Economic Reflections on the 50th Anniversity of the March on Washington

     Later this week I will post an analysis I have done, for my book-in-progress on the economics of inequality, on the relationship between the redistribution of wealth and income and the crisis in higher education. To the best of my knowledge, as the post will explain, no one has provided the proof I offer to show that the student debt crisis is entirely a function of the concentration of wealth and incomes and the decline into depression of the bottom 99% economy.

       Today, as I await the speeches of Jimmy Carter, Bill Clinton, and President Obama, and listen to the comments of the news analysts, I realize that I must weigh in right now with the overriding economic point about inequality I have been developing for several years. I just heard Chris Matthews argue that the President needs to be more aggressive in asserting that recovery and more job creation is possible, and to set forth a specific plan; Matthews will judge the President’s speech on the basis of the economic recovery and jobs plan he presents. Alex Wagner, too, reminded us that the original march 50 years ago was mainly an economic protest, before it became a social protest.

         But here’s something Alex Wagner is too young to know, or perhaps hasn’t thought about: Fifty years ago the inequality issue was mainly a problem of racism and social discrimination, whereas the economic problem today is far greater than it was then.  Here’s what I mean: There was a great deal of poverty and unemployment among African-Americans and other minorities back then, just as today, but that problem did not extend generally to white America, which had seen the incredible expansion of economic opportunity that came with the creation and nurturing of middle class prosperity after WW II.  The problem for minorities, especially in the south, was that they were in large measure denied the opportunities that would lead them into the middle class.  Today, they are still at the bottom of the income ladder, and still the victims of often brutish discrimination, but much of the middle class’s wealth and prosperity has, since 1980, been confiscated by the top 1%. Today all economic growth is confined to the very wealthy, high within the top 1%, and that group has astoundingly improved its net worth by more than $16 trillion since 1980.

          Certainly, just as the poorest classes in America and the racial minorities back in the 1950s and 1960s were the last group to begin to experience the economic opportunities of the middle class that would allow them a shot at the American dream, they are today the first to lose whatever progress they have made, as the economy slides back into depression. It is telling, for example, that 58% of the $1 trillion of outstanding student debt — the chilling new price tag for education and opportunity — is held by people in the bottom 20% income category. I don’t need to tell you, I’m sure, who these people are: They are people with little or no wealth, and the highest of their incomes is low enough to flirt with survival-level poverty.  So for them to be carrying nearly two-thirds of the growing college debt load has obvious consequences for the future growth of inequality, and for America’s future.

      The poorest are still the poorest, and with a vengeance.  But the difference today is that everyone in the bottom 99% is adversely effected: The depression is impersonal and mechanical, and it guarantees only that the poorest will be hurt first, and hardest.  But no one below the top 0.05% (roughly) income category can hold their ground anymore.  The President wants to emphasize hope, so it is doubtful that he will tell us that.

       There’s no way out of our decline into another Great Depression until we resolve to reverse the fatal concentration of wealth and incomes. That will require, no matter what else we do, a far more progressive tax system. Excess incomes must be limited, and excessive accumulations of wealth must be taxed back into the 99% economy, where they can contribute to growth and prosperity.

       I’m going back to my TV now to listen to speeches and await Barack Obama’s major, history-making speech.  It may be more more important, ultimately, for what he does not say than for what he says.  Yes, it will be important to include a powerful plan for jobs.  But new jobs require more than hope and dedication, as I hope Chris Matthews will remember: They will require more money.  Unless the President’s speech stresses the necessity (no, not just the desirability, or fairness) of higher, more progressive taxes on top incomes, wealth, and corporations, it will not in my book be the success it should, or could be.

       Somehow, I’m not optimistic on that score: Please, Mr. President — prove me wrong.

JMH – 8/28/2013 

Postscript (3:40 p.m. EST) OK, I’ve just seen the President’s speech, and I’ve been proven wrong. Like Chris Matthews, I did want to see more of an agenda in that speech, but we wanted too much.  As Eugene Robinson pointed out, the President wisely chose to pinpoint the fundamental problem and elevate our awareness of it.

Surely that was the correct choice. The President identified the universality of economic injustice and tied it to the Martin Luther King movement, and the sacrifices of all who have since been marching for economic justice. I think that was the best he could have done on this occasion. It still is not well understood even among economists how to combat inequality; in fact the answers were better and more universally understood during the Great Depression. And “economics” is only just now, for the first time, learning about the full scope of the fatal consequences of excessive income and wealth concentration.

It was a great speech. The American people will have to learn the unpleasant truths about the economics of inequality fairly soon, for the crisis is real and worsening. The path will be long and hard, as the President reminded us, but we’re in this for the long haul, and we now have our marching orders.

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