On Wednesday, May 30, the Asset Building Program hosted two authors for a conversation about the history, politics and rhetoric of income inequality in the U.S. Reid Cramer, Director of the Asset Building Program, introduced Timothy Noah, Senior Editor at The New Republic and author of The Great Divergence: America's Growing Inequality Crisis and What We Can Do about It, and David Corn, Washington Bureau Chief of Mother Jones and the author of Showdown: The Inside Story of How Obama Fought Back Against Boehner, Cantor, and the Tea Party.
The event began with Reid Cramer noting that the recent Great Recession has indeed put a modest damper on a several decade long trend of rising income inequality and brought renewed attention to the issue. However, since the recession’s official end, the recovering economy has seen a return to previous levels of inequality, with top income earners still receiving substantial percentages of the overall earned income of the U.S. He posed several key questions, including: is income inequality linked to overall economic performance? If there is a relationship between the two, do we have the political infrastructure and will to accomplish policy changes to improve the situation? What political and rhetorical challenges do we face in pushing for income equality?
Timothy Noah explored data on the rise of income inequality over the past century. Noah identified the key issue as the hefty percentage of overall income going to the top 1% of earners, noting that the problem is even more pronounced as you get higher up the scale to the top 0.1% of earners. While the 2007-2009 economy hit people of all incomes, the gains in the recovery have gone primarily to a small number of high income earners. This is an international trend, but the U.S. is a noteworthy and particularly serious case, he claims. He also responded to a critique from those who argue that income inequality is not a problem since we have income mobility. As Noah points out, income mobility is actually fairly limited and that on the whole, an increase in inequality in a country’s economy correlates with a decline in mobility. Race and gender differences do not offer much insight into rising inequality, since the gender wage gap has closed substantially in the past few decades and the racial income gap has remained the same for decades. Immigration, he argues, also has a fairly limited effect since the impact of immigration is a relatively small one on the wages of U.S.-born people who didn’t complete high school. He attributed the rise in inequality to a few factors, including a decline in the strength of unions, a rise in executive compensation driving inequality in the top percentiles, and the “financialization” of the economy accompanied by deregulation of the financial sector.
David Corn spoke next and chronicled recent political events that have generated public discussion about inequality. His book is a “behind the scenes” investigation of the intersections of governing and campaigning: a challenge presidents face when negotiating with lawmakers on highly publicized, hot-button issues. The fight over the extension of the Bush-era tax cuts, for example, provides an example of how President Obama struggled to stay faithful to his core campaign values, while simultaneously balancing the demands of Republican members of Congress. The political palatability of “raising taxes” (or restoring them to previous levels) was so low that Obama had to navigate a political minefield in that conversation. Corn believes that Obama has had to be creative about his “economic fairness” agenda, for example by pegging events to his overarching themes. He is interested in understanding how to talk about economic inequality in ways that are conducive to policy action in a highly partisan environment.
The authors then discussed the current political climate and the importance of raising inequality as a political issue. Noah argued that maintaining a middle class is critical to maintaining a healthy democracy. Cramer pressed both authors to look more deeply at inequality by including disparities in wealth. The three also discussed a variety of policy ideas, such as income tax reform that might ameliorate inequality. Again, the conversation turned to the issue of political palatability: Corn explained that Democrats fear being labeled as “tax hikers” which puts them in a bind when advocating for fairer taxation. Audience members asked questions about the potential inefficiencies of inequality, the rhetoric of “class warfare,” and the role demographic shifts will have on the issue of income inequality over time.