2011 will be remembered as the year Americans woke up to the harm of growing disparities in wealth and income.
Americans have funded their consumption — not just of widescreen TVs and vacations but also of homes, educations and health care — by taking on more and more debt. In 2008, the bottom fell out for a lot of households, and things haven’t improved much since.
The challenge of the new year is to begin reversing the trend of inequality. This isn’t a call for “class warfare,” but rather an alarm to the middle class that it needs to look after its own interests.
Occupy Wall Street certainly deserves credit for ingraining the concept of the top “1 percent” into public debate. The very richest Americans have accumulated wealth and income at staggering rates in recent decades, as the fortunes of the middle and lower classes have stagnated or dropped. The cleavage between the rich and the rest of us hasn’t been greater since before the Great Depression.
In recent weeks, there has also been fresh data about the wealth of Congress. The median net worth of all U.S. representatives and senators is $513,000 — a figure that doesn’t include home equity or other real estate holdings, and thus is certainly a low estimate. Compare that to the median U.S. household wealth of an estimated $100,000, as reported by Roll Call — a figure that, when adjusted for inflation, has declined in recent years.
What can we do to restore the earning power and build the wealth of average Americans?
We can begin by rejecting incumbents and candidates who don’t seem to understand what things are like for the common man and woman. A typical case is Newt Gingrich, who opined that the poor don’t know how to work. Apparently, he’s never seen a single working mother multi-task.
Much of the national debate about our dismal economy amounts to thoughtless moralizing. The unemployed are lazy. The poor don’t want to improve themselves. Those who complain about inequality are envious. This kind of rhetoric appeals to many voters, but there are signs that more are seeing through it.
More insidious are the discredited economic doctrines that live on, zombie-like, in Congress and in polite circles in Washington, which obstruct useful government action. A prime example: the notion that raising taxes on the rich, even moderately to shrink deficits, will stifle the economy. Republicans take care to refer to the rich as “job creators.”
Yet the greatest job creators are not the rich but the American consumer. We create jobs by demanding goods and services — and we can’t do it without income.
The economic policy we need now can be summed up in three words: Get Americans working.
Americans are a resilient, hard-working, forward-focused group. However, the private sector is not creating jobs in meaningful numbers and the public sector has been shrinking.
What we need more of right now is federal spending on infrastructure and other worthwhile investments — the “stimulus” that conservatives like to mock. The fact is that the costs of federal borrowing are at historical lows, and the “deficit crisis” that so many point to in horror was largely created by the tax cuts (and wars) of the past decade and the recession. (If you aren’t making income and spending it, you aren’t generating tax revenue.)
We also need to do more to prepare our workforce. Far more than during previous generations, successful workers will need advanced skills in math, science, engineering and technology. And this shift is occurring as college tuition costs have skyrocketed compared to wages.
That suggests some areas for Congress to focus on in 2012: student loan relief, incentives for students to enter the sciences and for start-up investment in technology fields. Meanwhile, we need tax reform to close loopholes and to increase relative tax rates on the very rich.
The point is not to denounce the rich. In any capitalistic society, inequality will always exist. The challenge of 2012 and beyond will be to restore opportunity to a greater swath of Americans so more people, at all economic levels, prosper.That would make for a happy new year, indeed.