Redistributing wealth upward by Harold Meyerson

Washington Post, September 25, 2012

excerpt

Which is the more redis­tri­b­u­tion­ist of our two par­ties? In recent decades, as Repub­li­cans have devoted them­selves with laser-like inten­sity to redis­trib­ut­ing America’s wealth and income upward, the evi­dence sug­gests the answer is the GOP.

The most obvi­ous way that Repub­li­cans have robbed from the mid­dle to give to the rich has been the changes they wrought in the tax code — reduc­ing income taxes for the wealthy in the Rea­gan and George W. Bush tax cuts, and cut­ting the tax rate on cap­i­tal gains to less than half the rate on the top income of upper-middle-class employees.

The less widely under­stood way that Repub­li­cans have helped redis­trib­ute wealth to the already wealthy is by chang­ing the rules. Mar­kets don’t func­tion with­out rules, and the rules that Repub­li­can pol­i­cy­mak­ers have made since Ronald Rea­gan became pres­i­dent have con­sis­tently depressed the share of the nation’s income that the mid­dle class can claim….

The only time in U.S. his­tory when work­ers sub­stan­tially ben­e­fited from pro­duc­tiv­ity gains was the three decades that fol­lowed World War II, when median house­hold income and pro­duc­tiv­ity gains both increased by 102 per­cent. Not coin­ci­den­tally, that was also the only period of gen­uine union power in U.S. his­tory, and the time when the tax code was at its most pro­gres­sive. Dur­ing the past quarter-century, as pro­gres­siv­ity was less­ened and unions dimin­ished, all pro­duc­tiv­ity gains have gone to the wealth­i­est 10 per­cent, accord­ing to research pub­lished by the National Bureau of Eco­nomic Research. In 1955, at the height of union strength, the wealth­i­est 10 per­cent received 33 per­cent of the nation’s per­sonal income. In 2007, they received 50 per­cent, Eco­nomic Pol­icy Insti­tute data show. If that’s not redis­tri­b­u­tion, I don’t know what is.

Indeed, the United State­s has expe­ri­enced an upward redis­tri­b­u­tion so pro­found that it affects far more than incomes. Whole sec­tors of the econ­omy and regions of the coun­try have been dec­i­mated by these eco­nomic changes. The descent in all man­ner of social indexes is most appar­ent among poorly edu­cated whites…over the past 30 years? Many Democ­rats have been com­plicit in this calamity by their indif­fer­ence to the con­se­quences of dereg­u­la­tion and trade. But the tro­phy for pro­mot­ing the poli­cies that have redis­trib­uted wealth, fam­ily sta­bil­ity and longevity upward goes to the Repub­li­cans, whose standard-bearers are cham­pi­oning even more rad­i­cal ver­sions of these poli­cies today…

Full text

Which is the more redistributionist of our two parties? In recent decades, as Republicans have devoted themselves with laser-like intensity to redistributing America’s wealth and income upward, the evidence suggests the answer is the GOP.

The most obvious way that Republicans have robbed from the middle to give to the rich has been the changes they wrought in the tax code — reducing income taxes for the wealthy in the Reagan and George W. Bush tax cuts, and cutting the tax rate on capital gains to less than half the rate on the top income of upper-middle-class employees.

The less widely understood way that Republicans have helped redistribute wealth to the already wealthy is by changing the rules. Markets don’t function without rules, and the rules that Republican policymakers have made since Ronald Reagan became president have consistently depressed the share of the nation’s income that the middle class can claim.

Part of the intellectual sleight-of-hand that Republicans employ in discussions of redistribution is to reserve that term solely for government intervention in the market that redistributes income downward. But markets redistribute wealth continuously. In recent decades, markets have redistributed wealth from manufacturing to finance, from Main Street to Wall Street, from workers to shareholders. Rules made by “pro-market” governments (including those of “pro-market” Democrats) have enabled these epochal shifts. Free trade with China helped hollow out manufacturing; the failure to regulate finance enabled Wall Street to swell; the opposition to labor’s efforts to reestablish an even playing field during organizing campaigns has all but eliminated collective bargaining in the private sector.

