“Conventional wisdom has it that the lower a central bank sets interest rates, the faster the economy grows. But the longer rates stay ultra-low, it’s not the economy that grows — it’s inequality.
There are signs of worsening inequality across the U.S. economy. But recent surges trace back to a major change after 2008, which transformed how America fights economic recessions.”
“. . . . But where it matters most, Congress has yet again missed the moment. The House passed the George Floyd Justice in Policing Act, which would institute carefully calibrated reforms, but it was blocked in the Republican-controlled Senate. After perfunctory lip service and failure to pass a pale substitute for the House bill, the Senate majority leader, Mitch McConnell, seems eager to move on. Meanwhile, he refuses to allow Senate consideration of a new Voting Rights Act or of funding to ensure safe voting during a raging pandemic, knowing that communities of color are suffering disproportionately from the coronavirus.
And predictably, President Trump has doubled down on his platform of divisiveness and blatant bigotry. Almost daily, Mr. Trump throws racist red meat to his base, hoping it will boost his sagging poll numbers. He has called peaceful protesters “thugs” and threatened Bull Connor-style tactics — the use of “vicious dogs” and “ominous weapons.”
Mr. Trump retweets videos of supporters screaming “white power” and white citizens who brandish guns at peaceful marchers. He parrots misleadingly that more white people than Black people are killed by the police. Mr. Trump sends federal forces to guard monuments and terrorize protesters, pledges to block the renaming of U.S. military bases that commemorate Confederate generals and dismisses flying the Confederate flag as an act of “free speech.”
Against this backdrop of half-measures and outright hostility, it’s easy to envision that the momentum for progress on racial justice will soon be squandered. But it needn’t be.
To redress systemic racism, America needs to create the conditions for systemic reform.
Transformational change would entail a new opportunity agenda that confronts the root causes of structural racism. The federal government, working with the private sector and nongovernmental organizations, should invest sustained attention, creativity and sufficient resources in broad-based initiatives to address the stark, stubborn inequalities that permeate not only the criminal justice system but also education, economic opportunity, health care, housing and environmental quality.
In each sector, the remedies must be comprehensive. In education, for instance, we should invest in the full spectrum of learning — starting with universal prekindergarten, competitive teacher salaries and reliable broadband in both rural and urban digital deserts.
To expand access to postsecondary education, it’s time to provide no-debt access to community colleges, scale up apprenticeships and Pell Grants, and make tuition free at public universities for all families earning under $125,000 annually.”
Credit…Michael George Haddad
“Since January, Amazon’s stock price has gone up from about $1,850 to about $2,600. The S.&P. 500 — comprising large corporate stocks dominated by technology companies — has recovered most of its recently lost value. And most highly paid professionals and managers have kept their jobs and experienced minimal changes in wealth.
Yet more than 20 million Americans are unemployed.
These are signs that the economic legacy of the coronavirus pandemic could be an increase in wealth concentration that will shock a nation that thought itself numb to such things. Arguments over whether the recovery will be “V-shaped” or “U-shaped” ignore the fact that different socioeconomic classes have been affected differently and will recover differently. Despite its populist airs, the Trump administration is orchestrating what will be, unless something is done, a rich man’s recovery.
While it may seem as if the federal government is throwing money at everyone, there’s a key difference between the support given to large businesses and the support given to small businesses and individuals. Large businesses have been given the security of long-term assistance, mainly through the actions and promises of the Federal Reserve: to buy corporate bonds (including junk bonds), to provide “liquidity backstops” by serving as a buyer of last resort and to lend money against an array of collateral. Collectively, these actions amount to a program not just of extraordinary assistance but also of extraordinary assurance.
By contrast, the money being spent on small businesses and individual workers is short-term and hard to bank on. Not only are many of the sums relatively small — a $1,200 check that might (or might not) come again some day — but the uncertainty also diminishes the value of the aid, since it’s hard to make plans if you don’t know what you can count on.
the aid, since it’s hard to make plans if you don’t know what you can count on.”
“Who is driving inequality in America? You are. I am. We are.
Did you read to your kids before bed when they were young? If you did, you gave them an advantage over kids whose parents were working the evening shift at 7-Eleven. Did you spend extra on tutoring or music lessons? Since 1996, affluent families have spent almost 300 percent more educating their young while everybody else’s spending has been mostly flat.
Did you marry before having kids and raise your kids in a two-parent home? The children of the well educated are now much more likely to grow up in stable families, and those differences in family structure explain 32 percent of the growth of family income inequality since 1979.
If you did these things, you did nothing wrong. You invested in your children’s flourishing as any decent parent would.
But here’s the situation: The information economy rains money on highly trained professionals — doctors, lawyers, corporate managers, engineers and so on.
Daniel Markovits, author of “The Meritocracy Trap,” estimates there are about one million of these workers in America today. They work really hard, are really productive and earn a lot more. In the mid-1960s, profits per partner at elite law firms were less than five times a secretary’s salary. Now, Markovits notes, they are over 40 times.”
“There are two ways to fight the long stagnation in living standards for most Americans. The first is probably the more obvious and the one I spend more time writing about: through government policy.The government can raise the minimum wage. It can increase the Earned Income Tax Credit, which is effectively a wage subsidy. It can cut taxes on the middle class. It can spend more money on education, child care and health care. All of these are good ideas.But they’re not the only way to lift living standards. For much of the past century, another approach has been even more important: As the economy grew, American companies paid workers their fair share of the growth.”
“A half-century ago, a top automobile executive named George Romney — yes, Mitt’s father — turned down several big annual bonuses. He did so, he told his company’s board, because he believed that no executive should make more than $225,000 a year (which translates into almost $2 million today).
He worried that “the temptations of success” could distract people from more important matters, as he said to a biographer, T. George Harris. This belief seems to have stemmed from both Romney’s Mormon faith and a culture of financial restraint that was once commonplace in this country.Romney didn’t try to make every dollar he could, or anywhere close to it. The same was true among many of his corporate peers. In the early 1960s, the typical chief executive at a large American company made only 20 times as much as the average worker, rather than the current 271-to-1 ratio. Today, some C.E.O.s make $2 million in a single month.”
Excellent op-ed. Thank you David Leonhardt. Here is a popular comment I endorse.
Portland Oregon 5 hours ago
When a nation refuses to invest in itself it rots. The American society of engineers gives our overall infrastructure a D rating. The corps of engineers says our infrastructure is close to failing. We’ve been at war for nearly two decades and our national deficit for 2018 is estimated at $440 billion dollars. Income inequality is the at the highest level since the 70’s and our students owe an average of $1.4 in student loans. We’re not the land of opportunity any longer.
At some point we’re going to need to raise taxes to invest in our country. Otherwise our best and brightest are going to start looking abroad for opportunities.
If you look at the happiest countries they have strong social safety policies and have invested in infrastructure and education. Denmark’s top individual tax rate is 60.4%, Sweden’s is 56.4% and Norway’s is 39%. These countries have government sponsored college education, paid parental leave, universal daycare, and universal healthcare. They only tax businesses at 25%.
Cutting taxes, especially for the wealthy considering how nicely they did after the recession is irresponsible. Hopefully our politicians will choose responsiblity and fairness but I doubt it.
“Martin Gilens of Princeton University and Benjamin I. Page of Northwestern University found that in policy-making, views of ordinary citizens essentially don’t matter. They examined 1,779 policy issues and found that attitudes of wealthy people and of business groups mattered a great deal to the final outcome — but that preferences of average citizens were almost irrelevant.“In the United States, our findings indicate, the majority does not rule,” they concluded. “Majorities of the American public actually have little influence over the policies our government adopts.” ”
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