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Given the prospects of a Clinton presidential campaign and a Democratic Party unwilling to put forth a serious plan for retooling our democracy and economic policies, the only hope for genuine progressive social change is a movement from below. (Photo: Joe Crimmings/flickr/cc)

More Evidence ‘Centrist’ Solutions Can’t Save Us

Richard Eskow

 by People's Action Blog

We have become a profoundly unequal society. That reality is explored in new detail in a recent study from the Institute for New Economic Thinking (INET). Even more importantly, the INET study shows that it will take a dramatic shift in policy to restore the equilibrium. Unless we can build momentum for a new political agenda, we’ll be divided into a small minority with fabulous wealth and a permanent underclass with few hopes or prospects.

"If we continue to let ourselves be constrained by politicians’ and pundits’ definition of the political mainstream, our economy will become permanently unjust."

Unfortunately, our mainstream political dialogue shows no sign of adapting to these realities. As the INET study confirms, mainstream Democratic ideas won’t protect us from this dismal future.

Republican policies? Don’t ask.

That’s why it was discouraging to read in the New York Times this weekend that the presumed presidential nominee of the Democratic Party is “expected to embrace … standard Democratic initiatives like raising the minimum wage, investing infrastructure, closing corporate tax loopholes and cutting taxes for the middle class” – along with “newer” ideas like “providing incentives to corporations to increase profit sharing with employees and changing labor laws to give workers more collective bargaining power.”

These ideas, while worthwhile, will not reverse our multi-decade descent into inequality. Nor does it seem likely that the “philosophy” of Hillary Clinton’s advisors, as presented to the Times, will resonate with the voters who have lost so much ground during this process of decline.

They call it “inclusive capitalism,” and that’s a formulation which would not have been out of place in conservative Republican platforms of recent decades.

“The challenge,” said Clinton advisor Lawrence Summers, “… is to address inequality without embracing a politics of envy.”

The “politics of envy” is another favored conservative trope, and it’s troubling to see it adopted by Democrats. But it fits with the overall message, as conveyed by the Clinton associates who spoke with Amy Chozick of the Times. Their consensus appears to have become slightly more liberal, but their policy prescriptions still seem to fall far short of what’s needed.

For its part, the INET paper adds to a growing body of literature that shows that inequality is deeper than previously understood. It also illustrates how deeply our policies – and our politics – will need to change if we are to address the problem.

Authors Lance Taylor, Armon Rezai, Rishabh Kumar, and Nelson Barbosa ran model simulations and found that the range of policies considered “do not reduce rich vs. poor inequality by very much” when they are “applied at politically ‘reasonable’ levels.”

In other words: If we continue to let ourselves be constrained by politicians’ and pundits’ definition of the political mainstream, our economy will become permanently unjust. It is left to the rest of us to wonder about the social implications of an economy based on permanent injustice.

The authors studied the “Palma ratio” between rich and poor, comparing the top 1 percent to the bottom 40 percent, and found that “the top 1 percent steadily increased its GDP share from 5 percent to nearly 15 percent over two decades … while shares of the other groups have been stable or declined.”

In one of their most significant findings, the authors concluded that 46.9 million American households spent more than they received, further intensifying the nation’s wealth gap. Economist Lance Taylor, the paper’s lead author, told Lynn Parramore that “the bottom 50-60 percent of households … have a negative savings rate.”

“Their average wealth is close to zero,” Taylor added.

The authors also noted that “the relatively rich have 50 times the average income of the poor. The share of the GDP of the top 1 percent is higher than the share of the bottom 40 percent.”

The “fundamental message of the paper,” as defined by the authors, is this:

“Policy initiatives with ‘feasible’ limits will not strongly affect distribution in the U.S. economy … Only major social changes – expropriating the expropriators in the ancient phrase – could begin to accomplish this task.”

It’s easy to follow these conclusions down a dark road. If Democratic policies fail to fundamentally address American inequality, voters could once again be convinced that – in that timeworn Republican phrase – “government itself is the problem.”

That’s essentially what we saw after a post-crisis stimulus that helped revive the economy, but was too small to extend that recovery to most Americans. That led many people to conclude, not that the stimulus was too small, but that it didn’t work at all.

(Perhaps not coincidentally, Lawrence Summers reportedly played a key role in reducing the recommended size of that stimulus.)

If the leading Democratic candidate’s policies are likely to prove inadequate, however, the Republican alternative would be disastrous. The authors' models show that the “Path to Prosperity,” as the GOP calls its policy, “leads to depression.” In the GOP’s “balanced budget” scenario, GDP would fall 9 percent.

Things fall apart. The center cannot hold.

So why aren’t any leading politicians offering solutions that might actually work? The answer may lie in the “quandary” that the New York Times described for the Hillary Clinton campaign: “how to address the anger about income inequality without overly vilifying the wealthy” – the same individuals who are presumably expected to fund her campaign.

"It is time for a genuinely progressive social and political dialogue to take center stage."

But there are ways to address that quandary. One is to recognize that struggling Americans want and need economic reformation, not personal vilification. The public is presumably much more interested in solving its problems than it is in demonizing wealthy strangers.

In fact, the entire “envy” and “vilification” framing is counterproductive. It’s a rhetorical ploy that, whether intentionally or not, characterizes a genuine national crisis – and the hardship of millions – as a transitory and less than admirable emotional state. We are dealing with a problem that threatens to tear our social fabric apart, and it must be discussed that way.

To address it, we will need to change the terms of the national debate – to begin with, in commentary and analysis. At a minimum, we must stop describing politically “feasible” half-measures as the “progressive” side of the debate. It is time for a genuinely progressive social and political dialogue to take center stage.

That means building an independent movement that is unafraid to call for the deeper shifts needed to reduce inequality – and to keep our society whole.

The situation also calls for political leaders who are willing to look beyond the world of wealthy individual and corporate donors. Sen. Bernie Sanders, for example, has spoken of a volunteer-based and movement-based presidential candidacy. The effort to draft Sen. Elizabeth Warren is also movement-based. And it’s equally important, if not more so, to mount the same kind of campaigns at all level of government.

In order to effect ongoing and long-term change, we’ll also need to move to publicly funded elections. (That almost goes without saying.)

One thing seems clear: Without a major shift in direction, the future is likely to be grim. Our economy could come to resemble that of H.G. Wells’ “The Time Machine,” with its wealthy indolent “Eloi” and hardworking subterranean “Morlochs.”

Readers may recall that the Wells story didn’t end well for either population.

“We’ve got to have a real social consensus that the way things are going is dangerous and unacceptable,” said Lance Taylor, “and an understanding that it will take seriously progressive taxation to make a dent in the problem.”

“But,” added Taylor, “I am not optimistic about the prospects.”

It will take a movement to prove him wrong.

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.
Richard Eskow

Richard Eskow

Richard (RJ) Eskow is a freelance writer. Much of his work can be found on His weekly program, The Zero Hour, can be found on cable television, radio, Spotify, and podcast media. He is a senior advisor with Social Security Works. 

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