The conservative counter to such liberal cavils is to assert that the market increases wealth, which will eventually descend on everyone as the gentle rains from heaven. Decrying such Keynesian notions as unions or federally established minimum wages, hedge fund guru Andy Kessler recently argued in the Wall Street Journal that “it is workers’ productivity that drives long-term wage gains, not workers’ wages that drive growth.”

But Kessler assumes — and this is the very essence of the “trickle-down” argument — that workers reap the rewards of productivity gains. Believing and asserting that requires either ignorance or willful denial of economic history. The only time in U.S. history when workers substantially benefited from productivity gains was the three decades that followed World War II, when median household income and productivity gains both increased by 102 percent. Not coincidentally, that was also the only period of genuine union power in U.S. history, and the time when the tax code was at its most progressive. During the past quarter-century, as progressivity was lessened and unions diminished, all productivity gains have gone to the wealthiest 10 percent, according to research published by the National Bureau of Economic Research. In 1955, at the height of union strength, the wealthiest 10 percent received 33 percent of the nation’s personal income. In 2007, they received 50 percent, Economic Policy Institute data show.

If that’s not redistribution, I don’t know what is.

The problem is not just that everyone but the wealthy is claiming a smaller share of the nation’s income; the absolute amount of income they’re getting is declining as well. Median household income has dropped to the levels of the mid-1990s, according to Pew analysis of census data, while the income of the 400 wealthiest Americans rose by a tidy $200 billion last year, according to data released this month by Forbes magazine.

If that’s not redistribution, I don’t know what is.

Indeed, the United Stateshas experienced an upward redistribution so profound that it affects far more than incomes. Whole sectors of the economy and regions of the country have been decimated by these economic changes. The descent in all manner of social indexes is most apparent among poorly educated whites. Conservative commentator Charles Murray has documented in his new book the decline in marriage rates and family stability within the white working class. And now, as the New York Times’ Sabrina Tavernise has reported, that decline includes longevity as well. While other Americans’ life expectancy has advanced, the life expectancy of whites without high school diplomas has declined since 1990 — by three years among men and five years among women.

The market is not just redistributing income in theUnited States, then. It is redistributing life.

So, which party can claim credit for this — the real redistribution this nation has experienced over the past 30 years? Many Democrats have been complicit in this calamity by their indifference to the consequences of deregulation and trade. But the trophy for promoting the policies that have redistributed wealth, family stability and longevity upward goes to the Republicans, whose standard-bearers are championing even more radical versions of these policies today.

A pro-life party? More like its opposite.

meyersonh@washpost.com  

http://www.washingtonpost.com/opinions/harold-meyerson-the-party-that-truly-believes-in-redistribution/2012/09/25/c5877b7a-0740-11e2-afff-d6c7f20a83bf_story.html?wpisrc=nl_headlines

 

Economic Justice – labor

The Decline of Unions Is Your Problem Too By Eric Liu, Time.com… the share of America’s work­force that’s union­ized hit a 97-year low…It’s a vicious cycle: as unions decline, fewer peo­ple see their fates as bound up with unions, which just accel­er­ates the decline… Inequal­ity and wealth con­cen­tra­tion are at lev­els not seen since just before the Great Depres­sion…a basic assump­tion now shapes most Amer­i­cans’ mind­set about labor: the belief that the death of unions isn’t my prob­lem because I’m not in a union. That assump­tion is wrong in two crit­i­cal ways. First, the fact is that when unions are stronger the econ­omy as a whole does bet­ter…On the flip side, when labor is weak and cap­i­tal uncon­strained, cor­po­ra­tions hoard, hir­ing slows, and inequal­ity deep­ens. Thus we have today both record highs in cor­po­rate prof­its and record lows in wages. Sec­ond, unions lift wages for non-union mem­bers too by cre­at­ing a higher pre­vail­ing wage…The weak­ness of labor is everyone’s prob­lem — and its revival everyone’s opportunity.

