Wednesday, March 5, 2014

It’s the inequality, stupid

Robert Reich has a column in today’s Globe and Mail: It’s the inequality, stupid.

He discusses how almost all the gains from economic growth over the last 30 years have gone to the top 1% — both in the US and Canada. What’s worse, is that the tax rate the rich pay has become a fraction of what it was 40 years ago.

The combination of the two has caused inequality and debt (both public and private) to soar. It is destroying the middle class, hitting the poor harder and hobbling income mobility.

He says the only way to reverse the damage is through tax increases on the wealthy.

Inequality election issue

Inequality and the shrinking middle class are shaping up to become prominent 2015 election issues. But in order to restore the “just society” and “equality of opportunity” of the post-war era, we’re going to need more action and less talk.

We must restore, to some degree, the level of taxation they wealthy paid back then.

Unfortunately, Justin Trudeau has ruled out reversing any of Harper’s $44-billion/yr in “starve the beast” tax cuts, most of which went to the rich. That puts him in a fiscal straight jacket from which he’ll only be able to deliver token measures.

Thomas Mulcair has promised to reverse Harper’s ineffective corporate tax cuts, which will restore $15-billion/yr according to the Con 2009 budget. That’s a good start, but obviously much more is required.

Canadians must demand leaders offer more action before the election, not after, unless they’re happy pretending something is getting done about it.

Robert Reich

Robert Reich has a documentary out, recently released on DVD: Inequality for all.

Here are some excerpts from today’s column:

The widening income gap is making it harder to escape poverty and thwarting equal opportunity, in both the United States and Canada.
Let me explain. When almost all the gains from economic growth go to the top 1 per cent of income earners, as they have for 30 years, the middle class is left without the purchasing power to keep the economy growing and generate jobs.
Once the middle class has exhausted its coping mechanisms – wives and mothers surging into paid work (as they did in the 1970s and 1980s), longer working hours (which characterized the 1990s) and deep indebtedness (2002-present) – the inevitable result is slower growth and fewer jobs.
This hits the poor especially hard, because they’re first fired, last hired and bear the brunt of declining wages and benefits. A stressed middle class also has a harder time being generous to them.
Helping America’s poor presumably requires money, but the U.S. fiscal cupboard is bare, and the only way to replenish it now is through tax increases on the wealthy.
The shrinking middle class also hobbles upward mobility. There is less money for schools, training and social services, and the poor face a more difficult challenge moving up – the income ladder is far longer and its middle rungs have disappeared. …
As wealth has accumulated at the top, it has reduced taxes on the wealthy, expanded loopholes that benefit the rich, deregulated Wall Street and provided larger subsidies, bailouts and tax breaks for large corporations. …
[The rich have] never been richer, but most adamantly refuse to pay anything close to the tax rates accepted 40 years ago.

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