What to do about income inequality (if anything)

 
President Obama delivers a speech on income inequality on December 4, 2013. President Obama has tried to put the spotlight on income inequality since a high profile speech in December

President Barack Obama will give his State of the Union address on Tuesday, and advance word is that income inequality will be a key theme. Among the policy objectives he may discuss are an increase in the minimum wage, extending long-term unemployment benefits and making college more affordable.

It won't be the first time the president has discussed the growing gap between the rich and the poor in the US. In a speech on 4 December, he called it "the defining challenge of our time".

But should inequality really be a concern? According to new poll by the Pew Research Center and USA Today, 65% of Americans believe inequality has grown in the past decade, but partisan divides are clear. Ninety percent of Democrats think the government should take steps to reduce the income gap, compared to only 45% of Republicans.

Start Quote

America's shrinking middle class also hobbles upward mobility”

End Quote Robert Reich Former US Secretary of Labour

"US president Obama faces a constituency united over the problem, but divided on solutions," says BBC's David Botti in this week's Face Facts.

The US has one of the highest income gaps in the developed world

The split was made starkly clear in a column by the New York Times's David Brooks last week - and the sharp response it provoked.

Brooks wrote that the "debate is confusing matters more than clarifying them".

He contends that Mr Obama and his supporters group together two unrelated issues: the increasing concentration of wealth in the top 5 percent and the plight of the chronically poor. One has little to do with the other, he writes.

Policymakers who are attempting to address income equality, he continues, are focusing on the wrong solutions - such as the minimum wage - instead of addressing single motherhood, low social mobility and "the fraying of social fabric".

"If we're going to mobilize a policy revolution, we should focus on the real concrete issues: bad schools, no jobs for young men, broken families, neighborhoods without mediating institutions," he concludes.

Former US Secretary of Labour Robert Reich calls Brooks' theory "baloney". The social ills Brooks discusses are a direct result of the lack of "buoyant growth" in the middle class, which then adversely affects the poor:

America's shrinking middle class also hobbles upward mobility. Not only is there less money for good schools, job training, and social services, but the poor face a more difficult challenge moving upward because the income ladder is far longer than it used to be, and its middle rungs have disappeared.

Start Quote

Should Congress confiscate part of their wealth in the name of fairness and income redistribution?”

End Quote Walter Williams Syndicated columnist

As wealth becomes more concentrated in the hands of the few, he writes, their political power grows, "drowning out the voices of average Americans, filling the campaign chests of candidates who will do their bidding, financing attacks on organized labor, and bankrolling a vast empire of right-wing think-tanks and publicists that fill the airwaves with half-truths and distortions."

The political power of the wealthy, writes the Nation's Eric Alterman, causes the "extreme version of 'inequality' experienced by the United States compared to other advanced industrial nations".

"Brooks, like other conservative commentators, seeks to evade the fundamental facts of economic inequality by shifting the ground to cultural, social and 'behavioral' terrain," he contends.

That the debate is now being conducted over how to best address income inequality is an indication that President Obama is successfully defining its terms. Whether that can be converted into political gains and actual policy implementation, however, remains to be seen.

Any significant proposals he makes during the State of the Union address, of course, will have to be approved by a Congress where many Republicans are more closely aligned with the views of syndicated columnist Walter Williams, who argues that income is the reflection of a free society.

"In a free society, for the most part, income is a result of one's capacity to serve his fellow man and the value his fellow man places on that service," he writes. "Should people who have improved our lives be held up to ridicule and scorn because they have higher income than most of us? Should Congress confiscate part of their wealth in the name of fairness and income redistribution?"

At present, there's a solid majority in the House of Representatives who would answer this with a firm "no". It will be very difficult to convince any of them to support the president's plans.

 

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  • rate this
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    Comment number 24.

    " financing attacks on organized labor, and bankrolling a vast empire of right-wing think-tanks and publicists ..half-truths and distortions."

    Argumentation and actions similar to that in Feudal Britain --before the Mayflower set sail.

    --and believed Hook, Line and Sinker by (it appears) most Americans.

    The ideals of the EU must not be based on the (unfulfilled) ideals of 18th Century America.

  • rate this
    +1

    Comment number 23.

    #21 LucyJ "I certainly don't expect anything good to come from Obama" Obviously, you think America is a dictatorship & Obama can do whatever he wants. Newsflash! America is a democracy. Congress not only control the budget, it must pass all bills before they become laws. Obama continually face republicans opposition, even on few things the US president can constitutionally do by executive order.

  • rate this
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    Comment number 22.

    Lucy J

    The basics of this discussion --is in the link.

    The deliberate destruction of unions and the accompanying reasonably well paying jobs (plus extras)is correctly mentioned by Mr Zurcher.

    The EU-USA free trade agreement must be stopped. EU workers and societal Rights must not be allowed to deteriorate to American standards.

    --

  • rate this
    -2

    Comment number 21.

    Oaktree: basics of this discussion is new

    I certainly don't expect anything good to come from Obama

    If he was going to do something good for Americans,
    it would have already happened by now

    I do think we are moving closer and closer to economic collapse
    because that is what Bilderbergers want

    They want to replace USA with EU with Euro replacing Dollar and rule the world via UN

  • rate this
    +1

    Comment number 20.

    It´s not as if the basics of this discussion is new.

