Tuesday, July 3, 2007

Income Inequality Isn't The Problem - Stagnating Affluence At The Bottom and Middle Is

In his June 10 column, “Democrats’ Prosperity Problem” (this link may require you to sign in, though it should be free to do so if you’re willing to give your email address to the Washington Post), George Will takes the various Democratic presidential candidates to task for their concerns over income inequality in the U.S.

Will points out that there has been continued, sustained economic growth over the past several years. This is true – the economy is in grand health, or it would be if the economy were the sort of thing that could be healthy. Will brushes aside concern with growing economic inequality in two ways. First, he questions the concern with fairness, asking when wealth has ever been distributed evenly or fairly (which is to say that since things have never been fair, we shouldn’t now be concerned with fairness). Second, here and elsewhere, he and other fiscal conservatives have argued that so long as everyone benefits from an expanding economy, it shouldn’t matter that some benefit more than others, especially since it is through the investment of capital by the wealthy that great wealth is produced for everyone.

In theory, that’s all well and good. At certain times in the past and for certain places (mainly the industrialized world in the post-WWII decades) this has actually happened to some extent. The middle classes, and to some extent the working classes, of the industrialized world did see a significant expansion in affluence over several decades. (I addressed some of the effects of this in popular culture in an earlier post, "Generation Gaps, Popular Music, and Affluence," and in relation to sushi in "Sushi and Globalization.")

The extent of both the growth of economic inequality and the stagnation of the expansion of affluence are made clear in an article in The New York Times from June 10 by Roger Lowenstein, “The Way we live now: the inequality conundrum.” The article includes these striking figures. First, the top 1 percent of the U.S. population collected 9 percent of national income in 1979 and 16 percent in 2004. While striking, this alone doesn’t bother me. If everyone were doing significantly better, it wouldn’t bother me that the richest are sucking up an increasing proportion of total wealth, but that’s not the case. The real problem is with stagnation of affluence for the rest. Lowenstein also points out, for example, that the incomes of the bottom 20 percent of Americans, adjusted for inflation, have increased only 2 percent, which is to say not significantly at all. Many in the middle class feel increasingly insecure as well.

I find myself stirred by the concluding paragraphs of Will’s column, though I read them differently than he intends:

“Democrats need not confine themselves to their ritual tropes about how "the middle class is under assault" (Clinton again). They control Congress; they can act. The unemployed John Edwards, who has the luxury of irresponsibility, challenges Democrats to repeal the Bush tax cuts they disapprove of rather than wait for them to expire.

“Democrats cannot end the war (actually, they can but won't), but they can send their tax agenda to the president and dare him to veto it. They can, but they won't. Do you wonder why?”

Given everything else he’s said, Will clearly thinks the Democrats will remain inactive on this front because of a disjuncture between their theory and reality. To me, the inaction of congressional Democrats seems to be the result of other factors. First, though slightly less spineless than during most of the Bush Administration, the Democrats in general are still mostly spineless in standing up to Bush, even though they control Congress. Second, while I don’t at all think that Democrats and Republicans are all the same (the Republican party is much more beholden to the interests of large corporations and the wealthy, and this does make a difference), they are more alike than I’d like (See my earlier post "The 'Sameness' of Republicans and Democrats"). Talking about economic inequality is the Democratic equivalent of Republicans talking about the perils of gay marriage or abortion – it’s a way of drumming up support from the party’s voting base. Actually doing something about economic inequality would require bucking the interests of the wealthy and the corporations who provide most of the campaign funding for the Democrats as well as Republicans (even while the Democrats do get more money in small sums from large numbers of middle and working class people, and Democrats receive less corporate money than Republicans).

(I was led to both Lowenstein’s and Will’s pieces via a summary in the June 22 print issue of The Week magazine.)

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