Apologies for the lateness of this post compared to the first two. There's lots of other work to be done, and this series has required me to do some hard work in the form of thinking through things. It's more time-consuming than the usual point-and-shoot of blogging.
So we've established that there is, in fact, growing income inequality in the United States. And the evidence of history suggests that such inequality can be a societal problem over time. So the next question is this: Why is inequality growing here? And what can be done about it?
Paul Krugman—whose 2007 book, "The Conscience of a Liberal" forms the basis of this series of posts—seems to offer a simple, even seductive answer: It's the Republicans' fault. They're the ones who radically cut marginal taxes on top earners after 1980, and they've done all they can to weaken the power of unions, who were a major factor in lifting the tide for working-class Americans in the post-Depression era.
Here's the crux of it, he says:
Over the course of the 1970s, radicals of the right determined to roll back the achievements of the New Deal took over the Republican Party, opening a partisan gap with the Democrats, who became the true conservatives, defenders of the long-standing institutions of equality. The empowerment of the hard right emboldened business to launch an all-out attack on the union movement, drastically reducing workers' bargaining power; freed business executives from the political and social constraints that had previously placed limits on runaway executive paychecks; sharply reduced tax rates on high incomes; and in a variety of other ways promoted rising inequality.
Krugman, of course, is as interested in reining in the elites as he is helping the working and middle classes get ahead. I'm more concerned with the latter part of the equation, and it seems to me he doesn't do a good enough job addressing why that second part failed to happen. There's no reason that rising executive pay should necessarily require stagnating worker pay in a growing economy, it seems to me. And despite the efforts of some more committed conservatives, there's not really been much reining in of the welfare state in the last 30 years—Republicans have even expanded it without bothering to pay for it.*
*If they somehow manage to slash and burn Social Security, Medicaid, and Medicare, however, this statement is null and void.
This is leading me to a conclusion about the cause of the inequality problem, but I want to prod at Krugman a little more first. He spends much of his time exalting the 1950s—when inequality was low, marginal tax rates were high, and everybody lived better than the generation before them. And that's true. But Krugman doesn't really address something I've got to believe has to be a major factor in all of this: the 1950s also happened to be a time when the United States was, more or less, the only industrialized power left standing. All the other ones had been destroyed by World War II, and it took the Marshall Plan to get a lot of those economies starting to roll in the right direction. The United States had a big head start on the rest of the world, which means its workers had a head start on the rest of the world, right?