On Inequality, Obama's Words Aren't Enough

There are times, like the speech Barack Obama gave yesterday on economic inequality, when he reminds liberals of what we found so appealing about him. The address can stand among the most progressive statements of his presidency. Not for the first time, Obama declared inequality "the defining challenge of our time," and articulated an eloquent case, based in American history and values, for the damage it does and why we need to confront it.

So why was I left feeling less than enthusiastic? Because over the last five years, Obama has succeeded in doing so little to address the problem. "Making sure our economy works for every American," he said, is "why I ran for president. It was the center of last year's campaign. It drives everything I do in this office." If that's true, then his presidency hasn't been particularly successful.

Now granted, it's not as though he hasn't been awfully busy. And he still has some notable achievements in this area, none greater than the Affordable Care Act, which is going to guarantee health insurance to millions of low and middle-income Americans. And of course, Republicans have fought and will continue to fight any and every measure that might make this a more equal society. Nevertheless, the stark reality is that the fundamental trends of the last 35 years—more wealth concentrated at the top, less economic mobility, the declining influence of labor unions—haven't been altered by the Obama years.

He cited some of the relevant statistics himself:

Since 1979, when I graduated from high school, our productivity is up by more than 90 percent, but the income of the typical family has increased by less than 8 percent. Since 1979 our economy has more than doubled in size, but most of the growth has flowed to a fortunate few. The top 10 percent no longer takes in one-third of our income; it now takes half. Whereas in the past, the average CEO made about 20 to 30 times the income of the average worker, today’s CEO now makes 273 times more.

And meanwhile, a family in the top 1 percent has a net worth 288 times higher than the typical family, which is a record for this country…

The problem is that alongside increased inequality, we’ve seen diminished levels of upward mobility in recent years. A child born in the top 20 percent has about a 2-in-3 chance of staying at or near the top. A child born into the bottom 20 percent has a less than 1-in-20 shot at making it to the top. He’s 10 times likelier to stay where he is. In fact, statistics show not only that our levels of income inequality rank near countries like Jamaica and Argentina, but that it is harder today for a child born here in America to improve her station in life than it is for children in most of our wealthy allies, countries like Canada or Germany or France. They have greater mobility than we do, not less.

All true. And no less true today than it was when Obama took office.

I don't doubt for a moment that the President sincerely wants and intends to reverse these trends. But when we hit January of 2017, what will matter isn't his desires and intentions. What will matter are the results. And he's got a lot of work to do.

Comments

Joseph Stiglitz lays out a powerful agenda in his latest book "The Price of Inequality" advocating a broad range of initiatives to reverse the growth of inequality. His basic point is that a good portion of this growth stems from the political power of the few to receive unfair advantages from the government or to protect their "rent taking" ability (think the financial industry other than legitimate economic activities such as lending). These can be reversed with a persuasive campaign much like happened in the 1890's with the muckrakers and reform movement led by Teddy Roosevelt. People need to see the connection between unfair economic advantage and government action.

One thing he could do immediately to show his sincerity is to cancel the secret Trans Pacific Partnership that his Trade Representative is trying to finesse past public scrutiny (fortunately with only limited success). Obama may be sincere, but he is a convinced neoliberal who wants to reduce the role of government, turn public goods over to private corporations, and reduce Social Security benefits. Look at what he does, not what he says.

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