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The Minimum We Can Do to Fight Inequality

Research & Commentary
January 29, 2014

by Sam Pizzigati

Why the 2014 State of the Union action agenda won’t take us nearly as far as we need to go.

The political profile of economic inequality in America has certainly been growing. So has the political confusion over what overcoming inequality will take. Unfortunately, President Barack Obama’s latest State of the Union address may only add to that confusion.

Obama could — and should — have declared a clear and compelling agenda for combating the concentration of income and wealth that has left America so staggeringly unequal.

2014-SOTU-Inequality-Govt-ContractsIn part — small part — he did point to that broad, serious agenda we need. The higher national minimum wage he once again proposed would most definitely help hike the share of our national income that goes to working people.[pullquote]To fix the ills that ail us, we can’t just look at the bottom of our economic pyramid.[/pullquote]

And Obama’s announcement that all private businesses seeking federal contracts will soon need to start paying their workers at least $10.10 per hour offers a great example of how we can leverage the power of the public purse to rebuild a more equal nation.

But if we really want to overcome income inequality, raising the minimum wage would be the minimum we should do. To fix the ills that ail us, we can’t just look at the bottom of our economic pyramid. We have to look at the top as well.

Most Americans get this reality, as a new USA Today/Pew Research poll makes plain. Some 60 percent of us believe “the economic system in this country unfairly favors the wealthy.” Only 26 percent feel that the government should do “not much” or “nothing” to reduce the gap between the rich and everyone else. Average Americans want real action against our top-heavy distribution of income and wealth.

On the other hand, those wealthy Americans who benefit the most from this top-heavy distribution don’t want to see any action at all that jeopardizes their good fortune. Nor do the politicians these wealthy folks bankroll.

But these politicians have a problem. America’s grand economic divide has become too gaping to deny. So what do these politicos do instead? They spread confusion. They blur the distinctions between inequality, poverty, and opportunity. They reduce inequality to a matter of poverty and blame poverty on the absence of opportunity. If we just gave poor people more opportunity to succeed, their basic line goes, inequality would be no great worry.[pullquote]Apologists for the wealthy are blurring the distinctions between inequality, poverty, and opportunity.[/pullquote]

This clever messaging totally rewrites our recent history. We don’t have a grand divide between the rich and everyone else — and a collapsing middle class — because poor people lack opportunity. We have an economy that’s stopped working for average people, middle class and poor alike, because the rich have rigged the economic rules in their own favor.

We need an anti-inequality offensive that takes on the rich and their capacity to rig the rules. For example, our billionaires shouldn’t be able to buy candidates and elections.

Instead of suggesting that kind of offensive, Obama simply ignored the political role the rich have played in his speech.

The blame for our current inequality? He pinned it on vague “massive shifts in technology and global competition.” But other major industrial nations have faced those same “massive shifts” and ended up with distributions of income and wealth far more equal than ours.

The difference between those nations and ours? Other nations have not let the rich set the basic rules for how “global competition” plays out within their borders.

Other nations, for instance, have tax rules in place that require the wealthy to bear a meaningful share of the tax burden. And other nations have labor relations rules that foster a healthy give-and-take between labor and management over the distribution of the wealth that modern economies create.[pullquote]The United States has become the most unequal major developed nation on the face of the Earth.[/pullquote]

Back in the middle of the 20th century, we had rules like these here in the United States. But we’ve let the rich erase them. We’ve become, as a result, the most unequal major developed nation on the face of the Earth.

Amid this stark inequality, we can certainly try to “build new ladders of opportunity into the middle class,” as Obama proposed during his State of the Union address. But if we continue to let the wealthiest Americans — and the corporations they run — shove people down those ladders, out of the middle class, real opportunity in our country will eventually belong only to our most privileged.

Sam Pizzigati, an Institute for Policy Studies associate fellow, edits the inequality weekly Too Much. His latest book is The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class.

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