaigns that attempt to educate the public, we can’t legislate a change of hearts. What we CAN do is create laws that legislate against the abuses that stem from greed — like fraud and the monopolization of our economy — just as we created laws to combat segregation and discrimination. Otherwise, it is up to movements like Moral Mondays to organize people around their shared values.
By: Nancy Letourneau, Political Animal Blog, The Washington Monthly, June 24, 2016
“The Slow Pace Of Change In America”: Bravo To Tubman, But U.S. Women Still Not Getting The Full $20
My apologies upfront to those cheering the announcement that Harriet Tubman will grace the front of the $20 bill, and that a few other women will eventually get similar treatment on other currency, but the announcement Wednesday by U.S. Treasury Secretary Jacob J. Lew merely underscores the slow pace of change in America.
The addition of the women — Tubman and other suffragists and civil rights heroines to the $10 and $5 bills — is a positive step. But it won’t count for much, not in most women’s wallets.
According to a report released in April by the Joint Economic Committee (JEC), based on median annual earnings, a woman, working full time, year-round, will lose nearly $500,000 over a career, due to gender pay gaps.
That’s $10,800 less per year than a man.
Pay gaps like this aren’t going to be fixed easily, and certainly not by stamping a few women’s faces on a U.S. sawbuck. And, at the current rate of change, cites the Institute for Women’s Policy Research, the gender pay gap will not close until 2059.
As a result of this inequity, women have less money in retirement, have less to reinvest into the economy and are more likely to live in poverty in old age. The economy in general loses by shorting women’s paychecks, whether we’re talking about Jennifer Lawrence not making as much as Bradley Cooper or the produce manager at your local supermarket who just found out the male butcher makes more.
The gaps are real and repeated studies show that they cannot all be explained away by career choice, level of education, women not being assertive in salary negotiations or by choosing to take time away from a career to raise a family.
Something else is to blame and its name is sexism.
Shuffling Andrew Jackson — a slave owner — to the back of the $20 bill so that Harriet Tubman — a former slave and abolitionist — can take center stage is worthy of note. It’s a monumental example of how far our history has progressed, a genial nod toward inclusion rather than exclusion.
And it only took the federal government 100 years to get there.
But more is needed. Substantive change must be made. The pay gap must close.
No woman in America is going to suddenly earn a fairer wage because Tubman’s face is on our money. Women don’t covet their dollars for the artwork on the front. They simply want to be paid fairly for the work they do.
Bravo to the federal government for acknowledging Tubman, but let’s not lose sight of the goals envisioned by all those women who will come after her (estimates are that it will take until 2030 before (all three of the) new bills are circulating). If the country is serious about righting longstanding inequities surrounding gender and commerce, let’s cut the symbolism and have a deeper discussion. Here are some ideas:
According to the JEC study, African-American women earn only 60 percent of what their white male counterparts earn and Hispanic women earn only 55 percent of white men’s earnings.
Put that on a $10 bill. Or how about putting Phillis Wheatley’s image on a bill worth only 60 percent of the one handed out with Oliver Wendell Holmes’ face on it? It’s not an idea that is likely to catch on. Best just close the pay gap.
The women who will one day have their image on U.S. currency — Susan B. Anthony, Elizabeth Cady Stanton, Alice Paul — spent their lives working for women’s equality.
Let’s not short-change their legacies now by easing up long before the job is done.
By: Mary Sanchez, Opinion-Page Columnist for The Kansas City Star; The National Memo, April 22, 2016
“The Way We Never Were”: Decades On, Advocates Of ‘Family Values’ Still Miss The Point
A quarter-century ago, amid a political environment obsessed with the decline of “family values,” a book was published that methodically blew holes in the myth-making at the heart of this outlook.
The title summed it up: “The Way We Never Were: American Families and the Nostalgia Trap.” Stephanie Coontz’s 1992 book was a work of first-rate history, and it undermined a slew of common misperceptions of family life in America, but it was also a plea to take off the rose-colored glasses that cause us to get so many political issues wrong.
Fittingly, Coontz’s publisher, Basic Books, has released a revised edition just as the moralizing we’ve come to expect from presidential campaigns kicks into overdrive.
You’ll recognize the common conceits: that families must have two parents at all cost; that some people thrive while others fail based on their self-reliance; that private enterprise is the sole engine of economic growth.
Coontz, a professor at Evergreen State College in Washington, is research director at the Council on Contemporary Families, which highlights her work and that of similar scholars. It’s always enlightening.