Why Americans Need Unions Now More Than Ever by Robert Creamer HuntingtonPost.com, February 23, 2011 — …The central problem facing the American economy — and our society — is the collapse of the American middle class. The incomes of the middle class Americans, and those who aspire to be middle class — 90% of Americans — have been stagnant for almost three decades. This trend, which was briefly interrupted during the Clinton Administration, is the chief defining characteristic of our recent economic history…Virtually all of the increase in our gross domestic product over the ten years before the Great Recession went to the wealthiest 2% of the population. These changes in income distribution are not the result of “natural laws.” They are the result of systems set up by human beings that differentially benefit different groups in the society…

Inequality Rages as Dwindling Wages Lock Millions in Poverty 

Why Don’t We Pay People Enough? 8 Facts About America’s Struggling Working People By Bill Quigley, AlterNet, January 23, 2012

5 Things Unions Have Done for You By Zaid Jilani,Think Progress, posted on Alternet.org, March 6, 2011 1. Unions Gave Us The Weekend. 2. Unions Gave Us Fair Wages And Relative Income Equality 3. Unions Helped End Child Labor 4. Unions Won Widespread Employer-Based Health Coverage 5. Unions Spearheaded The Fight For The Family And Medical Leave Act

It’s All About the Wages — Our Economy Would Be Fine If Everyone Made Their Fair Share by Robert Reich – Robert Reich’s Blog, Posted on Alternet.org, July 13, 2010

Attacking unions: It’s not about the money, it’s about power By David Schultz, MinnPost.com, Feb. 23, 2011 - Efforts to bust collective bargaining rights inMadisonare not about the money. Money and budget deficits are the pretext for a larger battle to attack government and break public-sector unions for political reasons. In many ways, this is the logical continuation of the union-busting battle that began under the Reagan era. What is really going on here is an effort by corporations and the GOP to dismantle one of the few remaining institutions in America that defy their power. It is the battle to restructure labor markets to serve a broader corporate neo-liberal agenda…the Wagner Act — aka the National Labor Relations Act (NLRA) — in 1935 recognized the right to collectively bargain and organize in the private sector. Subsequently, similar rights were extended to workers in the public sector. The NLRA was a success. By the early 1950s private-sector unions constituted approximately 38 percent of the private-sector workers. Wages, income and working conditions dramatically increased, economic inequalities decreased, work place safety improved, and features such as the eight-hour/40-hour work week emerged. ‘A countervailing power’ Yet the 1950s was thehigh pointof unions. Corporations hated them. Unions represented what John Kenneth Galbraith called a “countervailing power” on corporations. Yes, in many cases unions sided with management on protectionist practices (think of the car industry) and had corruption problems (Hoffa and the Teamsters), but they also did a lot of good, by raising the American standard of living. The real problem for corporations, and for Republicans, was that unions supported Democrats. They provided dollars, organizing, and votes for Democrats. But the Vietnam War and the dual oil embargos in the 1970s precipitated a major fiscal crisis that produced decreased corporate profits. It was at this point that corporate and Republican interests converged to attack labor unions….beginning and most visible effort to break unions and limit their power was the decision by President Reagan to dismantle PATCO in 1981. He busted the air traffic controllers’ union and that sent a clear signal that it was OK to go after unions. Together the GOP and corporations waged a terrific battle against unions, claiming thatAmerica’s economic decline was rooted in high union wages, inflexible rules, health care and benefits, along with excessive government regulation and taxation. Big government and unions were the cause of American decline. Of course, not all of this is true…Yet blame the unions because they form a great scapegoat for American industrial decline….The war on private-sector unions and government has been a success. Private-sector unions are now relatively weak. They constitute about 8 percent of the private-sector workforce. Their decline correlates with significant increases in economic inequality, declining wealth for the poor and middle class, and the weakening of the Democratic Party. The one stronghold for unions is the public sector. They constitute a larger percentage of the public sector workforce than do unions in the private sector. They generally support Democrats, and in return for lower wages compared to the private sector they have received greater job security and often better benefits. The job security in part was a consequence to prevent the politicization of the government, to protect from political reprisals, and limit patronage and the spoils system. Public-sector unions are now under attack as governments now face their own version of a fiscal crisis. The battle in Wisconsin is part of a broader agenda to demonize public employees and government. …It is just so easy. It is a great wedge issue — play the resentment and divide and conquer cards with taxpayers and private-sector workers…

Labor Unions’ Fight for the 99% Goes Way Beyond Raising Campaign Dollars By Sarah Jaffe, AlterNet, April 22, 2012

History of Labor Unions from shmoop.com, February 24, 2011