Paul Krugman’s column, “Rich man’s Recovery” focuses on a new study of I.R.S. data by Thomas Piketty and Emmanuel Saez, which reveals disturbing conclusions about the growing “concentration of income in America’s upper strata.” As Krugman explains:
According to their estimates, top income shares took a hit during the Great Recession, as things like capital gains and Wall Street bonuses temporarily dried up. But the rich have come roaring back, to such an extent that 95 percent of the gains from economic recovery since 2009 have gone to the famous 1 percent. In fact, more than 60 percent of the gains went to the top 0.1 percent, people with annual incomes of more than $1.9 million.
Basically, while the great majority of Americans are still living in a depressed economy, the rich have recovered just about all their losses and are powering ahead.
…These numbers should (but probably won’t) finally kill claims that rising inequality is all about the highly educated doing better than those with less training. Only a small fraction of college graduates make it into the charmed circle of the 1 percent. Meanwhile, many, even most, highly educated young people are having a very rough time. They have their degrees, often acquired at the cost of heavy debts, but many remain unemployed or underemployed, while many more find that they are employed in jobs that make no use of their expensive educations. The college graduate serving lattes at Starbucks is a cliché, but he reflects a very real situation.
Krugman adds that “the effect of that concentration is to undermine all the values that define America. Year by year, we’re diverging from our ideals. Inherited privilege is crowding out equality of opportunity; the power of money is crowding out effective democracy… Extreme inequality is still on the rise — and it’s poisoning our society.”
Krugman goes on to commend New York mayoral candidate Bill de Blasio for his call for a small surtax on incomes over $500K to finance universal prekindergarten education as an example of the kind of policies that can help rectify stalled upward mobility. He notes that Peter Beinhart’s Daily Beast post on “The Rise of the New New Left” cites de Blasio’s proposal as a good example of “new economic populism that will shake up our whole political system.”
Krugman is right that tax increases on the wealthy to help fund upward mobility in America are urgently needed at the federal, state and local levels. The other half of the policy mix would be the restoration of a healthy labor movement, without which any effort to rebuild the middle class is doomed. There is simply no getting around the reality that the precondition for both causes is a nationwide defeat of Republicans in 2014 — an enormous, but unavoidable challenge for Democrats.