Here’s the problem she consistently highlights, one that is endemic to politics: Twist the past and base current public policy on these misperceptions, and you will end up with a destructive effort that exacerbates the problems of inequality.
You can’t make America great “again,” a la Donald Trump, if you are clueless to what work life really looked like for most of the 20th century.
You can’t restore traditional family values, a la Ted Cruz, if you start with an interpretation of family that never existed in America.
And you certainly won’t resonate as a ceiling crasher for women, a la Hillary Clinton, if you continue to encourage policies and business structures that promote inequality between men and women and high- and low-wage workers.
Yet it is from this stewpot of historical illiteracy that many politicians ladle out their rhetoric, and voters gobble it up.
When the book was first published in the 1990s, experts of the day were wringing their hands over a range of issues: increasing rates of out-of-wedlock childbirth, numbers of single mothers, women in the workforce and welfare dependency. So many of the studies seemed to focus on women and the imagined threats from their changing roles in society — especially the threats they posed to children.
Yet what Coontz discovered back then would still be news to many: “I found that the male breadwinner family of the 1950s was a very recent, short-lived invention and that during its heyday, rates of poverty, child abuse, marital unhappiness and domestic violence were actually higher than in the more diverse 1990s.”
Here’s another tidbit: Almost a quarter of 1950s brides were pregnant on their wedding day. Keep that in mind the next time you hear a politician alluding mistily to the chaste and virtuous past.
So often we hear that unwed motherhood is a primary cause of poverty and economic insecurity. But Coontz cites current studies showing that income inequality is four times more important than family structure in explaining the growth in poverty.
Getting the story on poverty right is hugely important. It would force any honest politician to focus on things more likely to affect families: quality educational opportunities, access to childcare and family leave policies.
And those advantages are where America, in comparison to other industrialized countries, has really fallen down in recent decades.
Finally, there is what Coontz terms the myth of self-reliance. This one trips up Republicans and Democrats alike. It starts with a revisionist understanding of the role government has long played in aiding businesses, mortgage holders, farmers and college students, as well as the poor in various benefit and tax-credit programs.
Yet only some people are singled out as “takers”: minorities, single mothers and the like. The point is to make slashing their benefits seem like an act of fairness. After all, it is reasoned, it’s important to make people self-sufficient as well to balance state budgets.
“Legislators remain wedded to the historically disproven notion that subsidies to banks and corporations create jobs while subsidies to families create only laziness,” Coontz writes. The data say otherwise.
Remember that the next time a politician starts talking about his family’s humble beginnings and claims “we always stood on our own two feet.”
Media, it must be said, often echo these false narratives — perhaps because it’s so easy. What Coontz’s invaluable research shows us, though, is that to help families we must first understand them. Many of our politicians aren’t really trying.
By: Mary Sanchez, Opinion-page Columnist for The Kansas City Star; The National Memo, April 8, 2016
“Sanders’s Story Provides A Comforting Fable”: What Bernie Sanders Doesn’t Understand About American Politics
At the recent Democratic town hall, moderator Chris Cuomo presented Bernie Sanders with what has been a common complaint about his presidential campaign: Sanders’s relentless focus on income inequality, in this campaign and through his career, raises the question of whether he is prepared to address the full spectrum of issues faced by a president. But there is a deeper problem with Sanders’s vision of American politics. It is not just that he has trouble talking about issues other than the redistribution of income; it’s that he has trouble conceptualizing those issues in any other terms. His rigidly economistic frame of mind prevents Sanders from seeing the world as it is.
The phrase Sanders invokes constantly, and which distinguishes him from Hillary Clinton and other Democrats not merely in degree but also in kind, is “political revolution.” The political revolution is the secret sauce. When presented with any concrete obstacles that would stand between him and his desired policy outcomes, Sanders brings up the revolution, which will transform the world he inhabits into the one he desires. One questioner at the town hall asked how Sanders proposes to pass his left-wing economic program, given “the likelihood that Republicans will win control over at least one house of Congress.” This poses a massive obstacle, given the twin facts of a map that requires Democrats to win Republican-leaning districts in order to gain a majority and polarization so deep that almost all voters now choose the same party up and down the ballot. How to get around these obstacles? Sanders again brought up (this time, without using the term) the revolution:
In my view, you have a Congress today that is much more worried about protecting the interest of the wealthy and the powerful and making sure they get campaign contributions from the wealthy and the powerful.
