Income Inequality in 2014


Huffington Post
By: Lincoln Mitchell
January 2, 2014

By the end of 2013, it appeared that the major domestic political story of the year had been the botched rollout and negative reaction, in some quarters, to the Affordable Care Act (ACA). It is likely, however, that a year from now the ACA will be more accepted as a real, but limited, improvement to health care policy in the US and that another issue will have emerged as the most important issue of 2013.

2013 was the year where issues of income inequality, raised by the Occupy Movement in 2011, stressed by Pope Francis and, belatedly, by President Obama finally came to the fore of American politics. It is likely they will remain there for some time to come. Income inequality is not new in American politics, but the attention it received in 2013 was. While President Obama's recent speech on the topic is unlikely to lead to significant efforts to address income inequality, it demonstrates that the issue is firmly in the mainstream, for now.

Income inequality is different from poverty, an issue that is often discussed by politicians. These discussions, until this year, tended to frame poverty as an isolated issue growing out of individual or collective failings. Income inequality is different because it suggests that the problem is structural and deeply embedded in our larger economic system.

Accordingly, income inequality is considerably more controversial and divisive than poverty. Almost everybody can agree that poverty is a problem and that we would be better off, both nationally and globally, if there was less of it. There are heated disagreements about the best ways to address the problem, with some calling for more state intervention and others calling for letting the market ameliorate problems of poverty, but most recognize the problem itself.

Income inequality is different, because looking at economic conditions through the lens of equality means not only seeing that it is a problem that some lack enough money for housing, food or other necessities, but that it is also a problem that wealth is highly concentrated in the hands of a relatively small number of extremely rich people. More importantly, looking at income inequality examines the causal relationships between significant concentrations of wealth on one hand and widespread economic duress on the other and questions whether accumulation of enormous wealth by a few contributes to the economic struggles of others. This may seem obvious to some, but it also raises a major challenge to the generally accepted constructs on which American economic policy rests.

There is also a moral dimension to this as has been articulated by the pope. Income inequality is a problem, according to this moral angle, not just because it means that some are in poverty, but because it is somehow morally wrong for some to enjoy lives of wealth, luxury and the best food, housing and healthcare while others have tremendous difficulty meeting even the most basic needs. This moral dimension is intuitive to some and anathema to others.

The American political system as it is currently constructed is wildly unprepared to focus in any meaningful way on income inequality. The fact that a few platitudes by a Democratic president qualified as a major statement on income inequality is evidence of this. The political system is defined by one party that is committed essentially to making the economically powerful richer and more powerful, and another that is too timid and too dominated by moneyed interests of their own to be able to take a strong position on income inequality. Democrats may be more willing to address issues like marginal tax rates or extending benefits to the unemployed, but these proposals, while generally positive, clearly do not seek to address the fundamental problem of income inequality.

2014 will be an important year for addressing issues of income inequality. Either whatever momentum now exists will be lost, or we will see the beginnings of change. If the latter is the case, it is likely that income inequality will be an issue in the 2016 presidential election. Again, for the Republicans this does not matter because most in that party do not view income inequality as a problem, to the extent they believe it is getting worse at all. However, for the Democrats, already poised to candidate with decades long ties to the financial and political establishment that controls that party, this could present more of a concern.

Clearly then, income inequality will only be addressed if a movement is strong enough to push the country's leadership to recognize and seek to ameliorate the problem. It is easy to see how this could fail to happen, but it is more easy to see that income inequality is not going away on its own and that the impact of huge income inequalities will only become more severe in the future. 2013 was the year the country began talking about the issue; 2014 could become the year we start doing something about it, but this action will not come from our leaders unless they are pushed.

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This page contains a single entry by CFED published on January 3, 2014 8:39 PM.

A Strong Start to 2014 for Working Families was the previous entry in this blog.

Jobless benefits stunt growth; Extending emergency measures hurts poor is the next entry in this blog.

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