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Redistributing Wealth Upward

By Harold Meyerson | Washington Post | September 25, 2012

Which is the more redistributionist of our two parties? In recent
decades, as Republicans have devoted themselves with laser-like
intensity to redistributing America's wealth and income upward, the
evidence suggests the answer is the GOP.

The most obvious way that Republicans have robbed from the middle to
give to the rich has been the changes they wrought in the tax code ~
reducing income taxes for the wealthy in the Reagan and George W. Bush
tax cuts, and cutting the *tax rate on capital gains to less than half
the *rate on the top income of upper-middle-class employees.

The less widely understood way that Republicans have helped redistribute
wealth to the already wealthy is by changing the rules.

Markets don't function without rules, and the rules that Republican
policymakers have made since Ronald Reagan became president have
consistently depressed the share of the nation's income that the middle
class can claim.

Part of the intellectual sleight-of-hand that Republicans employ in
discussions of redistribution is to reserve that term solely for
government intervention in the market that redistributes income
downward.

But markets redistribute wealth continuously.
In recent decades, markets have redistributed wealth from manufacturing
to finance, from Main Street to Wall Street, from workers to
shareholders. Rules made by "pro-market"� governments (including those
of "pro-market"� Democrats) have enabled these epochal shifts.

Free trade with China helped hollow out manufacturing; the failure to
regulate finance enabled Wall Street to swell; the opposition to labor's
efforts to reestablish an even playing field during organizing campaigns
has all but eliminated collective bargaining in the private sector.
The conservative counter to such liberal cavils is to assert that the
market increases wealth, which will eventually descend on everyone as
the gentle rains from heaven.

Decrying such Keynesian notions as unions or federally established
minimum wages, hedge fund guru *Andy Kessler recently argued in the Wall
Street Journal that "it is workers' productivity that drives long-term
wage gains, not workers' wages that drive growth."�

But Kessler assumes ~ and this is the very essence of the "trickle-down"
argument ~ that workers reap the rewards of productivity gains.
Believing and asserting that requires either ignorance or willful denial
of economic history.

The only time in U.S. history when workers substantially benefited from
productivity gains was the three decades that followed World War II,
when median household income and productivity gains both increased by
*102 percent.

Not coincidentally, that was also the only period of *genuine union
power in U.S. history, and the time when the tax code was at its most
progressive.
During the past quarter-century, as progressivity was lessened and
unions diminished, all productivity gains have *gone to the wealthiest
10 percent, according to research published by the National Bureau of
Economic Research.

In 1955, at the height of union strength, the wealthiest 10 percent
received 33 percent of the nation's personal income. In 2007, they
received 50 percent, *Economic Policy Institute data show.
If that's not redistribution, I don't know what is.
The problem is not just that everyone but the wealthy is claiming a
smaller share of the nation's income; the absolute amount of income
they're getting is declining as well.

Median household income has dropped to the levels of the *mid-1990s,
according to Pew analysis of census data, while the income of the *400
wealthiest Americans rose by a tidy $200 billion last year,
according to data released this month by Forbes magazine.

If that's not redistribution, I don't know what is.
Indeed, the United States has experienced an upward redistribution so
profound that it affects far more than incomes. Whole sectors of the
economy and regions of the country have been decimated by these economic
changes.

The descent in all manner of social indexes is most apparent among
poorly educated whites.
Conservative commentator *Charles Murray has documented in his new book
the decline in marriage rates and family stability within the white
working class. And now, as the New York Times' Sabrina Tavernise *has
reported, that decline includes longevity as well.

While other Americans' life expectancy has advanced, the life expectancy
of whites without high school diplomas has declined since 1990 ~ by
three years among men and five years among women.

The market is not just redistributing income in the United States, then.
It is redistributing life.
So, which party can claim credit for this ~ the real redistribution this
nation has experienced over the past 30 years? Many Democrats have been
complicit in this calamity by their indifference to the consequences of
deregulation and trade.

But the trophy for promoting the policies that have redistributed
wealth, family stability and longevity upward goes to the Republicans,
whose standard-bearers are championing even more radical versions of
these policies today.

A pro-life party? More like its opposite.