22 January 2021   Leave a comment

Heather Boushey has written an essay for the International Monetary Fund (IMF) entitled “How to Make America More Equal“. Boushey notes how the COVID pandemic has aggravated already stark inequalities in the US economy. She writes:

“Before the pandemic, the United States was in the midst of a decade-long recovery from the Great Recession, which began in December. But not all Americans experienced that recovery in the same way. The top 1 percent emerged as strong as ever in terms of wealth, regaining what they had lost by 2012. As of March 2020, however, US working- and middle-class families had barely recovered their lost wealth, and many families, especially those of color, never recovered. Even amid a strong recovery, the United States was burdened by extraordinary economic and racial inequality.

Today, stark differences among US workers and their families make the current recovery neither U- nor V-shaped but rather one that resembles a sideways Y, with those benefiting from a stock market recovery or employed standing on the branch of the Y that points up unaffected by the recession, and those on the bottom branch facing perhaps years of struggle. And there are stark differences of race and class between the upper and lower legs of that sideways Y.”

Boushey identifies the underlying causes of these inequalities: a false belief that markets would over time reduce those inequalities; Tax cuts and weak public investment that overwhelmingly favor the rich; Eroding worker power due to animosity toward unions; Economic concentration that favors large corporations over small businesses; overemphasis on the Gross Domestic Product (GDP) as a measure of economic prosperity which ignores how that prosperity is shared; and Racism and sexism which limits the possibilities for disenfranchised groups.

Most importantly, Boushey points out that the solutions to these problem requires government intervention–unfettered markets have only made the situation worse: “Transforming the US economy requires policymakers to recognize that markets cannot perform the work of government.” To those who would characterize her policy recommendations as “socialist”, I would simply point out that the economic trends left unchecked would bring the US back to feudalism.

Posted January 22, 2021 by vferraro1971 in World Politics

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