If we are serious about rebuilding the American middle class, if we are serious about providing paid family and medical leave to all of our people, if we are serious about ending the disgrace of having so many of our children live in poverty, the real way to do it is to have millions of Americans finally stand up and say, enough is enough, for people to get engaged in the political process, to finally demand that Washington represent all of us, not just a handful of very wealthy people.
Note that Sanders, asked about Republican opposition to his proposals, defined that opposition as “protecting the interest of the wealthy and the powerful.” It is certainly true that fealty to the interests of the rich heavily colors Republican policy. But Sanders is not merely presenting corruption as one factor. It is the entirety of it. Likewise, Sanders has difficulty imagining any reason other than corruption to explain disagreements by fellow Democrats, which he relentlessly attributes to the nefarious influence of corporate wealth. One does not have to dismiss the political power of massed wealth to acknowledge that other things influence the conclusions drawn by Americans who don’t share Sanders’s full diagnosis.
In reality, people have organic reasons to vote Republican. Some of them care more about social issues or foreign policy than economics. Sanders would embrace many concepts — “socialism,” big government in the abstract, and middle-class tax increases — that register badly with the public. People are very reluctant to give up their health insurance, even if it is true that Sanders could give them something better.
What’s more, the interests of the wealthy do not cut as cleanly as Sanders indicates. It’s true that business and the rich tend to oppose parts of his program like higher taxes on the rich, more generous social insurance, and tougher regulation of finance. But the Obama administration’s stimulus encountered intense Republican opposition even though it did not pose a threat to any business interests. The U.S. Chamber of Commerce even endorsed the stimulus, which profited business both directly (by pumping billions into contracts for projects like infrastructure) and indirectly (by goosing public demand for its members’ products). That did not stop 100 percent of House Republicans from opposing it. Nor did the unified opposition of the business lobby dissuade Republicans from holding the debt ceiling hostage in 2011, or persuade them to pass immigration reform in 2013. Sanders currently proposes a massive infrastructure program, which would make lots of money for the construction industry. Clearly, subservience to big business only goes so far in explaining Republican behavior.
The depiction of conservatism as a mere cover for greed is a habit Sanders indulges over and over. Donald Trump’s appeal, in Sanders’s telling, has nothing to do with xenophobia or nationalism: “They’re angry because they’re working longer hours for lower wages, they’re angry because their jobs have left this country and gone to China or other low-wage countries, they’re angry because they can’t afford to send their kids to college so they can’t retire with dignity.” Sanders does not explain why this economic security has manifested itself almost entirely among white voters when minorities are suffering the same conditions. He simply assumes Trump has converted economic frustration into a series of pseudo-concerns, and rather than deal with those beliefs, Sanders proposes instead to convert them back into their original form: “I think for his working-class and middle-class supporters, I think we can make the case that if we really want to address the issues that people are concerned about … we need policies that bring us together that take on the greed of Wall Street, the greed of corporate America, and create a middle class that works for all of us rather than an economy that works just for a few.”
It is not only Republican voters whose ideas Sanders refuses to grapple with. Here he is in the previous debate explaining Republican climate-science denial: “It is amazing to me, and I think we’ll have agreement on this up here, that we have a major party, called the Republican Party, that is so owned by the fossil-fuel industry and their campaign contributions that they don’t even have the courage, the decency to listen to the scientists.” It is surely true that fossil-fuel contributions have encouraged the spread of climate-science denial. But the doctrine also appeals philosophically to conservatives. It expresses their disdain for liberal elites, and, more important, it justifies opposition to government action. Psychologists and social scientists have poured years of study into identifying the causes of climate-science denial. One does not need to harbor even the slightest whiff of sympathy for climate-science denial to grasp that its causes run deeper than a cash transaction with Big Oil. Figures like George Will and Charles Krauthammer dismiss climate science because it is a way to maintain order within their mental world. Many other conservatives have social or professional reasons to believe, or at least to say, that Will and Krauthammer are serious intellectuals rather than loons spouting transparently preposterous conspiracy theories. There are deep tribal influences at work that cannot be reduced to economic self-interest.
Sanders’s story provides a comforting fable for his party. Not only are Democrats not hemmed in by the Republican hold on Congress, but they don’t even need to do the laborious work of persuading the political center to come to their side. They need only to rise up and break the grip of moneyed interests on the political system.
There are many reasons to doubt Sanders’s promise that he can transform American politics. Perhaps the most fundamental is that he does not actually understand how it works.
By: Jonathan Chait, Daily Intelligencer, New York Magazine, January 27, 2016
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