One hears the term “income redistribution” used to disparage progressive agenda. We have been undergoing income redistribution in the USA for three decades: from the less wealthy to the very wealthy.
Robert Creamer notes in HuffPost:” We frequently hear pundits pontificating about the rising level of political polarization in Congress.
Often the blame is ascribed to plummeting levels of civility among Members. In fact, ten years ago the House actually conducted several “civility retreats” aimed at fostering a more civil atmosphere inside the body. These events featured motivational speakers and smaller “encounter-group-like” seminars – and were widely attended by Members and their families. Needless to say, this approach didn’t do much for the actual “civility index” in Congress.
And then there are the “centrists” who think that the partisan divide can best be bridged by proposals that seek to “moderate” the Democratic “change” agenda. Of course, most of these “moderates” want to water down Democratic proposals to change the status quo — proposals that would reduce the power of the Wall Street gang, the private insurance industry, the energy companies and Chamber of Commerce. This presents a serious problem to most Democrats because the interests of these special interests are generally diametrically opposed to the interests of the American people. But it turns out they are also counterproductive when it comes to ending political polarization as well. Here’s why:
Several years ago, a group of political scientists that included Nolan McCarty, Keith Poole and Howard Rosenthal, conducted an important study on the causes of political polarization. Their results were published in a fascinating book, Polarized America: The Dance of Ideology and Unequal Riches. Their study found that there is a direct relationship between economic inequality and polarization in American politics.
The team measured political polarization in congressional votes over the last century, and found a direct correlation with the percentage of income received by the top 1% of the electorate.
They also compared the Gini Index of Income Inequality with congressional vote polarization of the last half-century and found a comparable relationship.
Why should this be? It doesn’t take a political genius to figure out that if people have more in common they are more likely to support similar proposals and perspectives. Political polarization in Congress does not result from some new inability to “communicate” or “empathize.” It results from the fact that the major constituencies of the two parties have increasingly divergent economic interests.
To put it simply, Republicans increasingly represent the interests of the wealthiest elements of American society, and Democrats represent everyone else. As the gap between the incomes of these segments of the population grows, so does the gap between their economic interests and the policy proposals they support.
So in other words, if you want to do something about the political polarization of Congress, you have to deal with the underlying cause. You have to reduce the growing level of income inequality in America. Unfortunately, when “Moderate” Democrats attempt to defang Democratic proposals to rein in private insurance companies, Wall Street banks, energy companies, and the Chamber of Commerce they have exactly the opposite effect. The actions of these “Moderates” serve to perpetuate income inequality – and as a direct consequence, the political polarization they are so quick to attack.
We should remember that the level of income inequality is far from being a static feature of American society.
Paul Krugman points out that at the beginning of the Great Depression, income inequality, and inequality in the control of wealth, was very high. Then came the “the great compression” between 1929 and 1947. Real wages for workers in manufacturing rose 67% while real income for the richest 1% of Americans fell 17%. This period marked the birth of the American middle class. Two major forces drove these trends – unionization of major manufacturing sectors, and the public policies of the New Deal that were sparked by the Great Depression.
The growing spending power of everyday Americans spurred the postwar boom from 1947 to 1973. Real wages rose 81% and the income of the richest 1% rose 38%. Growth was widely shared, but income inequality continued to drop.
From 1973 to 1980, everyone lost ground. Real wages fell 3% and income for the richest 1% fell 4%. The oil shocks, and the dramatic slowdown in economic growth in developing nations, took their toll on America’s and the world’s economies.
Then came what economist Paul Krugman calls “the New Gilded Age.” Beginning in 1980, there were big gains at the very top. The tax policies of the Reagan and Bush administrations magnified income redistribution.
In the last 20 years, there has been a massive re-polarization of incomes in America between the wealthiest 1% of the population and everyone else. The Center on Budget and Policy Priorities reports that fully two-thirds of all income gains during the last economic expansion (2002 to 2007) flowed to the top 1% of the population. And that, in turn, is one of the chief reasons why the median income for ordinary Americans actually dropped by $2,197 per year since 2000.
From 1990 to 2004, the income of the top 1% of the population has increased 57%. The richest Americans – the top one-tenth of 1% – have experienced income growth of 85%. Yet the median income of the bottom 90% has increased only 2%
- Now the CEO of the average company in the Standard and Poor’s Index makes10.9 million. That means that before lunch, on the first workday of the year, he (sometimes she) has made more than the minimum wage workers in his company will make all year. That translates to5,240 per hour – or about 344 times that pay of the typical American worker.
- Most people would consider a salary of100,000 per year reasonably good pay. But the average CEO makes that much in the first 20 hours of the work year.
- And that’s nothing compared to some of the Kings of Wall Street. In 2007, the top 50 hedge and private equity fund managers averaged588 million in compensation each- more than 19,000 times as much as the average U.S. worker. And by the way, the hedge fund managers paid a tax rate on their income of only 15% — far lower than the rate paid by their secretaries.
So if all the “moderates” who say they want to help end the polarization of Congress are serious, they need to get to work supporting the Democratic agenda to end the stranglehold of the wealthiest, most powerful economic interests, and support measures to once again increase taxes on the wealthiest among us at least to the levels they were back in the Clinton Administration. In other words, if you want to end the polarization of Congress, you have to end the economic polarization of America….”
(some italics mine)