Later On

A blog written for those whose interests more or less match mine.

What grotesque economic inequality is doing to the country

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I alluded to George Packer’s analysis of what’s going on in the GOP in an earlier post. Take a look at this passage from his article:

In 2012, Wehner co-authored an essay in National Affairs, titled “How to Think About Inequality.” He concludes:

The problem in America today is therefore not wealth but rather persistent poverty. And the right way to deal with income inequality is not by punishing the rich, but by doing more to help the poor become richer, chiefly by increasing their social capital. This means not simply strengthening the bonds of trust and mutual respect among citizens, but also equipping Americans—especially the poor—with the skills, values, and habits that will allow them to succeed.

In other words, the way to think about inequality is by looking down, not up. It’s not the wealth amassed at the top but, rather, the lack of “skills, values, and habits” at the bottom that accounts for the widening income gap. Oddly, Wehner’s essay barely mentions the economic struggles of the middle class. A close look at the three middle quintiles of income, where Americans with an education, a job, and a spouse can be found treading water or sinking, would have forced him to reconsider the notion that a lack of “social capital”—as opposed to just capital—explains the entire problem.

Even though the reformocons recognize the difficulties of the middle class, they prefer to focus not on income disparities but on “mobility,” which describes how individuals fare across their own life span and in comparison with past generations. Levin told me that the word “growth”—the unconvincing mantra of supply-siders—was losing its hold on conservatives. When Jeb Bush predicted that his economic policies would lead to four-per-cent economic growth, a level not seen since the late nineties, the claim was either ignored or derided. “ ‘Mobility’ is much healthier,” Levin said. “It’s the right lens to talk about the economy.”

But there’s a reason to look up as well as down the economic ladder, and it has nothing to do with envy or with punishing the rich. Economic stratification, and the rise of a super-wealthy class, threatens our democracy. Americans are growing increasingly separated from one another along lines of class, in every aspect of life: where they’re born and grow up, where they go to school, what they eat, how they travel, whom they marry, what their children do, how long they live, how they die. What kind of “national community” built on “mutual obligation” is possible when Americans have so little shared experience? The Princeton economist Alan Krueger has demonstrated that societies with higher levels of income inequality are societies with lower levels of social mobility. As America has grown less economically equal, a citizen’s ability to move upward has fallen behind that of citizens in other Western democracies. We are no longer the country where anyone can become anything.

Inequality saps the economy by draining the buying power of Americans whose incomes have stagnated, forcing them to rely on debt to fund education, housing, and health care. At the top, it creates deep pools of wealth that have nowhere productive to go, leading to asset bubbles in capital markets bearing little or no relation to the health of the over-all economy. (Critics call this the “financialization” of the economy.) These fallouts from inequality were among the causes of the Great Recession.

Inequality is also warping America’s political system. Greatly concentrated wealth leads to outsized political power in the hands of the few—even in a democracy with free and fair elections—which pushes government to create rules that favor the rich. It’s no accident that we’re in the era of Citizens United. Such rulings give ordinary Americans the strong suspicion that the game is rigged. Democratic institutions no longer feel legitimate when they continue to produce blatantly unfair outcomes; it’s one of those insights that only an élite could miss. And it’s backed up by evidence as well as by common sense. Last year, two political scientists found that, in recent times, policy ideas have rarely been adopted by the U.S. government unless they’re favored by corporations and the wealthy—even when those ideas are supported by most Americans. The persistence of the highly unpopular carried-interest loophole for hedge-fund managers is simply the most unseemly example.

The reformocons like to quote Lincoln, but not this memorable sentence: “Republicans are for both the man and the dollar, but in case of conflict the man before the dollar.”

Written by LeisureGuy

6 November 2015 at 1:45 pm

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