A man walks past five foreclosed homes in Chicago, July 21, 2010.
Over the last 37 years, America’s top 10 percent saw their incomes rise by 115 percent and the top 1 percent saw an incredible rise of 198 percent. Meanwhile, the bottom half of all American earners not only failed to see any gain at all, but their incomes actually declined by 1 percent from 1978 to 2015, according to research by Thomas Piketty and co-researchers.
Runaway inequality is at the root of many of the problems we face, including the meteoric and disastrous rise of the financial sector, defunding of the public sector, environmental destruction, increased racial discrimination, the gender gap in wages and the rise of our mammoth prison population. Also, as localities are starved for revenues, public safety and the sense of community deteriorate. The social fabric of decent living is imperiled.
Extreme inequality and the related social deterioration fueled both the Sanders and the Trump revolts. While Sanders offered concrete plans to reverse it, Trump and the Republicans are sure to make it worse.
The inevitability of rising inequality?
Politicians and pundits alike have convinced themselves that rising inequality is an economic act of God. They repeatedly point to new technology, automation, and competitive globalization as the root causes of rising inequality. They claim that these blind forces turn the well-educated into winners, while the less educated are left behind. These inevitable forces are so powerful in our free market economy, that it would be impossible, and therefore foolish, to intervene directly.
Such a self-justifying story! So soothing for well-to-do! And oh so wrong.
The Piketty study provides a clear-cut example that shows that runaway inequality is not inevitable ― France.
The French economy is as modern as ours. It is even more exposed to the global market place: Exports in France account for 30 percent of its GDP compared to only 12.6 percent for the U.S. Because it must compete even more rigorously, France must use the highest levels of technology and automation. So if competitive global markets, new technology and automation cause rising inequality, then France should be its poster child.
It is not.
Inequality is far less extreme in France. The bottom 50 percent saw their incomes grow by 39 percent from 1978-2015. The incomes of the top 10 percent grew by 44 percent and the top 1 percent by 67 percent ― unequal still, but nowhere near as lopsided as in the U.S.
Viva la difference?
Social and economic policies, not blind market forces, determine the degree of inequality. Here are a few obvious differences:
- France has universal health care ―we don’t.
- France has far stronger labor protections ― in the U.S. workers are far more vulnerable to layoffs, with the Republicans now seeking to cripple unions still further.
- France has more progressive income taxes ― the Republicans want to lower them for the rich.
- Higher education is virtually free in France ― here we put students and families deeply into debt.
- Financial institutions are more constrained in France― in America, Wall Street dominates the economy and politics.
The financialization of our economy ― more aptly called financial strip-mining ― is the most powerful driver of runaway inequality. This is the direct result of the failed neo-liberal policies that erroneously claim that cutting regulations always makes the economy run better.
In the case of finance the picture is crystal clear. When we had our foot on the neck of Wall Street (from the New Deal to the late 1970s) the economy became more egalitarian with real wage increases for working people of all kinds.
But after deregulation of Wall Street activities ― legalization of stock buybacks, end of Glass Steagall, prohibition of regulating derivatives, etc ― U.S. inequality soared. As the recent Piketty study puts it:
“We observe a complete collapse of the bottom 50% income share in the US between 1978 and 2015, from 20% to 12% of total income, while the top 1% income share rose from 11% to 20%”
The Undoing of Trump?
Trump seized basic working class issues away from Clinton and the Democrats ― little wonder given their intimate ties to Wall Street. But the Obama/Sanders voters who turned to Trump (and there are millions of them) expect Trump to improve working class incomes.
After several weeks of utter chaos, it is safe to say that Trump won’t do anything of the sort.
- Rather than reduce the power of Wall Street, he has welcomed into his administration a large cohort of big time financiers.
- Their first collective move is to kill as many financial regulations as possible
- The Republicans want to shift more money to the rich with so-called “tax reforms” and through anti-union legislation.
- The replacement for Obamacare, whatever that may turn out to be, is certain to harm lower-income people even more, unless the rest of us intervene in a big way. (See Labor for Single-payer)
From Resist to Reversing Runaway Inequality
The good news is that millions are taking to the streets, organizing meetings, challenging their congressional representatives, and in general raising hell. Except for a handful, however, most of these actions are aimed at protecting the status quo from an impetuous, childish autocrat. Without question the resistance must continue, especially to protect the most vulnerable ― immigrants, low-income women in need of Planned Parenthood, Medicaid recipients etc.
However, we are unlikely to win back Obama-to-Sanders-to-Trump voters until we rekindle the spirit of Occupy Wall Street and the Sanders campaign. The social democratic platform Sanders put forth attacked runaway inequality. That kind of agenda needs to become part of the work of Indivisible and the thousands of groups that are holding town meetings all over the country.
A new march/A new movement?
To reach the Obama-to-Sanders-to-Trump voters we need to organize a new set of protests with a clear set of pro-active demands. It’s not just about what we don’t want Trump to do, it’s about what we really want to see changed.
Would people show up for protests around this agenda: A Wall Street speculation tax, free higher education, Medicare for All, a $15 dollar an hour minimum wage and tackling climate change?
To go from resist to reversing runaway inequality requires a movement educational process to spread the word. We need thousands of educators to reach out to the Obama-to-Sanders-to-Trump voters who really are seeking to reverse runaway inequality.
Armed with facts ― not alternate facts ― we can build the foundation for a new movement to take back our country both from Trump and from the financial strip-miners. (For more information about the activities underway and how to get involved see the Join Us page at runwayinequality.org.)
Les Leopold, the director of the Labor Institute, is currently working with unions and community organizations to build the educational infrastructure of a “reversing runaway inequality” movement. His new book Runaway Inequality: An Activist Guide to Economic Justice serves as a text for this campaign. All proceeds go to support these educational efforts. For more information, contact him at LesLeopold@aol.com.