Periodic opinions from The Relentless Liberal, Jerome Grossman
Tuesday, January 22, 2013
Inequality is the Real Financial Crisis
The reelection of President Obama is subject to many interpretations. Each side debated issues that affect a long malaise into which the economy seems to be settling, and the growing divide between the 1% and the rest is an inequality not only of outcomes but also of opportunity, as pointed out by Nobel Laureates Paul Krugman and Joseph Stiglitz.
These problems have driven inequality to its highest level since before the Depression and will be difficult to overcome - and the American dream - a good life in exchange for hard work-is slowly dying.
Politicians typically talk about rising inequality in the sluggish recovery as separate phenomena but in fact they are intertwined. Inequality stifles, restrains, and holds back our growth. This serious threat to America after four decades of widening inequality is squelching our recovery
The reasons: the middle class is too weak to support our economic growth. The top 1% of income earners took home 93% of the growth in incomes in 2010, skyrocketing inequality. Those who are born to parents of limited means are likely to never live up to their potential. More than a fifth of our children live in poverty. Adjusted for inflation, real wages have stagnated or fallen. When young people are jobless their skills atrophy. The student debt for 2010 exceeds $1 trillion.
Many of these problems originated in the Bush Administrations. Obama bailed out the banks but didn’t invest enough in workers and students.
It is not too late to correct policies