## How to Make America More Equal

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**Canonical URL:** [How to Make America More Equal](https://www.imf.org/en/publications/fandd/issues/2020/12/how-to-make-america-more-equal-boushey)

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## Bibliographic details
- Authors: HEATHER BOUSHEY
- Published: December 1, 2020

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### 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.*

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## Content in this bundle

- **وجهة نظر**
  - [وجهة نظر (Markdown version)](/-/media/files/publications/fandd/article/2020/december/ar/boushey.pdf.md){rel="alternate" type="text/markdown"}
  - [وجهة نظر (PDF)](/-/media/files/publications/fandd/article/2020/december/ar/boushey.pdf){rel="external" type="application/pdf"}
- **Cómo hacer de Estados Unidos un país más igualitario ● Finanzas y Desarrollo ● Diciembre de 2020**
  - [Cómo hacer de Estados Unidos un país más igualitario ● Finanzas y Desarrollo ● Diciembre de 2020 (Markdown version)](/-/media/files/publications/fandd/article/2020/december/es/how-to-make-america-more-equal-boushey.pdf.md){rel="alternate" type="text/markdown"}
  - [Cómo hacer de Estados Unidos un país más igualitario ● Finanzas y Desarrollo ● Diciembre de 2020 (PDF)](/-/media/files/publications/fandd/article/2020/december/es/how-to-make-america-more-equal-boushey.pdf){rel="external" type="application/pdf"}
- **Pour une Amérique plus égalitaire**
  - [Pour une Amérique plus égalitaire (Markdown version)](/-/media/files/publications/fandd/article/2020/december/fr/how-to-make-america-more-equal-boushey.pdf.md){rel="alternate" type="text/markdown"}
  - [Pour une Amérique plus égalitaire (PDF)](/-/media/files/publications/fandd/article/2020/december/fr/how-to-make-america-more-equal-boushey.pdf){rel="external" type="application/pdf"}
- **How to Make America More Equal – IMF F&D**
  - [How to Make America More Equal – IMF F&D (Markdown version)](/-/media/files/publications/fandd/article/2020/december/how-to-make-america-more-equal-boushey.pdf.md){rel="alternate" type="text/markdown"}
  - [How to Make America More Equal – IMF F&D (PDF)](/-/media/files/publications/fandd/article/2020/december/how-to-make-america-more-equal-boushey.pdf){rel="external" type="application/pdf"}
- **Как сделать Америку более равноправной – Финансы и развитие – декабрь 2020 года**
  - [Как сделать Америку более равноправной – Финансы и развитие – декабрь 2020 года (Markdown version)](/-/media/files/publications/fandd/article/2020/december/ru/boushey.pdf.md){rel="alternate" type="text/markdown"}
  - [Как сделать Америку более равноправной – Финансы и развитие – декабрь 2020 года (PDF)](/-/media/files/publications/fandd/article/2020/december/ru/boushey.pdf){rel="external" type="application/pdf"}
- **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**
  - [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 (Markdown version)](/-/media/files/publications/fandd/article/2020/december/zh/boushey.pdf.md){rel="alternate" type="text/markdown"}
  - [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 (PDF)](/-/media/files/publications/fandd/article/2020/december/zh/boushey.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/fandd/issues/2020/12/how-to-make-america-more-equal-boushey_