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MARTY WISEMAN: 2016 and the ‘income inequality’ debate



Perhaps the thing that is evolving as the most unusual element at this early stage of the 2016 presidential race has to do with the central or dominant theme that will be debated with the greatest vigor during the coming campaign.  While such issues as which war do we leap into in the Middle East, the immigration debacle, same-sex marriage and the future of health care in the United States are sure to soak up ample discussion time, many pundits spread across the liberal to conservative spectrum are increasingly mentioning one issue as having the potential to dominate the debate. That issue has come to be known simply as “income inequality.”

Sit back for a moment and let that thought sink in.  From the first time I heard the mention of this term in the context of modern day American politics, it occurred to this writer that perhaps a different choice of words might be in order.  Alas, income inequality seems to have burrowed  too deeply into the current political lexicon as a topic to be debated and indeed, depending on one’s position, a central reason for one’s voting preference.

The breadth of concern over this topic spread as it is over a goodly number of Democrats and Republicans alike is clear evidence that the once taboo issue of mal distribution of wealth is now fair game for contesting and winning and losing elections.  Dare I say it brings to mind the research and writings of the reviled Karl Marx who spent the better part of his career in the library in London pouring over the wage and hour records of the day describing the labor of the industrial revolution.  Marx’s single minded mission was to analyze labor and its relationship to the formation of capital.  He sought to prove what he viewed as a great imbalance between increasingly wealthy captains of industry and the laborers who created the wealth by the sweat of their brows.  While once the stuff of ever more distant history, by virtue of Marx’s writings we are left with reasoning and terminology that is sounding astoundingly familiar today.

Occupy Wall Street brought sentiments to the public stage in the form of mass protests over what supporters described in various terms as financial greed  flowing forth from the apex of corporate America.  Also, the Democrats are raving over the candidacy of Independent-Socialist Senator from Vermont, Bernie Sanders.  Furthermore, Democrats continue to salivate over even the remotest possibility that Massachusetts Senior Sen. Elizabeth Warren would join Sanders to challenge Hillary Clinton.  Senator Warren gained fame for her insightful and unrelenting attacks on what she labels as Wall Street excesses at the expense of Main Street consumers.

The case being made by these politicians is being bolstered by a rising tide of survey data clearly pointing to public concerns that can hardly be ignored. A couple of recent examples should suffice to illustrate this.  In a 2012 Pew Research survey 65 percent of respondents believe the gap between the rich and poor has gotten wider and of that number 57 percent stated that this was a bad thing for society.  In a separate 2014 study Pew Research revealed that only the top 10 percent of income groups are seeing an increase in income while the bottom 90 percent get less and less each year.  Perhaps most telling of all, the Pew study found that currently the actual corporate CEO-to-worker earnings ratio is a record 354-to-one!

The question naturally arises as to how we reached this point.  Ironically, we only have to reach back to insiders in conservative hero President Ronald Reagan’s administration to retrieve ample clues.  President Reagan’s youthful budgeting superstar David Stockman and Reagan’s labor secretary and renowned economist, Barry Bluestone, have both been quite forthcoming in admitting the mistaken assumptions of the once hallowed theory of “supply-side economics” and the increasingly obvious unworkability of “trickle down” theory. The idea behind “trickle down economics” held that if earnings at the highest corporate levels are maximized those dollars would naturally trickle down to the middle and lower classes.  Stockman himself opined that  Reagan trickledown is horribly flawed as a policy that would provide economic growth that will benefit all Americans.  There is no way, according to Stockman that trickledown can work to increase the incomes of working classes in America.  The Reagan years saw increased taxes on consumers and a new array of tax credits, loopholes, and subsidies for corporate interests.  Thus, the formula for burgeoning income inequality was put in place.

Economist Bluestone pronounced “trickledown” a failure also. He cited Reagan era policies that in effect redistribute income from working families to rich corporate types as clearly reducing consumption.  In an interview with the Public Broadcasting Service Bluestone stated that, “the wealthiest people spend 30 percent of their incomes.  The poor spend 100% and working people spend 98 percent.”  According to these front liners in the Reagan administration the result has been a widening income gap.

Hence the parameters of the debate are set and they center on the question of who are the real “job creators”?  Are they the rich and ultra-rich of corporate America or are they the legions of working men and women with a few extra dollars in their pockets who keep the cash registers ringing on main street?  The debate should be enlightening indeed.

» Dr. Marty Wiseman is Professor Emeritus of Political Science and Public Administration and Director Emeritus of the The Stennis Institute of Government at Mississippi State University. His email address is wmw3@msstate.edu.

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