Just about nothing being proposed in mainstream politics is radical enough to fix what ails the economy. Consider everything that is destroying the life chances of ordinary people:
- Young adults are staggered by $1.3 trillion in student debt. Yet even those with college degrees are losing ground in terms of incomes.
- The economy of regular payroll jobs and career paths has given way to a gig economy of short-term employment that will soon hit four workers in 10.
- The income distribution has become so extreme, with the one percent capturing such a large share of the pie, that even a $15/hour national minimum wage would not be sufficient to restore anything like the more equal economy of three decades ago. Even the mainstream press acknowledges these gaps.
The New York Times‘ Noam Scheiber, using Bureau of Labor Statistics data, calculated that raising the minimum wage to $15 for the period 2009 to 2014 would have increased the total income for the 44 million Americans who earn less than $15 an hour by a total of $300 billion to $400 billion. But during the same period, Scheiber reported, the top 10 percent increased its income by almost twice that amount.
So even if we’d raised the minimum wage to $15 an hour, the top 10 percent would still have emerged from the 2009-2014 period with a substantially larger share of the increase in the nation’s income than the bottom 90 percent. Inequality would still have increased, just not by as much.
It will take more than hiking wages
Restoring a more equal economy simply can’t be done by raising incomes at the bottom, even with a minimum wage high that seemed inconceivable just months ago. It requires going after the grotesquely concentrated wealth and power at the top.
Last week, another writer in the Times, Eduardo Porter, assessed Hillary Clinton’s eagerly anticipated speech on how to rescue the middle class.
Porter’s conclusion? Far from sufficient. He writes:
Mrs. Clinton’s collection of proposals is mostly sensible. The older ones — raising the minimum wage, guaranteeing child care to encourage women into the labor force, paying for early childhood education — have a solid track record of research on their side. The newer propositions, like encouraging profit-sharing, also push in the right direction.
But here’s the rub: This isn’t enough.
Nothing in mainstream politics takes seriously the catastrophe of global climate change. Few mainstream politicians have the nerve to call for a carbon tax.
The budget deadlock and the sequester mechanism, in which both major parties have conspired, makes it impossible to invest the kind of money needed both to modernize outmoded public infrastructure (with a shortfall now estimated at $3.4 trillion) or to finance a green transition.
The economy is so captive to financial engineers that even interest rates close to zero do not help mainstream businesses recover. There is still a vicious circle of inadequate purchasing power and insufficient domestic investment.
The rules of globalization and tax favoritism make it more attractive for companies to assemble products, export jobs, and book profits overseas.
To remedy the problem of income inequality would require radical reform both of the rules of finance and of our tax code, as well as drastic changes in labor market regulation so that employees of hybrids such as Uber and TaskRabbit would have both decent earnings and the protections of regular payroll employees.
Congress would have to blow up the sequester deal that makes it impossible to invest money on the scale necessary to repair broken infrastructure and deal with the challenge of climate change.
Politicians would have to reform the debt-for-diploma system, not only going forward, as leaders like Bernie Sanders and Elizabeth Warren have proposed, but also to give a great deal of debt relief to those saddled with existing loans.
Unions would need to regain the effective right to organize and bargain collectively.
This is all as radical as, well… Dwight Eisenhower. Somehow, in the postwar era, ordinary people enjoyed economic security and opportunity; and despite the economy of broad prosperity, there were plenty of incentives for business to make decent profits. There just weren’t today’s chasms of inequality.
But the reforms needed to restore that degree of shared prosperity are somewhere to the left of Bernie Sanders.
This is one of those moments when there is broad popular frustration, a moment when liberal goals require measures that seem radical by today’s standards. If progressives don’t articulate those frustrations and propose real solutions, rightwing populists will propose crackpot ones. Muddle-through and token gestures won’t fool anybody.
(Robert Kuttner is co-editor of The American Prospect and a visiting professor at Brandeis University’s Heller School. His latest book is Debtors’ Prison: The Politics of Austerity Versus Possibility.)