income inequality

  • July 18, 2014
    Guest Post

    by Gabriel J. Chin, Professor of Law, UC Davis School of Law

    *Noting the 50th anniversaries of Freedom Summer and the Civil Rights Act of 1964, ACSblog is hosting a symposium including posts and interviews from some of the nation’s leading scholars and civil rights activists.

    Practicing the art of the possible rather than seeking perfection may be an inevitable feature of civil rights legislation. Even the greatest and most honored laws have loopholes; the Thirteenth Amendment, for example, allows slavery based on conviction of crime, any crime, and the exception was liberally exploited in the former Confederacy after Redemption. The Fifteenth Amendment seems to countenance discrimination on the basis of sex, and a protection in earlier versions of the right to hold office was stripped out before enactment.        

    Nevertheless, I’ll take them; I do not criticize the Reconstruction Amendments or their makers for being merely as good as was possible at the time. Similarly, it would not have been better to give up what was good in the 1964 Act simply because of its deficiencies. At the same time, recognizing a law’s compromises and gaps is essential to understanding its real import, and to thinking about how policy can be shaped to fully reflect the principle at stake.

    Among the important compromises in the bill are exemptions from the employment discrimination prohibition of Title VII for businesses of less than 15 people, and the exemption from the Public Accommodations provision of Title II for small, owner-occupied motels and lodging establishments. Presumably, these exceptions exist for the benefit of racists who grew up in a racist system through no fault of their own. Congress might reasonably have concluded that forcing close contact between racial minorities and these racists might have been more trouble than it was worth.  But these exemptions should have been time-limited; at this point, all but the oldest business owners spent their entire lives, or at least their adulthoods, in a nation were discrimination has clearly been against the law and public policy. The case for continued compromise of the policy is not obvious.

    Another major gap in the Civil Rights Act is the lack of protection against discrimination of members of the LGBTQ community. Clearly, this was no oversight. The desegregation struggle was to some degree a Cold War propaganda effort. Fair treatment on the basis of race was a “cold war imperative,” and so too was controlling the potentially subversive effects of sexual minorities. Thus, the 1965 Immigration Act, a close cousin of the Civil Rights Act, eliminated discrimination on the basis of race in immigration law, but simultaneously clarified and strengthened a prohibition on gay and lesbian immigration. The Civil Rights Act makes little sense unless it recognizes a fundamental human dignity and equality. The Americans with Disabilities Act and the Age Discrimination in Employment Act closed unjustified gaps in the coverage of the original law, and the prohibition on gay immigration is gone. Continuing to allow discrimination against gays and lesbians in the Civil Rights Act is indefensible.

  • September 27, 2013
    “It’s no use pretending that what has obviously happened has not in fact happened,” wrote Columbia Prof. Joseph Stiglitz in the spring of 2011. “America has allowed inequality to grow.” In fact, the United States now has the fourth-highest degree of wealth inequality in the world, surpassed only by Russia, Ukraine and Lebanon. So, as we mark the second anniversary of Occupy Wall Street, we are presented with an ideal moment to take stock of our society with an eye to shaping its future.
    Enter Robert Reich. The U.S. Labor Secretary-turned-U.C. Berkeley professor has never pretended anything to the contrary. Both a founding editor of The American Prospect and the current chairman of Common Cause, Reich has penned 13 books on economics and public policy in the last two decades. With the September 27 limited release of the documentary film Inequality for All, in which he is both narrator and star subject, Reich is resizing his impassioned argument for the silver screen. As he explained to Bill Moyers, “I’ve tried everything else!”
    The film – directed by Jacob Kornbluth, whom Reich names the “creative giant” behind its inception – is masterful in constructing a narrative of urgency without falling into despair. Reich explores the causes and consequences of widening economic inequality through compelling graphics like the “suspension bridge," whose foundation tracks the concentration of income in the last century. In one powerful sequence, Reich asks a class of Berkeley students to guess how the profits from iPhone sales are distributed globally. To their surprise, the U.S. and China receive a combined 10 percent of revenue, while Germany and Japan receive upwards of 20 and 30 percent, respectively. Globalization, Reich concludes, is a terrific win for the consumer but a devastating loss for the worker.
    Woven into the factual argument is personal testimony from across the economic spectrum. Among the most compelling is that of Nick Hanauer, the entrepreneur and progressive advocate whose 2012 TED Talk on income inequality sparked controversy in its call for a more equitable tax policy. When the rich call themselves “job creators,” Hanauer explains, they are “making claims about status, power and privilege.” As an early investor in and a successful venture capitalist, Hanauer is no stranger to wealth, but he readily admits that the rich don’t generate enough economic activity to sustain the economy. After all, he jokes, “even the richest people only sleep on one or two pillows.” Instead, Hanauer believes we must demand a kind of “middle-out economics” that protects and empowers the middle class – America’s true job creators.
  • January 31, 2012

