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Robert Reich

Robert Reich

ROBERT REICH

It’s the inequality, stupid Add to ...

U.S. President Barack Obama calls income inequality the “defining challenge of our era.” Polls show that a majority of Americans believe inequality has grown over the past decade, and that they favour tax increases on the wealthy to help the poor. The non-partisan Pew Research Center recently found that six out of 10 Americans believe their system unfairly favours the wealthy.

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And yet the reaction of U.S. conservatives has been to change the subject. Those with presidential ambitions say the focus should be on poverty, not income inequality. Senator Marco Rubio of Florida points to the poor’s “lack of mobility” as the core problem. Representative Paul Ryan of Wisconsin blames their isolation from mainstream America.

Conservative New York Times columnist David Brooks argues that the “interrelated social problems of the poor” have nothing to do with inequality. Even some Democratic operatives are worried that talking about the wage gap will turn off voters.

This is rubbish. The widening income gap is making it harder to escape poverty and thwarting equal opportunity, in both the United States and Canada.

Let me explain. When almost all the gains from economic growth go to the top 1 per cent of income earners, as they have for 30 years, the middle class is left without the purchasing power to keep the economy growing and generate jobs.

Once the middle class has exhausted its coping mechanisms – wives and mothers surging into paid work (as they did in the 1970s and 1980s), longer working hours (which characterized the 1990s) and deep indebtedness (2002-present) – the inevitable result is slower growth and fewer jobs.

This hits the poor especially hard, because they’re first fired, last hired and bear the brunt of declining wages and benefits. A stressed middle class also has a harder time being generous to them.

Helping America’s poor presumably requires money, but the U.S. fiscal cupboard is bare, and the only way to replenish it now is through tax increases on the wealthy.

The shrinking middle class also hobbles upward mobility. There is less money for schools, training and social services, and the poor face a more difficult challenge moving up – the income ladder is far longer and its middle rungs have disappeared.

U.S. conservatives also don’t want to acknowledge any connection between inequality and political power. But it’s precisely the concentration of power at the top – which flows largely from the concentration of income and wealth there – that has prevented Washington from dealing with these problems.

As wealth has accumulated at the top, it has reduced taxes on the wealthy, expanded loopholes that benefit the rich, deregulated Wall Street and provided larger subsidies, bailouts and tax breaks for large corporations.

Unequal political power is the noxious end game of widening income inequality. Big money has all but engulfed Washington and many state capitals, drowning out the voices of average Americans.

The final reason conservative Republicans would rather talk about poverty is because they can then characterize the poor as “them” – people who are different, who have brought their problems on themselves, who lack self-discipline or motivation. So any attempt to alleviate poverty requires that “they” change their ways.

Indeed, the question “Why should we pay for them?” is being asked with increasing frequency. It underlies the U.S. debate over unemployment benefits for the long-term unemployed. It’s in the resistance of some young people to buying health insurance. It can be heard among residents of upscale neighbourhoods who don’t want their tax dollars going to poorer neighbourhoods nearby.

Conservatives understand that “we” and “they” are the most important of political words. They demarcate who’s within the sphere of mutual responsibility, and who’s not – and so have been used to separate the middle class and wealthy from the poor.

The middle-class and wealthy citizens of East Baton Rouge Parish, La., for example, are trying to secede from the school district they share with poorer residents and set up their own district funded by their property taxes. Similar efforts are under way in Memphis, Atlanta and Dallas.

“Why should we pay for them?” is also reverberating in wealthy places like Oakland County, Mich., that border devastatingly poor places like Detroit.

“Now, all of a sudden, they’re having problems and they want to give part of the responsibility to the suburbs?” says L. Brooks Paterson, the Oakland County executive. “They’re not gonna talk me into being the good guy. ‘Pick up your share?’ Ha ha.”

Why are the conservatives succeeding?

One obvious explanation involves race. Detroit is mostly black; Oakland County is mostly white. The secessionist school districts are almost entirely white. But race alone can’t explain it.

Another culprit is the economic stress on the middle class. It’s easier to be generous about the sphere of “we” when incomes are rising and future prospects seem even better, as after the Second World War, when America declared war on poverty and expanded civil rights.

Yet this doesn’t explain America’s wealthy. They’ve never been richer, but most adamantly refuse to pay anything close to the tax rates accepted 40 years ago.

Perhaps it’s because America’s wealthy no longer have any idea how the other half lives. Being rich today means not having to come across anyone who isn’t. Elite schools, private jets, gated communities and vacation homes all insulate them.

Conservatives have it wrong. Poverty isn’t separate from widening inequality. In fact, no country can do anything significant about poverty without addressing these wage gaps.

The first step for Americans is to break down the barriers of race, class and segregation by income that are pushing them apart. Canada would be well advised to watch for the same symptoms, and take similar steps.

Robert B. Reich is the Chancellor’s Professor of Public Policy at the University of California at Berkeley and the author of Beyond Outrage. His film Inequality for All has just been released on Netflix. He will be appearing at the Salon Speakers Series in Toronto on March 5. Parts of this essay have been adapted from previous pieces written by Mr. Reich.

 

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