How to Make America More Equal
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Bibliographic details
- Authors: HEATHER BOUSHEY
- Published: December 1, 2020
Overview
- Author: HEATHER BOUSHEY; F&D Magazine; December 2020.
- Thesis: The COVID-19 pandemic exposes and amplifies longstanding economic and racial inequalities in the United States; transformative public policy is required to build a healthier, more resilient economy that delivers strong, stable, and broad-based growth.
Major causes of US inequality identified
- Markets and ideology
- Beginning in the 1980s, the rise of an ideology favoring "unfettered markets" shifted economic risk away from corporations and the wealthy toward medium- and low-income families.
- Tax policy and public investment
- The 2017 tax cut is cited as a recent manifestation of a long-running tax-cutting philosophy that has reduced resources for public functions.
- Public investment as a share of GDP "has fallen to its lowest level since 1947."
- Eroding worker power
- Anti-union court and administrative rulings and "right-to-work" laws in 27 states have weakened workers' bargaining power, contributing to wage stagnation and reduced workplace safety.
- Economic concentration
- Weaker antitrust enforcement has allowed industry concentration, enabling large firms to set prices, suppress wages, eliminate competitors, and possibly dampen investment; small businesses face survival risks.
- Measurement issues
- As inequality rose close to its 1920 levels, GDP growth increasingly reflects gains to the top 10 percent of earners rather than the majority.
- Racism and sexism
- "The median earnings for a Black household are 59 percent of those of a White household."
- "A median woman earns 81 cents for every dollar earned by a man."
- Job segregation places many women and minorities in essential jobs that lack benefits such as paid sick time or employer-provided health insurance.
Impacts of COVID-19 and the nature of the recovery
- The pandemic "is shining an unforgiving spotlight" on pervasive inequalities and increases the risk that future shocks will again produce large-scale job losses and lasting economic scars.
- Characterization of the recovery: not U- or V-shaped but a "sideways Y" — a split recovery where those connected to the stock market or able to remain employed benefit, while others "face perhaps years of struggle."
- As of "March 2020," working- and middle-class families had "barely recovered" lost wealth from the Great Recession; the top 1 percent had regained losses by 2012.
Policy recommendations and interventions
- Immediate priority: "Eradicate COVID-19" as the first public-health and economic priority.
- Major public investments required in:
- Health system reform to reduce insufficient care.
- Education reform to prevent the preservation of inequality.
- Policies to provide basic economic stability for most families.
- Climate change mitigation and adaptation.
- Funding approach:
- Implement "significant tax increases, primarily or entirely on the wealthy" to fund long-term solutions.
- Tax "the enormous wealth concentrated at the top that is being saved, or kept overseas" and direct proceeds to urgent investments.
- Corporate and financial conditions for pandemic aid:
- Ensure federal aid does not disproportionately benefit large businesses over small businesses.
- Bar corporations receiving aid from issuing dividends and carrying out stock buybacks.
- Require banks to suspend capital distributions during the crisis to support lending to the real economy.
- Competition and antitrust:
- Strengthen US antitrust enforcement and bolster antitrust laws, especially for merger and exclusionary conduct rules.
- Consider creating a digital regulatory authority to enforce privacy laws and enhance competition in digital markets.
- Measurement and data:
- Disaggregate income at all levels to understand who benefits from recovery policies and what further actions are needed, given that overall GDP masks distributional outcomes.
- Race-specific and equity-directed use of revenues:
- Use proceeds from wealth taxation to fund investments that "benefit the majority of the nonwealthy," specifically targeting COVID-19 testing and treatment in communities of color, policies that progressively support low-wage and care workers, and engagement with minority-owned small businesses.
- Gender-focused policies:
- Enact a national paid family and medical leave policy and a national program for quality, affordable childcare and prekindergarten education to address a significant cause of the gender earnings gap.
Measurement and accountability
- GDP is insufficient as a sole recovery indicator because it mainly reflects how the better-off are doing; policymakers should use disaggregated income measures to assess recovery progress across groups.
Race, gender, and equity framing
- Economic inequality is "firmly tied to the issue of racial inequality."
- The Black Lives Matter movement underscores distrust that government will act on behalf of Americans of color; government must enable "low-income Black, Latinx, and Native American people" to develop and deploy skills and talents in the economy.
- Wealth taxation must be paired with progressive, targeted spending to avoid entrenching pervasive inequities.
- Lack of paid leave and affordable childcare disproportionately forces women to put careers on hold, contributing to the gender earnings gap.
Political context and outlook
- Shifts in public conversation driven by COVID-19, the recession, the Black Lives Matter movement, and the recent presidential election have moved previously marginal policy ideas closer to the center of debate.
- Barriers: deep partisanship and institutional features that make enacting transformative policies difficult.
- Tone: Optimistic — possibility of an inflection point if proponents of progressive policies effectively develop and advocate reforms to reduce inequality and promote broad-based growth.
Source: How to Make America More Equal — F&D Magazine, HEATHER BOUSHEY, December 2020.
Content in this bundle
- وجهة نظر
- Cómo hacer de Estados Unidos un país más igualitario ● Finanzas y Desarrollo ● Diciembre de 2020
- Pour une Amérique plus égalitaire
- How to Make America More Equal – IMF F&D
- Как сделать Америку более равноправной – Финансы и развитие – декабрь 2020 года
- 如何创建更平等的美国社会 - 金融与发展 - 国际货币基金组织季刊