A Note on Income Inequality, Its Social Cost, and the Political Economy of the Second Gilded Age

I have never gotten it straight whether Vladimir Lenin actually did say: “The worse, the better.” But Eduardo Porter does!:

The bloated incarceration rates and rock-bottom life expectancy, the unraveling families and the stagnant college graduation rates amount to an existential threat to the nation’s future. That is, perhaps, the best reason for hope. The silver lining in these dismal, if abstract, statistics, is that they portend such a dysfunctional future that our broken political system might finally be forced to come together to prevent it.

Talk about grasping at straws…

In a thumbnail, the plutocratic American right these days appears to try to:

  • mobilize the top by promising an unequal distribution of wealth, and

  • mobilizes the bottom by provoking them to hate “others”–the liberals, the minorities, the most recent wave of immigrants.

Policies to enrich and improve the lives of even their voters who are not at the top of the income and wealth distribution appear to be the furthest thing from their minds.

The contrast of the political economy of this Second Gilded Age with the political economy of the First Gilded Age a century ago is striking. Then even the most conservative politicians had a strong commitment to policies of social and economic betterment: the entire progressive agenda. Yes, there were policies to disadvantage “others”–Woodrow Wilson’s extension of segregation, Theodore Roosevelt’s flirtations with various forms of soft eugenics. But there were also policies to make the market economy one of opportunity and upward mobility on the one hand, and to curb the power of the “malefactors of great wealth” on the other.

That has fallen away…

Eduardo Porter:

Eduardo Porter: Income Inequality Is Costing the U.S. on Social Issues: “Thirty-five years ago, the United States ranked 13th among the 34… nations… today in the OECD in terms of life expectancy for newborn girls. These days, it ranks 29th. In 1980, the infant mortality rate in the United States was about the same as in Germany. Today, American babies die at almost twice the rate of German babies…. What’s most shocking… is how stunningly fast the United States has lost ground….

Much of America’s infant mortality deficit is driven by ‘excess inequality.’ American babies born to white, college-educated, married women survive as often as those born to advantaged women in Europe. It’s the babies born to nonwhite, nonmarried, nonprosperous women who die so young…. When it comes to the health, well-being and shared prosperity of its people, the United States has fallen far behind…. The labor market lost much of its power to deliver income gains to working families in many developed nations. But blaming globalization and technological progress… is too easy. Jobs were lost and wages got stuck in many developed countries. What set the United States apart… was the nature of its response. Government support for Americans in the bottom half turned out to be too meager to hold society together….

When globalization struck at the jobs on which 20th-century America had built its middle class, the United States discovered that it did not, in fact, have much of a welfare state to speak of. The threadbare safety net tore under the strain. Call it a failure of solidarity…. Is there a solution to fit [American] ideological preferences? The standard prescriptions, typically shared by liberals and conservatives, start with education, building the skills needed to harness the opportunities of a high-tech, fast-changing labor market that has little use for those who end their education after high school…. On the left, there are calls to build the kind of generous social insurance programs, which despite growing budget constraints, remain largely intact among many European social democracies…. [But] it remains a political nonstarter in a nation congenitally mistrustful of government. Just in time to kick off the presidential campaign, Republicans in the House and Senate were working on a budget that would gut Obamacare — most likely increasing the pool of the nation’s uninsured — and slash funding for programs for Americans of low and moderate income…

May 4, 2015

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