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How Runaway Inequality Helped To Elect Trump — And How It Can Defeat Him

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How Runaway Inequality Helped To Elect Trump — And How It Can Defeat Him

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Income Inequality

Reprinted with permission from AlterNet.

Over the last 37 years, the top 10 percent of all Americans saw their incomes rise by 115 percent and the top 1 percent saw an incredible rise of 198 percent. Meanwhile, the bottom half of all American earners not only failed to see any gain at all, their incomes actually declined by 1 percent from 1978 to 2015, according to research by Thomas Piketty and co-researchers.

Declining income brings with it a host of related social problems. As localities are starved for revenues, public safety and the sense of community deteriorate. The social fabric of decent living is imperiled.

Extreme inequality and related social deterioration fueled both the Sanders and the Trump revolts. While Sanders offered concrete plans to reverse it, Trump and the Republicans are sure to make it worse.

The Inevitability of Rising Inequality?

Politicians and pundits alike have convinced themselves that rising inequality is an economic act of God. They repeatedly point to new technology, automation, and competitive globalization as the root causes of rising inequality. They claim that these blind forces turn the well-educated into winners, while the less educated are left behind. These inevitable forces are so powerful in our free market economy, that it would be impossible, and therefore foolish to intervene directly.

Such a self-justifying story! So soothing for well-to-do! And oh so wrong.

The new Piketty study provides a clear-cut example that shows runaway inequality is not inevitable: France.

The French economy is as modern as ours. It is even more exposed to the global market place: Exports in France account for 30 percent of its GDP compared to only 12.6 percent for the U.S. Because it must compete even more rigorously, France must use the highest levels of technology and automation. So if competitive global markets, new technology, and automation cause rising inequality, then France should be its poster child.

It is not.

Inequality is far less extreme in France. The bottom 50 percent saw their incomes grow by 39 percent from 1978-2015. The incomes of the top 10 percent grew by 44 percent and the top 1 percent by 67 percent—unequal still, but nowhere near as lopsided as in the U.S.

Viva la Difference?

Social and economic policies, not blind market forces, determine the degree of inequality. Here are a few obvious differences:

  • France has universal health care—we don’t.

  • France has far stronger labor protections—U.S. workers are far more vulnerable to layoffs, with the Republicans now seeking to cripple unions still further.

  • France has more progressive income taxes—the Republicans want to lower them for the rich.

  • Higher education is virtually free in France—here we put students and families deeply into debt.

  • Financial institutions are more constrained in France—in America, Wall Street dominates the economy and politics.

The financialization of our economy—more aptly called financial strip-mining—is the most powerful driver of runaway inequality. This is the direct result of the failed neo-liberal policies that erroneously claim cutting regulations always makes the economy run better.

In the case of finance the picture is crystal-clear. When we had our foot on the neck of Wall Street (from the New Deal to the late 1970s) the economy became more egalitarian with real wage increases for working people of all kinds. But after deregulation of Wall Street activities—legalization of stock buybacks, end of Glass Steagall, prohibition of regulating derivatives, etc.—U.S. inequality soared.

As the Piketty study puts it, “We observe a complete collapse of the bottom 50% income share in the U.S. between 1978 and 2015, from 20% to 12% of total income, while the top 1% income share rose from 11% to 20%”

The Undoing of Trump?

Trump seized basic working-class issues away from Clinton and the Democrats—little wonder given their ties to Wall Street. But the Obama/Sanders voters who turned to Trump (and there are millions of them) expect Trump to improve working-class incomes. After several weeks of utter chaos, it is safe to say that Trump won’t do anything of the sort.

  • Rather than reduce the power of Wall Street, he has welcomed into his administration a large cohort of big-time financiers.

  • Their first collective move is to kill as many financial regulations as possible.

  • The Republicans want to shift more money to the rich with so-called “tax reforms” and through anti-union legislation.

  • The replacement of Obamacare, whatever that may turn out to be, is certain to harm lower-income people even more, unless the rest of us intervene in a big way.

From Resist to Reversing Runaway Inequality

The good news is that millions are taking to the streets, organizing meetings, challenging their congressional representatives, and in general raising hell. Except for a handful, however, most of these actions are aimed at protecting the status quo from an impetuous, childish autocrat. Without question the resistance must continue, especially to protect the most vulnerable—immigrants, low-income women in need of Planned Parenthood, Medicaid recipients, etc.

However, we are unlikely to win back Obama-to-Sanders-to-Trump voters until we rekindle the spirit of Occupy Wall Street and the Sanders campaign. The social democratic platform Sanders put forth attacked runaway inequality. That kind of agenda needs to become part of the work of Indivisible and the thousands of groups that are holding town meetings all over the country.

A New Movement

To reach the Obama-to-Sanders-to-Trump voters we need to organize a new set of protests and a clear set of pro-active demands. It’s not just about what we don’t want Trump to do, it’s about what we really want to see changed.

Would people show up for protests around this agenda: A Wall Street speculation tax, free higher education, Medicare for All, a $15-dollar-an-hour minimum wage, and tackling climate change?

