03.08.11

Fixing income inequality is “the fix” for our economic problems

Posted in Around The Nation, Commentary, Taxes, The Budget, The Economy at 5:27 pm by wcnews

Not to oversimplify the many economic problems we face, but the most pressing issue is economic inequality, which has grown to historic proportions in our state and our country over the last 30 plus years. It’s the age-old story of the rich getting richer and the poor getting poorer.

It’s very simple. As the tax rates for the wealthy have decreased, they’ve increased for those on the lower end of the income levels. (From How the rich soaked the rest of us).

In simplest terms, the richest Americans have done by far the best over the last 30 years, they are more able to pay taxes today than they have been in many decades, and they are more able to pay than other Americans by a far wider margin. At a time of national economic crisis, especially, they can and should contribute far more in taxes.

Instead, a rather vicious cycle has been at work for years. Reduced taxes on the rich leave them with more money to influence politicians and politics. Their influence wins them further tax reductions, which gives them still more money to put to political use. When the loss of tax revenue from the rich worsens already strained government budgets, the rich press politicians to cut public services and government jobs and not even debate a return to the higher taxes the rich used to pay. So it goes – from Washington, to Wisconsin, to New York City.

Certainly include Texas in that list. And As Union Membership Has Declined, Income Inequality Has Skyrocketed In The United States.

Across the country, right-wing legislators continue their attack on labor unions,claiming that they are saving their states money. Yet in waging these anti-labor campaigns, these politicians are ignoring one very simple fact: unions were a major force in building and sustaining the great American middle class, and as they declined, so has the middle class. As CAP’s Karla Waters and David Madland showed in a reportthey first published this past January, as union membership has steadily declined since 1967, so too has the middle class’s share of national income, as the super-rich have taken a larger share of national income than any time since the 1920s

Ed Schultz does a great job of explaining it here:

And Paul Krugman explains it’s unions and not education that will bring back high paying jobs for working people.

So what does all this say about policy?

Yes, we need to fix American education. In particular, the inequalities Americans face at the starting line — bright children from poor families are less likely to finish college than much less able children of the affluent — aren’t just an outrage; they represent a huge waste of the nation’s human potential.

But there are things education can’t do. In particular, the notion that putting more kids through college can restore the middle-class society we used to have is wishful thinking. It’s no longer true that having a college degree guarantees that you’ll get a good job, and it’s becoming less true with each passing decade.

So if we want a society of broadly shared prosperity, education isn’t the answer — we’ll have to go about building that society directly. We need to restore the bargaining power that labor has lost over the last 30 years, so that ordinary workers as well as superstars have the power to bargain for good wages. We need to guarantee the essentials, above all health care, to every citizen.

What we can’t do is get where we need to go just by giving workers college degrees, which may be no more than tickets to jobs that don’t exist or don’t pay middle-class wages.

It’s time for working in the US to get paid a living wage, so we can be the country we need to be again. The only way that can happen is if the wealthy, once again, start paying their fair share in taxes. Until that happens we won’t be able to afford to fix education, health care, and the social safety net. The only other way is draconian budget cuts, where the least among us wind up on the streets. (See below).

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