According to former Treasury Secretary Larry Summers -- who is emerging as a key economic advisor to Hillary Clinton -- the big political challenge in addressing economic inequality is not to embrace "a politics of envy."
No, Mr. Summers, it's not the politics of envy. It's the politics of responsibility.
Summers was quoted in The New York Times about "what has emerged as a central question of [Hillary Clinton's] early presidential campaign strategy: how to address the anger about income inequality without overly vilifying the wealthy."
The rich may imagine that blaming them for the struggles of the rest of us is driven by envy, but that's their own conceit to make them feel good. Americans don't resent the rich. While we might fantasize about winning the lottery, we are not consumed by envy. What most Americans understand is that they are struggling financially because the wealthy have rigged the economic and political system to benefit them at the expense of the rest of us. That's not envy; it's reality.
Summer's formulation is meant to give intellectual cover to the real problem that Democrats like Clinton face: taking on those who finance their political campaigns. As the Times puts it: "[S]he [Clinton] must convince a middle class that feels frustrated and left behind that she understands its struggles, even as she relies heavily on the financial industry and corporate interests to fund her candidacy."
There is a way to connect with people without "overly vilifying the wealthy." The politics I would recommend to Clinton and other Democrats is that of responsibility.
There are two senses in which we can have a conversation about responsibility. The first is in explaining who is responsible for the financial squeeze on American working- and middle-class families. The second sense is to describe the kind of responsible behaviors that we can insist that those who are responsible engage in to rebuild opportunity and security. The two are related, as one needs to be clear on who is responsible in order to identify how to fix the problem.
For example, wages are stagnant because corporations engaged in concerted strategies to limit the proportion of profits shared with workers, including busting unions rather than negotiating with them, shipping jobs overseas rather than paying higher wages to American workers, and aggressively using campaign contributions and lobbyists to undermine labor standards (minimum wage, overtime protection, etc.) and labor laws. Corporations spent their huge profits on stock buybacks and CEO pay rather than on better compensation for workers.
Then there's Wall Street's culpability for using its political clout to shred financial regulations and oversight while engaging in the orgy of financial speculation and predatory lending that triggered the Great Recession.
And then there's the manipulation of tax policy by corporations pushing to reduce their proportion of taxes paid to the federal government, and by the wealthy so that they now pay a lower share of taxes than the middle class. The result: working- and middle-class families pay higher taxes and more for public services. A glaring example is the enormous rise in the cost of public higher education, as funding for public colleges and universities has been slashed.
The economic story about who is responsible requires acknowledging the democratic story. One thing that Americans on the left and right agree on is that the wealthy and corporate lobbyists have hijacked our democracy. That's not cynical; it's true. And it is a major reason that so many have given up on government working for them or solving the problems they face.
None of this is "over-vilifying the wealthy." It is describing the reality that Americans understand. As we saw in the election this past fall, Democrats who fail to identify those responsible will lose, as base Democrats stay home and white working-class voters turn to Republicans who assign blame to the government and the poor.
Identifying those who are responsible, as I've done above, drives the power of solutions to address those problems. For example, corporate suppression of wages is fixed by revitalizing labor law and enforcement, raising labor standards like minimum wage and earned sick days, creating new workplace protections like paid family leave, changing the rules on stock buybacks, and limiting CEO compensation.
Addressing the adverse impact of Wall Street's drive for speculative profits calls for taxing speculative trading, breaking up the big banks, stopping predatory lending, and providing new, publicly backed mechanisms for financing the residential and community lending that banks have abdicated.
Revenue raised from reversing tax breaks for corporations and the very wealthy can be used to invest in services families need like affordable child care and free community college, proposals in President Obama's new budget.
Instead of vilifying the wealthy, the politics of responsibility can lift up corporate leaders and wealthy Americans who are examples of responsible behavior. President Obama has done this occasionally, lauding Costco for its high pay and good benefits for big-box stores, for example. Last week, Aetna announced that it was going to raise wages and benefits for its lowest-wage workers. Warren Buffett has a "rule" bearing his name, for proposing that the wealthy shouldn't pay lower shares of taxes than their secretaries. Buffett's example is particularly important because he's calling for government action, not just setting an example through his own behavior.
The handful of corporate leaders who are acting responsibly are also acting in their own long-term self-interest. They understand that their businesses do better with workers who get paid decently. They realize they need an educated workforce. They may even comprehend that if workers get paid more, they'll have more to spend, driving the economy forward.
The real emotional challenge in addressing inequality is not envy by the 99 percent for the 1 percent. It's the very thin skins of the super-rich. President Franklin D. Roosevelt, born one of the 1 percent, understood this. FDR framed the question of wealth and responsibility brilliantly when he said:
Government can deal and should deal with blindly selfish men. But that is a comparatively small part -- the easier part of our problem. The larger, more important and more difficult part of our problem is to deal with men who are not selfish and who are good citizens, but who cannot see the social and economic consequences of their actions in a modern economically interdependent community. They fail to grasp the significance of some of our most vital social and economic problems because they see them only in the light of their own personal experience and not in perspective with the experience of other men and other industries. They, therefore, fail to see these problems for the nation as a whole.
There were some prominent capitalists who supported New Deal programs, including banking reforms. But of the rest, FDR famously said, "I welcome their hatred."
At the end of the day, if Hillary Clinton or any other Democrat is going to champion the policies essential to rebuilding the middle class and creating a new era of broad, sustainable prosperity, she will have to join FDR in applauding those businesses who worked for the benefit of all and welcoming the hatred of those who resist the fundamental changes needed to build an America that works for all of us.
Cross-posted from Next New Deal