How to Stop the GOP Effort to Recreate the Gilded Age

The Republican answer to everything in terms of the economy is to cut taxes, for the rich, smash labor unions, reduce safety regulations, and allow vulture capitalism an unfettered free hand.  The results of this approach is that over the last 35 years, the wealth of the top 1% in America has collectively increased by $1 trillion.  Meanwhile, the wealth of the bottom 80% of society has shrunk by $1 trillion.  While giving lip service to concern about rising inequality in America, the Republicans basically have no solutions and are only too willing to allow things to continue while using racism, appeals to far right religion, and fear of foreigners to dupe Americans into voting for politicians who will continue the war on the middle and lower classes.  A column in the New York Times looks at some of what really needs to be done if the problem is to be addressed.  Here are highlights:

Summers’s analysis of current economic conditions suggests that free market capitalism, as now structured, is producing major distortions. These distortions, in his view, have resulted in gains of $1 trillion annually to those at the top of the pyramid, and losses of $1 trillion every year to those in the bottom 80 percent.

At a Feb. 19 panel discussion on the future of work organized by the Hamilton Project, a centrist Democratic think tank, Summers defied economic orthodoxy. He dismissed as “whistling past the graveyard” the widely accepted view that improving education and job training is the most effective way to reduce joblessness.  “The core problem,” according to Summers, is that

there aren’t enough jobs, and if you help some people, you can help them get the jobs, but then someone else won’t get the jobs. And unless you’re doing things that are affecting the demand for jobs, you’re helping people win a race to get a finite number of jobs, and there are only so many of them.

He adds that he is “all for” more schooling and job training, but as an answer to the problems of the job marketplace, “it is fundamentally an evasion.”

Summers dismissed as palliative such relatively modest proposals as supplementing the earnings of low-wage workers by increasing the earned-income tax credit and expanding eligibility for the refundable credit.

Even a 50 percent increase in the earned-income tax credit at a cost of $25 billion would barely address current income inequality, Summers said.
[A]ny attempt to correct the contemporary pattern in income distribution would require large and controversial changes in tax policy, regulation of the workplace, and intervention in the economy to expand employment and to raise wages.

To counter the weak employment market, Summers called for major growth in government expenditures to fill needs that the private sector is not addressing:

In our society, whether it is taking care of the young or taking care of the old, or repairing a lot that needs to be repaired, there is a huge amount of very valuable work that needs to be done. It’s much less clear, to use a modern phrase, that there’s a viable business model for getting it done. And I guess the reason why I think there is going to need to be a lot of reflection on the role of government going forward is that, if I’m right, that there’s vitally important work to be done for which there is no standard capital business model that will get it done. That suggests important roles for public policy.

In order to stem the disproportionate share of income flowing to corporate managers and owners of capital, and to address the declining share going to workers, the report calls for tax and regulatory policies to encourage employee ownership, the strengthening of collective bargaining rights, regulations requiring corporations to provide fringe benefits to employees working for subcontractors, a substantial increase in the minimum wage, sharper overtime pay enforcement, and a huge increase in infrastructure appropriations – for roads, bridges, ports, schools – to spur job creation and tighten the labor market.

Summers has advised Hillary Clinton on economic issues, and a key question looking toward 2016 is how much of the Summers agenda she is prepared to adopt, if she decides to run for president.

Many of the policies outlined by Summers — especially on trade, taxation, financial regulation and worker empowerment — are the very policies that divide the Wall-Street-corporate wing from the working-to-middle-class wing of the Democratic Party. Put another way, these policies divide the money wing from the voting wing.

Summers has forced out in the open a set of choices that Hillary Clinton has so far avoided, choices that even if she attempts to elide them will amount to a signal of where her loyalties lie.

Yes, Hillary will need to show her hand.  But meanwhile, it is noteworthy that EVERYTHING that is proposed as part of the solution is opposed by the GOP. Meanwhile, there is more upward social mobility in "Old Europe" than here in America.