Well, the results of 35 years of supply side economic are in. The rich have gotten vastly richer and the middle class has gotten the shaft. During the previous 35 years, 1945-80, the distribution of wealth was much more equitable. Workers saw their incomes rise with productivity. Reagan’s supply-side economics shifted the gains in productivity to investors. No wonder the populist movements in both parties are gaining so much steam.
Free-market ideologues in the Republican party would call this development freedom. The rich are getting richer because the system is set up to benefit them. Reductions in the top income bracket and capital gains gave them more money to invest, money that never trickled-down but inflated their coffers. Organized labor has been steadily losing its influence as manufacturing jobs were sent overseas. Big corporations and their shareholders get bailed out by the tax payers but small businesses just go under.
As David Leonhardt of the New York Times says, “Different policies could produce a different outcome. My list would start with a tax code that does less to favor the affluent, a better-functioning education system, more bargaining power for workers and less tolerance for corporate consolidation. Remarkably, President Trump and the Republican leaders in Congress are trying to go in the other direction.”
Republicans believe that if we just give more freedom, or money, to the wealthiest Americans, they’ll unleash an entrepreneurial spirit that will create businesses and wealth. But maybe the real entrepreneurial energy is in the much larger low income and lower middle class communities. After 35 years, it’s time we try investing more in them for again.
Back in 1980, Pell Grants covered the entire cost of a two-year degree and 77% of a four-year degree. Today, they cover just 62% of a two-year degree and 36% percent of a four-year degree. In 1965, the average CEO made 20 times the salary of a company’s employees. Today, it’s 276 times as much. There’s a reason people think the system is rigged.
Income inequality is the central problem facing the broadest number of people in our society, not access to bathrooms or police shootings or immigration reform. While Democrats in power should address all of those concerns, they need to run campaigns on an economic platform and message that addresses economic well-being. We need more investments in education and a higher minimum wage. We need a tax system that rewards work as much as investments. And we need an infrastructure program that modernizes our grid, improves transportation including rail and provides greater access to broadband in rural areas. It’s still the economy, stupid.