    -- very few new ideas can be offered that have not already been said --both pre and post 1917.

    http://en.wikipedia.org/wiki/Tolpuddle_Martyrs

  • rate this
    +1

    Comment number 19.

    http://en.wikipedia.org/wiki/Permanent_normal_trade_relations

    'there have been three attempts to repeal the PNTR with China. The best attempt was in 2005 when Representative Sanders and sixty one cosponsors introduced a legislation that would repeal the PNTR with China. “anyone who takes an objective look at our trade policy with China must conclude that is an absolute failure"

  • rate this
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    Comment number 18.

    EU did treaty in 1993 to be EU
    NAFTA passed in 1992 before Bush Sr left office (began in 1994)

    EU did eurozone 1999 (started in 2002)
    USA did China trade deal 1999 before Clinton left office (began in 2000)

    It just tells you USA's economic decline and income equality has been years in the making

    NAFTA and China trade deal are why USA has so much income inequality

  • rate this
    -1

    Comment number 17.

    Income inequality.. what more socialists a term can there be comrades? Reminds me of the scene in David Lean's Dr. Zhivago movie when the communists take over and steal Alexander Gromyko's house because it's far too large for just one family to live it. Robin Hood makes for a wonderful fable but a thief is a thief whether it be a man in tights or a morbidly obese government. Be ever vigilant.

  • rate this
    +1

    Comment number 16.

    Education is one important factor to solve long term poverty here in the USA. Another, perhaps equally important factor is motivation, and here we have a serious problem. The problem of motivation is demonstrated by the ability of motivated, often penniless, immigrants to become productive members of the middle class, while much of the urban and rural poor lack this motivation.

  • rate this
    +2

    Comment number 15.

    The US is in decline largely because the rest of the world rising in income, thats why the US made laws making student loans a lifetime debt for their citizens. They want every penny they can squeeze out of their citizens while offering minimal government services in return.

  • rate this
    +2

    Comment number 14.

    NAFTA was done to desensitize Americans to outsourcing

    Because it was to our neighbors, Canada and Mexico, most Americans didn't object

    By the time Bill Clinton did trade deal with China in 1999 (and EU started eurozone)
    we were starting to get used to it

    If Bill Clinton had not done NAFTA, Americans would have likely objected to him making law allowing outsourcing our jobs to China

  • rate this
    +2

    Comment number 13.

    read: But the basic premise of capitalism is this

    Its very interesting that the Eurozone was established in 1999,
    the same year America under Bill Clinton made trade deal with China
    leading to the end of our middle class

    Maybe when this happened, EU had a premonition that USA's economy would collapse from outsourcing
    and so they created a currency to replace ours if such happened

  • rate this
    -1

    Comment number 12.

    But the basic premise of capitalism is this
    Cheap sells more than expensive for the same quality.
    If you can buy the same goods from China for less then doing so makes you a good capitalist. That should in turn push up the cost of living in China and thus the cost of those goods leveling it back out
    If we are going to have protectionism of markets, then that needs to be Policy. Not Piecemeal

  • rate this
    +4

    Comment number 11.

    oinkus: the even bigger problem is the huge percentage of children born to unmarried women

    It doesn't matter whether Americans are married, unmarried, do or don't have kids

    The problem is there are no good jobs

    The only jobs people can find are mostly part time or temporary jobs that don't pay enough which is why many Americans work full time but are still on welfare and food stamps

  • rate this
    -1

    Comment number 10.

    Outsourcing is a problem. But the even bigger problem is the huge percentage of children born to unmarried women in the US. All ethnicities have similar huge numbers, from 45% on the low end to 70% on the high end. Much of violent crime and many of the poorly educated jobless young males are from that demographic. Robert Reich is a good yardstick for beliefs. Whatever he says is probably wrong.

  • rate this
    +3

    Comment number 9.

    Yankee: just how patriotic is ouutsourcing your fellow citizens jobs to India, China, the Philipines?

    Politicians on both sides will talk about outsourcing but no one wants to actually change things

    The worst country we outsource to is China
    because China is the biggest threat in the world to USA

    USA's outsourcing to China is why USA is losing everything we have
    yet no politicians care

  • rate this
    +3

    Comment number 8.

    America is all about patriotism, but just how patriotic is ouutsourcing your fellow citizens jobs to India, China, the Philipines...? We brits have a few things to learn about that too.

  • rate this
    +1

    Comment number 7.

    The biggest problem is that corporations who outsource pay no taxes and provide no jobs so they are basically making tax-free profits

    This offers no incentive to employ Americans in USA

    I doubt that Obama will offer anything substantial as he is the main reason why USA is becoming more inequal

    If anything Obama will likely announce measures to make income even more unequal

  • rate this
    +3

    Comment number 6.

    In the US we live in a capitalist economy that is starting to run into the problems that are inherent with with capitalism itself. The fastest way to destroy an economy is for money to become stagnant. The rich in our country are stockpiling money and not spending it. While I don't like the idea of having to take it from them, forcing that money to circulate again is the only solution.

  • rate this
    +1

    Comment number 5.

    It makes America the country people from around the globe are literarily & figuratively dying to reach. Rather than grow/maintain the middle-class, the republicans have made it their goal to destroy the middle-class in the last decade or so. Any attempt by democrats to address this issue is met with fierce opposition from conservatives, who call it socialism & wealth redistribution. Part 2 of 2.

 

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