    by Jeremy Leaming

    Discussion of the nation’s growing economic inequalities inevitably leads some pundits, notably on the Right, to assert that such talk is fueling “class warfare.”

    In his State of the Union address, President Obama spoke to that charge when he raised the need for the nation’s super wealthy to pay more in taxes. “You can call this class warfare all you want,” Obama said. “But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.”

    But the president’s assertion is unlikely to dissuade conservative pundits from whining about so-called “class warfare” anytime soon.

    Indeed, Media Matters For America has complied research detailing the Right’s obsession with “shouting class warfare,” whenever the president or others, for that matter, delve into discussion of the nation’s economic inequalities. 

    For example after the president’s State of the Union address, Rush Limbaugh claimed that the president’s use of the word “fairness” was “code for class warfare.”

    And likely not surprising, Limbaugh’s theme as Media Matters notes was echoed on Fox News. On the network’s “Fox & friends,” the hosts advocated for the poor to pay income taxes. “Kick in a buck, kick in something!” co-host Steve Doocy cried.

    Although class warfare has long been bandied about by the Right whenever talk of raising taxes on the wealthy occurs, the Occupy Wall Street protests and commentary from several economists and more moderate policy makers have intensified the class warfare rhetoric. Elizabeth Warren who advocated for the creation of the Consumer Financial Protection Bureau has been hit with it for her straightforward discussions of income inequality and the need for the nation’s uber-wealthy to start paying their fair share in taxes.

    As Media Matters notes, however, the Right is likely ramping up its class warfare rhetoric in light of statements from high-profile figures, such as billionaires Warren Buffett and Bill Gates, maintaining that their kind simply don’t pay enough in taxes.

  • January 24, 2012

    by Jeremy Leaming

    It may be hokum to some conservative pundits, but government policies that coddle the nation’s super wealthy, have sparked what some economists say are long overdue and legitimate protests, such as the Occupy Wall Street demonstrations.

    In his Jan. 24 column for The New York Times, David Brooks blasts lawmakers for taking up the concerns of the OWS protestors, writing that they are obsessed with “pounding down the rich.” But Brooks seems to have missed what is animating those protests – the fact that conservative economic policies in the United States have been aimed heavily in favor of protecting a powerful few.

    Columbia University professor Joseph E. Stiglitz has written about this nation’s growing wealth gap, while acknowledging that the top 1 percent has contributed to society. Nonetheless, Stiglitz notes the policies protecting the top 1 percent are shrinking middle classes in numerous countries, and creating disconcerting gaps, between the top 1 percent and everyone else.

    “But, around the world, political influence and anti-competitive practices (often sustained through politics) have been central to the increase in economic inequality. And tax systems in which a billionaire like Warren Buffet pays lower taxes (as a percentage of his income) than his secretary, or in which speculators, who helped bring down the global economy, are taxed at lower rates than those who work for their income, have reinforced the trend,” Stiglitz wrote in a piece republished by Slate.

    Stiglitz goes on to note that many of the bankers who helped trigger the Great Recession, and were later bailed out by taxpayers, are “now back at their desks, earning bonuses that amount to more than most workers hope to earn in a lifetime, while young people who studied hard and played by the rules see no prospects for fulfilling employment.” (In a recent piece for The Times, Susanne Craig reports that large bonuses have already returned for top executives of two Wall Street titans. For example, Craig notes that despite a “rough year,” JPMorgan’s chief executive, Jamie Dimon, “was awarded $17 million in equity-linked stock for his work in 2011, according to a regulatory filing.”)

