If the Occupy movement has one primary concern, I’m guessing it would be that the expansion of income inequality has had a massive amount of negative consequences for the country. It has created a near-permanent underclass and robbed them of their voice in the political sphere. The overclass, meanwhile, the 1%, has an inordinate amount of economic and political power, as well as a separate system of justice where their crimes do not get sanctioned to the degree of the 99%. They get to write the rules and live by them.
Meanwhile, as a forthcoming book from Chris Hayes will point out, the elites who benefit from this power structure are actually worse than ever, and in part this is because of inequality, which has created a more socially insulated, more corrupt, and more incompetent American aristocracy.
A premise of the 2012 election is that it represents a crossroads, where we can either give ourselves over fully to these failed elites, and bestow upon them every gift in the government’s arsenal, or we can stop them, fully, finally, and reverse their progress. But that’s not actually the case, or it least it hasn’t been in the past several years. As Matt Stoller points out, using the graph above, income inequality has actually accelerated over the past three years, with a Democrat in the White House and Democrats partially or fully in control of Congress.
Yup, under Bush, the 1% captured a disproportionate share of the income gains from the Bush boom of 2002-2007. They got 65 cents of every dollar created in that boom, up 20 cents from when Clinton was President. Under Obama, the 1% got 93 cents of every dollar created in that boom. That’s not only more than under Bush, up 28 cents. In the transition from Bush to Obama, inequality got worse, faster, than under the transition from Clinton to Bush. Obama accelerated the growth of inequality [...]
It’s important not to overstate the conclusion. It’s not obvious that Obama’s policy framework is worse than Bush’s, only that the outcome is. After all, the losses suffered by the wealthy during 2007-2009 recession were less severe than those it suffered in the 2000-2002 recession, and most of the Great Recession happened under Bush (with a Democratic Congress). It’s possible that the Obama policy framework is a bit less bad, but he has been more successful at implementation because unlike Bush, he [doesn't] face any pressure from Democrats. In other words, perhaps Obama’s policy thrust has just been implemented more fully, because the traditional opposition to plutocratic rule, the left, has been silenced. Perhaps it’s a competence issue. Or maybe you can chalk it all up to structural factors, though I suspect the JOBS Act and trade deals imply otherwise. Maybe he really is as conservative as these policy choices suggest. It’s hard to say.
This is a key point. The names change on the parking spots in the executive office building, in Congress, in the White House, but the acceleration of inequality just continues. This is largely the result of a cascade of previous policy choices that have not been rolled back, policies that value wealth over work, that have led to executive compensation far outstripping wages, and that have brought us a tax policy that is almost totally flat when you add in state and local taxes. As a result, we have a recovery without wage gains and with most of the profits going to the 1%. In fact, more than before. And the other benefits that come with all the profits, like a two-tiered system of justice and the ability to buy elections, continue unabated as well.
As UC-Berkeley economist Emmanuel Saez writes in this paper, “falls in income concentration due to economic downturns are temporary unless drastic regulation and tax policy changes are implemented and prevent income concentration from bouncing back.” This is what didn’t happen. You can call Dodd-Frank what you will, but the last thing you can call it is “drastic” regulation. Similarly, tax policy was just pushed forward.
Now we have an election year, so we hear more talk of the divergent viewpoints among the candidates on tax policy. But as I’ve said, they are playing out on a narrow patch of ground. If there was a seriousness behind the symbolism, we would see, as Jamie Galbraith writes, a bid for higher wages at the low end through an increase in the minimum wage. Galbraith is right that symbolic issues like the Buffett rule, a tax fairness policy, have their place. But it’s just inadequate as a full policy.
And yet, at the same time, by itself, the Buffett Rule solves no significant economic problem. It will not create any jobs, raise any wages, reduce the crushing debts of the middle class, slow the wave of foreclosures, conserve energy or reduce the price of gas. Nor will it restore confidence in the banks. And it is directed, at least in principle, toward a notorious nonproblem, namely the deficit and the public debt, on which we waste far too much ink as things stand.
I noticed in the news that a number of states are once again taking the lead on measures to raise the minimum wage — with Massachusetts moving toward a minimum of $10 per hour, and with other measures on the table in New York, Illinois, New Jersey, Connecticut and Missouri. Meanwhile Sen. Tom Harkin, D-Iowa, is pressing for the federal minimum to rise to $9.80 per hour by 2014 [...]
I’ve proposed pushing the minimum wage up to $12 an hour, and at least some conservatives — the editors at The American Conservative — agree with this goal. (Actually I took my cue from them.) More recently, Reihan Salam at the National Review has weighed in, calling the idea “a tougher call than I would’ve thought.” Salam suggested that Romney could transform his campaign by endorsing it. That’s still possible, I suppose. But anyway we have a discussion and maybe even a left-right coalition — that rarest of political birds — getting under way. And on something real.
Something real would be nice.