How to go about reducing inequality is another matter. Republicans, including Trump, default to the same old trickle-down tax cuts that, if anything, make after-tax inequality worse. A true anti-inequality policy agenda must begin with an accurate diagnosis of the problem, which simply can’t be that the wealthy aren’t wealthy enough.
Inequality is high because the mechanisms meant to ensure that growth is broadly shared have either eroded or were never sufficiently in place. These include labor unions — which have fallen from around 30 percent of the workforce following World War II to 11 percent today — and labor standards such as minimum wages and overtime protections. They include a commitment to full employment in the job market, which historically gives workers increased power at the negotiating table— we were at full employment about 70 percent of the time between 1949 and 1979, but have only been there about 30 percent of the time since. And they include measures to combat systemic, race-based discrimination in our schools, job markets, voting systems and more.
Democrats tend to think in terms of tax and transfer policies, moving resources — money, food, housing services, help with child care, subsidies for low-wage jobs — from the rich to the poor. Such redistribution through the tax code is absolutely called for and has been highly successful in reducing poverty and boosting opportunity. Democrats, including President Obama and Hillary Clinton, have also embraced tax increases on the wealthy: an excellent place to start. But the current set of ideas is too limited. More broad-based tax increases will be necessary just to maintain our current set of inequality-reducing policies as our population ages.
What’s missing is an agenda that strikes at the heart of the problem by repairing and updating the mechanisms that re-balance economic power. That means bolstering unions, committing to full employment and adequately funding our schools. It means that if the private sector fails to create the jobs needed to employ all seekers — most importantly the disadvantaged — the government must pick up the slack through direct job creation. It means considering bold policy ideas offered by groups that have been especially held back by inequality and discrimination, which include police and criminal justice reform, reparations and trade deals that “prioritize the interests of workers and communities” over those of multinational corporations.
If we advance a bolder vision, we can ensure a more equitable distribution of market incomes that keeps the tax and transfer system from having to work so hard. The next president would be wise to think big.