Came across this article this morning from the Columbus Dispatch, where I thought that the writer, Jack Torry, did a credible job of defining the differences in the way that Republicans and Democrats frame the issue of how we came to to the Great Inequality of today and what the potential remedies are:
Rising Gap in Incomes a Key Issue
Many Democrats blame international trade agreements for wiping out millions of good-paying manufacturing jobs. They cite a decline in union membership for private companies, predatory lending by mortgage companies and a sharp decline in income-tax rates since 1980 for upper-middle class and upper-income Americans.
Conservatives contend that the gap has widened because the Obama administration has adopted policies that slow economic growth, such as raising taxes on the wealthy and business investments, swamp small companies and burden the health and financial industries with a maze of new regulations.
From what I see so far, I agree with Torry that this is how the framing will shake down. Let's discuss below the merits of both frames.
Let's start with the easier one - the Republican frame that government regulation and oversight has burdened and crippled industry and thus the trickle down effect for everyone has been recession and decline.
The refutation is that in no time in history have corporations done better or been more profitable, so the issue of today's inequality has little to nothing to do with burdensome regulation. I would say that when Republicans haul out this dinosaur, that the effective counter is to ask - specifically WHICH regulation has hampered industry and caused this decline?
Be prepared to hear that Obamacare is the culprit. Yet, Obamacare has only been in effect since 2014. How then does one lay the economic decline of the middle and working classes that has gone on for decades on Obamacare? The one kernel of truth in the Obamacare argument is that it is possible that some companies chose to artificially reduce the size of their work force in order to not fall under Obamacare guidelines for coverage, but I would venture that the finite number of those companies is relatively small - those right around the 50 employee mark. It might be of some value to ask what kind of company that is that large, wouldn't want to provide healthcare for their employees? And, is the penalty, if they choose not to, really that onerous?
Putting aside Obamacare, there are very few answers based in reality that tie regulation or oversight with lack of jobs and sustainable wages. And again, if there actually are any, let's identify them specifically and not allow Republicans to use the lazy and inaccurate frame that "regulation" in general is what evaporates jobs.
Now, let's move along to the Democratic frame for causes: lack of high paying jobs, union or otherwise, predatory lending and inequitable tax rates. This is where things get interesting. All of the causes of inequality cited by Democrats in Torry's story have as their underpinning a basic moral failure that might be loosely defined as a lack of fairness.
Going back to the robust financial health and profits of corporations today, how is it that almost none of those gains made it down to the employee level? Why was it all sucked up in outrageous executive compensation and not some portion expended in higher wages, better benefits? Why do so many of those companies who are awash in capital often choose to cut hours and benefits? Why do we have the Walmartization of the country where we actually subsidize the serf wages of some corporations with Medicaid and food stamps for the working poor? Let's call this form of capitalism what it is - cannibal capitalism whereby some companies exploit their employees and allow the rest of us to make up the difference. These companies eat the collective wealth of all of us. This is why "minimum wage" is the wrong discussion and we need to talk about a "living wage" whereby a full-time worker can expect to be able to provide for themselves food and shelter at some community standard.
The exploitation of workers and the grotesque greed of those at the top are gigantic, horrific, moral failures. Let's call it what it is - WRONG. EVIL. BAD FOR SOCIETY. Let's be passionate about it. Our disgust at this situation has nothing to do with wealth envy, it has to do with disgust at the way the wealth has been accumulated. Maybe someone connected to the Clinton campaign can clue the clueless Larry Summers in on this.
Now, where does predatory lending enter the picture? Why did Torry mention it? In the real estate meltdown beginning in 2007 the equity loss has been equated to be around 7 trillion dollars.
Unlike other stock and tech bubbles - this one hit right on the Main Street of almost city and town in the country. The largest portion of the wealth amassed by the lower and middle classes was concentrated in their home equity, much of which evaporated overnight and which left many homeowners upside down and under water in negative equity. This is a pretty good summary of the consequences of the housing bubble.Housing and the Great Recession although it does not address solutions.
But I'm talking about the blame game here anyway. The banking and mortgage industries made conscious choices to put people in unviable mortgages. They really didn't care about the quality of the mortgages being generated because their whole gameplan was off-loading the mortgages anyway into securities, so they literally had no interest in whether the mortgage was sustainable in the long-term. Again, this was systemic corruption, or "control corruption" as William Black defines it. It's not that individual mortgages were predatory, although many were, it was that the ENTIRE F-ing INDUSTRY was predatory. We are still suffering the consequences.
This is why Elizabeth Warren becomes important. She is the only politician on a national level who acknowledges that we were screwed and that we have a right to be angry and that she is angry on our behalf as well and that she, unlike others, would actually try to do something to prevent it in the future. All our other leaders tell us that nothing bad or illegal happened when we know differently. They make excuses. They stand between the pitchforks and the miscreants by their own admission. If nothing illegal happened, why are all these civil fines being assessed and paid by the industry?
We and our economy suffered not because of oversight and regulation but due to the LACK of it. Now, which Democrat do you think will be able to make that argument? And who will instead agree and fall into the Republican framing because they lack the guts or the will to argue for the oversight and yes, prosecution necessary to restore us to a nation of Laws and not just some Social Darwinist enclave where the 1% prey on the rest of us?
Last point of what should be the Democrats answer to wealth inequality - taxation of the wealthiest at rates that make sense and have worked in the past. Again, do the Democrats have the guts and the will to make what should be an easy argument or will they immediately cede the entire playing field to the anti-tax Republicans? Who do they represent really? The working and middle classes they are trying so hard to market themselves to without alienating their wealthy donors?
In fact, in the course of writing this diary, I have come to wonder at one of Torry's premises - he has outlined what should be the Democrats explanation of wealth inequality, but what evidence do we have that it will actually play a part in any Democratic campaigns of the future?
Finally, Torry defined both Republicans and Democrats as having the same primary answer to the answer to wealth inequality being based on providing more education and training. While I agree that improved access to education at all levels, from early childhood through to university and vocational training is a good thing for society in general, I don't see it as the panacea that many do to solving our issues of unemployment and underemployment. Just ask all the highly trained unemployed people out there if more training will help them to obtain non-existant jobs.