Obama's Itty Bitty Teeny Tiny War on Inequality
President Obama plans to use executive action to expand the number of American workers eligible for overtime pay. For those conservatives whose hackles are raised, take heart: Obama is tossing pebbles against a huge, advancing monster of inequality that may not be slain in this generation.
There's no doubt that the president's heart is in the right place. He has acknowledged that economic inequality is "the defining challenge of our time," which is far more than we would get from any Republican. He's passed a health care law that is at least a first step towards addressing that basic need. But in the absence of a like-minded Congress, his fight against inequality thus far has been reduced to small measures around the edges: a meager new retirement savings plan that will do little to help the poor, a polite request to corporations to hire the long-term unemployed, a push to raise the minimum wage. The new overtime rules will, at least, have a concrete effect, by putting (at least a little) more money in the pockets of millions of workers that had previously been classified as "supervisors," and thereby denied overtime pay. (Alternately, it could cause businesses to hire more employees to prevent paying overtime, which is not so bad in itself.)
So, the effort is nice. It's better than what we would get under any Republican, certainly. But let's keep this in the context of what is going on with America, wealth, and inequality. Though the Wall Street economy has boomed for the past five years, only about half of Americans own stock, which would allow them to participate in those gains. A new Bloomberg poll finds that only 46% of Americans say they're better off than they were five years ago, and only 21% say that the stock market's gains have made them feel "more financially secure."
That makes sense—those top 21% (including, most especially, the top 1%, which owns more than a third of our nation's wealth) reaping meaningful investment gains are the economic winners in America, and they are pulling away from the rest of the people like a drag racer accelerating off the line against a Volskwagen Rabbit. In a new book, the economist Thomas Piketty says that, contrary to previous conventional wisdom, the wealth gap in America will not regulate itself back to reasonable levels due to market forces. Instead, economic inequality will continue to increase, because, as Eduardo Porter writes, "the income from wealth usually grows faster than wages. As returns from capital are reinvested, inherited wealth will grow faster than the economy, concentrating more and more into the hands of few."
Oh yes. It's not just the investment income of the wealthy that we need to worry about when thinking about inequality. As the Baby Boomers begin to die off, there will be a massive wave of inherited wealth passed down to the next generation. The children of the rich, who tend to be the new rich, will get a windfall; the children of the less rich, who tend to be less rich, will get much less. Annie Lowrey reports that "Households with less than $500,000 in net worth will transfer about $3 trillion to their heirs. Ones with more than $500,000 will transfer four times that much wealth." In all ways, the rich will get richer.
As Piketty points out, political action is the only real mechanism able to counter this ongoing widening of the wealth gap. Yes, we need bigger inheritance taxes, and a strong progressive taxation system, and a stronger social safety net for the poor. But just helping those at the bottom of the economic pyramid will never put a stop to the dynamic of inequality. We must also target those at the top. Why? Because—and this sterling insight is often left out of discussions by economists—rich people control everything. If political power is the tool we must use to rein in the influence of the rich, and political power is solely wielded by the rich, then political power will never be used to rein in the influence of the rich. When we speak of severely limiting the ability of people to become insanely wealthy billionaires, it is not because we hate winners. It is because it is unhealthy to democracy and antithetical to our nation's ability to heal its own inequality for individuals to become so rich that they are singlehandedly able to warp the space-time of America's politics.
We need to take the influence of money out of politics. That won't happen any time soon. Until then, the next best thing is to take money away from the ridiculously rich, and spread it around. The we can all be influencers.
And until then, I guess you have to be satisfied with a little more overtime pay.