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Income Inequality

February 27, 2013

In a New York Times article, Grand Old Parity, Sheila Bair comments on and documents the continuing and sustained rise in income inequality in the US. Not good for democracy, and not good for the 99%. See the extended quote below. However, the following paragraph stood out:

Republicans should also put rebuilding the nation’s transportation and energy infrastructure high on our political agenda. From Lincoln’s transcontinental railroad to Eisenhower’s highway system, Republicans have understood that investing in critical infrastructure projects creates jobs and expands commerce.

The reference to Eisenhower reminds us of how far the Republican party has strayed from its policies of the past. Can one imagine the modern GOP advocating a program of the magnitude of the interstate highway project? Reflect for a moment on what it has done for the US economy.

The same holds for the Lincoln reference. In the midst o the Civil War, in the depths of our darkest hour, Lincoln looked to the future – and it wasn’t just transportation. Lincoln established the system of land grant colleges and also the National Academy of Sciences.

It is time for our political parties – but I must say, especially the Republican Party – to focus on the common good, the nations’s future, not on tribal warfare and knocking out the other guy. The other guy is us. We are knocking out ourselves.

LAST month Emmanuel Saez, a celebrated economist at the University of California, Berkeley, issued another depressing report on income inequality. Among other things, Mr. Saez examined how real family incomes changed in the United States from 2009 to 2011, the first two years of the recovery. The richest 1 percent of Americans, he found, saw their incomes grow, on average, by more than 11 percent. As for the other 99 percent? You guessed it: incomes shrank by nearly half a percent.

The phenomenon is hardly new. The yawning gap between rich and poor has been growing since the 1970s and reached a 90-year peak in 2007, just before the financial crisis. The Great Recession narrowed the gap a bit, but now, once again, the richest Americans are vacuuming up what wealth is out there, a trend that Mr. Saez expects to continue.

I am a capitalist and a lifelong Republican. I believe that, in a meritocracy, some level of income inequality is both inevitable and desirable, as encouragement to those who contribute most to our economic prosperity. But I fear that government actions, not merit, have fueled these extremes in income distribution through taxpayer bailouts, central-bank-engineered financial asset bubbles and unjustified tax breaks that favor the rich.

This is not a situation that any freethinking Republican should accept. Skewing income toward the upper, upper class hurts our economy because the rich tend to sit on their money — unlike lower- and middle-income people, who spend a large share of their paychecks, and hence stimulate economic activity.

But more fundamentally, it cuts against everything our country and my party stand for. Government’s role should not be to rig the game in favor of “the haves” but to make sure “the have-nots” are given a fair shot. …

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From → Economics, Politics

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