Sunday, November 25, 2012

Obama Nibbles at Inequality

According to Zachary Goldfarb, Obama has made reducing inequality the most important goal of his Presidency. His health care law is designed to get coverage for millions, largely funded by higher taxes on the rich. He wants to undo the Bush tax cuts on the rich, but leave taxes on the middle class low. He has fought to preserve education funding even if that means cuts in programs that help the poor and elderly.

All of which I applaud. But:
Faced with a divided Congress that imposes significant limits on what he hopes to accomplish, it may seem, in 20 years, that Obama only tinkered at the margins. Several of the nation’s leading experts on inequality say that although he has pushed in the right direction, he may have to push much harder if he wants to make a significant mark.

“Obama’s proposals are not strong enough, per se, to undo the very large inequality increase the U.S. has experienced since the 1970s, particularly when it comes to the incomes at the very top,” Emmanuel Saez, an economics professor at the University of California at Berkeley and one of the world’s top experts on the subject, told me. “To really make a dent, you would need to consider more radical policies.”
This is what I think; I cannot see any set of politically possible policies that would seriously reduce inequality in the US. Moving beyond the possible, there are things that might work but might not. Saez seems to advocate World War II-era tax rates of 70 to 90 percent on the highest incomes; but in such a globalized era, would that even work? or would it just cause the whole financial industry to shift to London and the Cayman Islands? Another expert cited by Goldfarb wants free day care and preschool for everyone. I suspect that would help a little at the bottom, but, not as much as some people think, and it would do nothing about the growing disparity between billionaires and the rest of us.

Only a fundamental change in how our society thinks about money and success would do that, a return to the concept of enough that has vanished from our lexicon.

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