    Stiglitz says the “rise of inequality is the product of a vicious spiral: The rich rent-seekers use their wealth to shape legislation in order to protect and increase their wealth – and their influence. The U.S. Supreme Court, in its notorious Citizens Uniteddecision, has given corporations free rein to use their money to influence politics. But while the wealthy can use their money to amplify their views, back on the street, police wouldn’t allow me to address OWS protesters through a megaphone. The contrast between overregulated democracy and unregulated bankers did not go unnoticed. But the protestors are ingenious: They echoed what I said through the crowd, so all could hear.”

    Some lawmakers, despite conservative pundits’ derision of the OWS protesters, are listening.

    In his Dec. 6 address in Osawatomie, Kan., President Obama cited the statistics, widely reported by Stiglitiz and others, saying “the average income of the top 1 percent has gone up by more than 250 percent to $1.2 million per year. I’m not talking about millionaires, people who have a million dollars. I’m saying people who make a million dollars every single year. For the top one hundredth of 1 percent, the average income is now $27 million per year. The typical CEO who used to earn about 30 times more than his or her worker now earns 110 times more. And yet, over the last decades the incomes of most Americans have actually fallen by about 6 percent.”

  • December 13, 2011

    by Jeremy Leaming

    In late October, Texas Gov. Rick Perry, and Republican presidential hopeful, unveiled tax policy that despite the already historically low tax breaks for the nation’s wealthiest would advance even more tax benefits for that tiny, but politically powerful, group. As reported by TPM’s Brain Beutler, Newt Gingrich’s tax policy, reviewed by the Tax Policy Center, continues the Republican Party presidential candidates’ formula of advancing tax policy geared to coddling the super wealthy.

    As Beutler writes, “And like all the plans that came before it, Gingrich’s constitutes a massive tax cut for the rich. Indeed, no matter how you stack the numbers, Gingrich wants a tax system that permanently holds tax rates on the highest earners lower than the tax rates on the middle class."

    With study after study showing the decline of the nation’s middle class and sharp increase in poverty, the GOP presidential candidates are either oblivious to the research or are collectively shrugging their shoulders. It was Fox’s Britt Hume who said earlier this year of growing economic inequality, “who cares?”

    The Tax Policy Center, Beutler notes in conclusion, would drastically “reduce federal revenues.” Groups, such as Grover Norquist’s Americans for Tax Reform, have advocated this type of policy for years – that is starve the federal government of revenues, so policies intended to help the less fortunate dwindle. The group’s mission, as noted on its website, is directed at shrinking what it sees as an unwieldy federal government. “The government’s power,” the group’s mission statement reads, “to control one’s life derives from its power to tax. We believe that power should be minimized.”    

    The Republican Party, as Tim Dickinson explores in this piece for Rolling Stone, has evolved to become a movement beholden to the nation’s wealthiest.

    Dickinson writes, “Today’s Republican Party may revere Reagan as the patron saint of low taxation. But the party of Reagan – which understood that higher taxes on the rich are sometime required to cure ruinous deficits – is dead and gone. Instead, the modern GOP has undergone a radical transformation, reorganizing itself around a grotesque proposition: that the wealthy should grow wealthier still, whatever the consequences for the rest of us.”

    Earlier this month in Osawatomie, Kan., President Obama echoed some of the concerns that the Occupy Wall Street protestors have brought, in dramatic fashion, to the fore in recent months, when he decried economic policies that have damaged the middle class while benefiting a tiny few.

    “Look at the statistics,” the president said. “In the last few decades, the average income of the top 1 percent has gone up by more than 250 percent to $1.2 million per year. I’m not talking about millionaires, people who have a million dollars. I’m saying people who make a million dollars every single year. For the top one hundredth of 1 percent, the average income is now $27 million per year. The typical CEO who used to earn about 30 times more than his or her worker now earns 110 times more. And yet, over the last decade the incomes of most Americans have actually fallen by about 6 percent.”

    In a Dec. 11 column for the Chicago Tribune, Geoffrey R. Stone, a distinguished law professor at the University of Chicago Law School, and an ACS Board member, called Obama’s speech “groundbreaking,” for likely speaking to whom he dubbed “The Concerned Majority.”