We can’t get from resist to reversing runaway inequality until we launch an educational process to spread the word. We need thousands of educators to reach out to the Obama-to-Sanders-to-Trump voters who really are seeking to reverse runaway inequality.

Armed with facts—not alternate facts—we can build the foundation for a new movement to take back our country both from Trump and from the financial strip-miners.

Les Leopold, the director of the Labor Institute, is currently working with unions and community organizations to build the educational infrastructure for a new anti-Wall Street movement.

IMAGE: mSeattle / Flickr

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6 Comments

  1. Eric Henry February 15, 2017

    Stop using education as a proxy for class instead of income and wealth. It’s a ridiculous way to measure things, especially today when there’s such a huge disparity in education between our oldest and youngest generations.

    It’s led to this sort of absurdity where we call some white 70 year old retired business owner “working class” simply because he’s uneducated, while a Black 25 year old child care worker with a bachelors degree isn’t working class.

    Trump’s base is not the working class, but the petite bourgeoisie, same as his GOP predecessors. America’s working class is brown and black and getting moreso every day. And we voted for Hillary, against both Trump and Bernie. And for Obama before that.

    Reply
    1. FireBaron February 16, 2017

      Eric, there is still a significant education discrepancy. How many black and brown skinned youths have left school so they can try to find work to support themselves? How many kids (black, white, brown) have found themselves in college and unprepared for both the workload and the complete lack of supervision regarding their completing it, then dropping out?
      For those that do stay in school, how many have been suggested into paths that provide no financial sine cure? When the entire country probably only has 5000 or so social worker jobs opening every year, why do we produce over 10,000 people with that degree? At the same time, there are thousands of jobs opening for entry-level precision toolmakers, but only hundreds of people completing training to qualify for them! And don’t get me going on folks with BFAs. How many jobs in “Fine Arts” are there?
      And when they do enter the job market, there is almost always someone willing to do the same jobs they are willing to do for less money!

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    Reply
  3. dbtheonly February 16, 2017

    Really Mr. Leopold?

    The same France that is bringing us Marine Le Pen ought to be the example for the USA?

    The Occupy Movement had practical policy proposals? I’ll grant you that Sanders had volume, but Democrats soundly rejected his sloganeering campaign. You insist that Sanders would have won? Yeah, right.

    Millions of Obama/Trump voters?

    Clinton 2016: 65,845,063
    Obama 2012: 65,446,032

    Boeing workers voted down unionizing yesterday.

    The policies of the 1930s worked for the 1930s. The 21st Century is different.

    Just one example for you.

    You claim to want to, ” (have) our foot on the neck of Wall Street”. You have noticed that several companies have moved overseas because of what they felt was “burdensome taxes and regulation”? Burger King is the example that springs to mind. As your foot comes down, what’s to stop companies moving to a less regulated nation? Ireland is waiting for them.

    That said, serious, enforceable, regulation, like President Obama proposed, is the solution.

    Reply
    1. FireBaron February 16, 2017

      Sort of my response, too. Apparently Leopold likes to ignore that France regularly gets crippled by union strikes (“Oh! We demand you pay us for a 30 hour work week what we are being paid for a 35 hour work week, and we demand a 6th week of guaranteed vacation, too!”) and their August Diaspora (Rule of thumb – if you are poor or on vacation in Paris, don’t get sick in August because all the doctors and nurses are on vacation in the south!).
      Algerian immigrants are being drawn to Radical Islam because of their treatment at the hands of radical right Frenchmen.

      As for “Occupy”, they didn’t even do what they set out to – raise awareness of worsening financial conditions and force the government to act on it. The Berniebots who believed (along with many Conservatives) that Hillary was Satan (or at least his mother) incarnate who cast their votes for Jill Stine, Gary Johnson or (yeah, a bunch of them did) Teflon Donnie have allowed these conditions to worsen. How many states that Teflon Donnie edged his way into would have gone to Hillary had the disgruntled Berniebots not cast their “protest votes”?

      1. dbtheonly February 16, 2017

        Hey FB,

        I’ll need to see some real figures before I quit lumping millions of Obama/Trump voters with millions on illegals voting for Hillary. “Just ask anybody.” Sheesh.

        I tend to equate “raising awareness” with “accomplishing nothing else”. Nice, but only a first step. Compare Occupy to the TPR.

        I’m a big fan of Unions; but what do you do then the employees vote them down?

        Thomas Friedman has written several books over the past dozen years. His arguments make a lot of sense. He doesn’t consider the ramifications of his conclusions. And those ramifications are pretty scary.

        I’ll throw out one more for you. I have, in my bag, a degree from the Universitatus Kansienisis granting me a degree as Doctor of Thinkology. What if we just copy my degree and hand one out to everyone? Then everyone will have a college degree. Isn’t that kinda what Bernie’s looking for?

        But I put two propositions to you.
        1. College doesn’t make you smart. It merely shows others that you are inately smart.
        2. If college degrees are used to eliminate some from high paying jobs, won’t the bar rise if everyone has them? Hiring Offices will merely find another way of triaging resumes.

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