What Can We Do about Economic Inequality

Over the last few days of this conference, we have heard a great deal about the growth of inequality and its insidious impacts. Inequal- ity is a nasty disease and evidence of that nastiness mounts, year by year. And yet we must respond forcefully and effectively. Such a response is the topic of my remarks today.What do we know? First, that inequality has become an endemic feature of our capitalist economy. Even before Thomas Piketty made this argument in his magisterial book Capital in the Twenty-First Century, other colleagues in economics had been arguing that capitalist economies have a tendency to create inequality. We now know this to be the general trend of market economies. There are exceptions, with the most notable being the post-World War II period in the West. The trauma of the war, the power of labor, and the discrediting of free market economic theory led to an unusual period in which gov- ernment structuring of markets and strong institutional interventions resulted in a growing middle class and declining inequality. But we recognize this era now as unusual-almost an aberration-in a system that excels in accumulating assets and power in the hands of a few. Just this week Oxfam published a report estimating that 48 percent of all global wealth is now held by the top one percent and that by next year their share will rise to more than 50 percent. A mere eighty individuals now own the same amount of wealth as more than 3.5 bil- lion people (and the wealth of those eighty has doubled since 2009).1Second, once economic inequality begins to mount and money be- comes concentrated in the hands of a few, those few are able to amass political power. They exercise a defacto blackmail over government policy, given their control of investment funds, jobs, and economic activity. They also use their wealth to buy elected officials directly. The main political organizations controlled by the Koch brothers spent more than $100 million on the 2014 election and have bought themselves the most pro-fossil-fuel industry, climate-denying Congress in history. They have announced plans to spend $1 billion on the 2016 presidential election. We are in a vicious cycle in which economic power translates into political power, which is then used to transform laws, regulations, and budgets in order to create more wealth for the one percent. The game is rigged, and people know it. Elections mean less and less. Political democracy is eroded by plutocracy.That erosion in turn breeds cynicism and apathy. Time-honored people-powered social movements seem both unattainable and ineffectual. People rightly question the efficacy of action when government is a wholly owned subsidiary of corrupt political parties and all-powerful wealth.Given this understanding, how should we proceed? What is possible when economic and political systems themselves are corrupted? How can we act when it seems that we are living in a closed system with no way out? And if we could mount the political will to make change, what should we do? Are there viable remedies for the structural inequality that has accompanied the globalization of capital?Via its interconnections with political corruption, climate change, and other issues, inequality has become what social planners first called a "wicked problem." Wicked, not in the sense of evil, but in the sense of difficult, or resistant. These are problems with no easy solutions. They are unique, which is one reason why last century's solutions to the wicked problems of today will not work. We have a different problem of inequality today. Wicked problems have multiple complex dimensions and are interconnected in economic, political, social, and often ecological terms. Wicked problems involve changing behavior, mindsets, and institutions.Wicked problems require that we approach solutions in a new way. Older representations would suggest that we can tackle inequality as we have in the past: introduce more progressive income taxation, institute a wealth tax or a transactions tax, raise the minimum wage. …