Economic Inequality

  • May 2, 2017
    Guest Post

    *This piece originally appeared on StateAG.org.  

    by James Tierney, Former Maine Attorney General and Lecturer in Law at Columbia Law School

    In a letter sent last week, 21 state attorneys general and the Office of Consumer Protection of Hawaii urged Secretary of Education Betsy DeVos to immediately reconsider “the Department of Education’s revocation of critical student loan service reforms.” The policy and guidance memoranda withdrawn by the Department addressed industry-wide procedures by student loan servicing companies that were the subject of investigations and enforcement actions by the Illinois and Washington state attorneys general, among others.

    The April 24 letter highlights some of the industry practices that contributed to more than a quarter of borrowers being delinquent or in default on a student loan, according to a report by the Consumer Financial Protection Bureau (CFPB):

    “In its 2015 report, the CFPB identified troubling student loan servicer practices – including paperwork processing errors and failure to provide accurate information – that discourage the use of income-driven repayment plans. By reforming service incentives and strengthening consumer protections, the rescinded guidance sought to eliminate the loan servicing failures that keep borrowers from entering affordable repayment plans.” — April 24 letter from 21 state attorneys general to Department of Education

    According to Forbes, 44 million borrowers owe approximately $1.3 trillion in student loan debt, making it the second-largest type of consumer debt behind mortgages.

  • April 27, 2017
    Guest Post

    *This piece is part of the ACSblog Symposium: 2017 ACS National Convention. The symposium will consider topics featured at the three day convention, scheduled for June 8-10, 2017. Learn more about the Convention here

    by Orly Lobel, Professor of Law, University of San Diego School of Law

    I am pleased to be a speaker at the ACS 2017 National Convention, which takes place in June 8-10 in Washington D.C. My talk, which will be part of a panel discussion entitled A Second Gilded Age? The Consolidation of Wealth and Fracturing of Employment, will bring together several lines in my research: the gig economy, platform regulation and governance, human capital, intellectual property and antitrust law. In April 2016, I had the honor to deliver the 12th Annual Pemberton Lecture at the 9th Circuit Court of Appeals. I delivered a paper called The Gig Economy and the Future of Employment and Labor Law, which was later published in the USF Law Review and can be read here. I ask: What is the future of employment and labor law protections when reality is rapidly transforming the ways we work? What is the status of gig work and what are the rights as well as duties of gig workers? I propose four paths for systematic reform, where each path is complementary rather than mutually exclusive to the others.

  • April 11, 2017
    Guest Post

    *This piece is part of the ACSblog symposium: "The Future of the U.S. Constitution

    by Walter Dellinger, ACS Board of Advisors Member, Douglas B. Maggs Professor Emeritus of Law, Duke University School of Law and Dawn Johnsen, ACS Board of Advisors Member and Walter W. Foskett Professor of Law, Indiana University Maurer School of Law

    America’s increasing economic inequality threatens our liberal democracy. Economic inequality translates into political inequality and corrodes our democratic institutions and the viability of our Constitution. Ganesh Sitaraman describes these threats in his excellent new book, The Crisis of the Middle Class Constitution: Why Economic Inequality Threatens Our Republic. We need urgently to find innovative tools to counter the erosion of our foundational, shared belief in opportunity and fairness, the American Dream.

    It is time to begin a serious national debate about the wisdom and constitutionality of a federal tax on wealth – an annual tax of a small percentage of an individual taxpayer’s net worth in excess of some large minimum. Just for example:  a 1 percent annual tax on wealth in excess of 10 million dollars, which would affect less than 1 percent of Americans. We leave the details to those skilled in economic and tax policy. Nor do we have in mind the short-term political viability of such a tax in the current Congress – though we will note that in 1999 Donald Trump suggested a one-time 14.25 percent tax on net worth in excess of 10 million dollars.

  • April 11, 2017
    Guest Post

    *This piece is part of the ACSblog symposium: "The Future of the U.S. Constitution"

    by Kate Andrias, ACS Board of Academic Advisers Member and Assistant Professor of Law, University of Michigan Law School

    Ours is an economy and a political system from which many ordinary Americans feel excluded; they feel forgotten by those in power; and they worry that their opportunities are declining. Their perceptions are based in reality. Today, income inequality in the United States is at its highest level since the period leading up to the New Deal. The top 1 percent of earners in the United States take home nearly a quarter of our national income. Workers’ real wages have barely grown during recent decades, even as productivity and educational attainment have increased. The situation is most dire for people of color, particularly African Americans, but white men have also fallen behind, suffering mounting health problems and diminishing opportunities. Political inequality has soared as well. Numerous studies demonstrate the outsized influence of economic elites, both individuals and corporations, at every level of the legislative and administrative process. 

    Trump came to power in part because of these problems of economic and political inequality. His election, like others around the globe, reflected voters’—and nonvoters’—widespread dissatisfaction with political elites. Unfortunately, every indication is that the problems in the political economy that contributed to Trump’s victory will only grow worse under his watch.

    The inequality that helped produce Trump’s election represents a failure of American politics. It also represents a failure of U.S. constitutional law—or more precisely, judge-made constitutional doctrine. Constitutional doctrine contributes to, even facilitates, political and economic inequality in numerous ways. Campaign finance doctrine is the most notorious example. But paltry constitutional protections for workers’ rights to organize and strike are also to blame. Some scholars estimate that the decline in unionization in the United States is responsible for up to one-third of the climb in income inequality in recent decades. So too, the Supreme Court’s doctrine on poverty and education is at fault, having allowed, despite sound constitutional arguments to the contrary, a system of vast inequity in schooling to persist. Many other examples exist.  Here, too, things are likely to get worse under the Trump administration rather than better.

  • April 7, 2017
    Guest Post

    *This piece is part of the ACSblog symposium: "The Future of the U.S. Constitution

    by Jamal Greene, ACS Board of Academic Advisers Member and Dwight Professor of Law, Columbia Law School

    The election of Donald Trump as president represented a failure of American politics. No healthy political culture could have produced his presidency. What is less clear, and what I wish to address here, is whether Trump’s election also represented a failure of the U.S. Constitution. Do our constitutional arrangements predict just the kind of political failure that materialized in November 2016? If so, does that mean that the long-term remedy for that failure lies in constitutional reform? Does our constitutional fate, in other words, determine our political fate?

    Trump’s election has many causes, some of which are clearly contingent. It is easy to imagine Hillary Clinton winning an election held one week later, say, or two weeks earlier. And so the question that interests me arises from the possibility of Trump’s being elected rather than the fact of his election itself. The question does not, moreover, depend on Trump’s particular cocktail of policy interests (such as they are). Trump’s presidency is a crisis not because of his policy positions but because of his corruption, his infantile temperament, his dangerous self-obsession, his sexism and sympathy to white nationalism, his indifference to the truth and his fundamental indecency. A leftist version of Trump is imaginable and, in my view, equally frightening.

    The set of conditions that create the possibility of a Trump or Trump-like presidency are many and are contestable. The umbrella term I will place over at least a subset of those conditions is one I borrow from economics: disintermediation. Disintermediation is what it sounds like: cutting out the middle person, typically from a supply chain. Intermediaries such as distributors or brokers connect sellers to buyers. This is easy to see in a commercial market, and it is equally easy to see how technological change can reduce the need for intermediaries. Amazon is a low-cost means of connecting buyers to sellers. Trulia connects home buyers to sellers without the need for real estate brokers. But disintermediation also occurs in political and information markets, as the Internet and social media platforms diminish the need for traditional information brokers such as major media outlets.