Back in 2009, when it was becoming clear that bankers had crashed the world economy but were going to be spared the worst effects, while ordinary folks took the brunt of the hit, people asked why there was not more social outcry. Yes, the Occupy Wall Street movement pilloried the 1%, and the 99% gained a catch-phrase but not much else. OWS then faded from view while the Tea Party dominated political debate and pushed the U.S. government into shutting down and to the brink of default.
I wrote then that in the 1930s it had taken a good seven years after the market crash of 1929 before people gave up on mainstream conservative measures — budget cuts, tolerating high unemployment, and waiting for recovery — and a large enough wave of social support built up to support major reforms. So I speculated that it might take seven years again after the current crash, that is up to late 2014, before we similarly gave up on conservative austerity measures and started implementing reforms aimed at improving the income distribution to restore some dignity and opportunity to middle-class workers.
Has the new day dawned? In the last few months we have seen talk about inequality move to front and center in the President’s speeches, in articles in Foreign Affairs and the debates of the Aspen Institute. Even at Davos and major academic conferences, inequality has become the main theme.
Yet talk is cheap. So far, we have yet to see any major moves in Europe or the US away from the austerity and budget-balancing that have prevailed toward real measures to redistribute income and support the poor, working, and middle classes. Obamacare and the latest US tax reforms did make some small efforts to increase taxes on the rich (top rates tweaked a bit, medicare taxes extended on high earners), but these were more than taken away in the stopping of long-term unemployment benefits and the massive, extended cuts in government employment and the real wage declines in government jobs.
Probably the most important indicator of how most people view the current economy is that the number of people who want to find work — who believe that jobs exist where the pay is worth the work — has continued to drop to levels not seen in half a century.
Yes, technology and globalization and education have been driving these trends; but there is no reason to simply sit back and let the minimum wage stagnate and decline for decades while the rewards for top earners increase manifold. Squeezing labor and generously rewarding the highest echelons of management and finance is a social decision, not an automatic and unavoidable outcome of global economics (in Germany and Japan the ratio of top pay to average earnings is still a fraction of that in the U.S.).
What could be done? The answers are simple — there is plenty — yes PLENTY — of loose cash in the US economy waiting to be deployed. Corporations are sitting on trillions in financial assets that they have not deployed due to slow growth in demand. Turning that money over to the public sector for rebuilding roads and bridges, hiring teachers and funding pre-school and subsidizing public higher education (as we used to do generously in this country) would simply restore the American business model of the 1950s and 1960s, when we built the interstate highway system, went to the moon, and raised the living standards of ordinary Americans even as high taxes and limited stock market gains moderated the income gains of the very rich.
So can we go back to this model? The only reason we have not done so is political. But this is 2014, not 2007, so let us see if things change. The true indicator will be in President Obama’s State of the Union speech. Will he ask for new investments in American opportunity? Will he get them? These simple facts will tell the story of social justice in America for the future.