Jared Bernstein, a member of President Obama’s economic team from 2009 to 2011, told a Portland audience that the you’re-on-your-own (yoyo) ideology of powerful special interests is fueling income inequality and driving down opportunity.
He said the yoyo’s are using budget hysteria as a smokescreen for cutting entitlement programs. “They are resorting to fear-mongering,” he said to create a crisis mentality.
In reality, Bernstein said, the short-term budget situation is not critical at all. “The Obama Administration has cut $1.5 trillion of government spending, half from defense and half from other programs.”
The noted economist spoke to an audience of about 250 at an event free and open to the public and sponsored by the Oregon Center for Public Policy and the Wayne Morse Center for Law and Politics.
What is needed now is more government spending not less, Bernstein said. “We should be investing in education, infrastructure repairs and upgrades and renewable energy.” Cutting spending during periods of high unemployment just weakens the economy even further, he said.
Bernstein demonstrated through charts and graphs that income inequality has been increasing since 1980 and is at its worst since 1929. The graphs also showed that as income inequality increased so did educational inequalities.
Spending by the upper class families on enrichment programs for their children such as music lessons and better schools increased sharply from 1972 to 2010, whereas during that same period spending on enrichment by middle class families barely increased at all.
In 1972 the wealthy spent four times as much as the middle class on enrichment, but by 2010 that had increased to seven times as much. As a result the percentage of young men and women from upper class families that are graduating from top universities keeps growing compared to those from middle class families.
According to the world view of the yoyos, all this is justified by the doctrine of the survival of the fittest, a throwback to Darwinian thinking regarding the survival of species. What appears to be a class war is actually an ideological one between yoyos and proponents of the we’re-in this-together (wit) philosophy.
Income inequality has allowed huge sums of money to concentrate at the top, Bernstein said, allowing the wealthy to increase their influence over government policy. They use this influence to further their agenda, he said, creating a vicious circle of greater and greater inequality.
What to do about it? Bernstein offered the following government initiatives to help restore justice by leveling the playing field:
–Full employment through a big infrastructure repair program;
–Progressive manufacturing policy – forward looking R&D investments in areas where markets will be short, and fighting back against non-tariff barriers like currency manipulation;
–Better access to head start programs for the economically disadvantaged, and better access to college; –Unions – level the playing field to organizing;
–Increase the minimum wage and improve labor standards (overtime rules, correct worker classification, paid sick leave)
–Financial transactions tax to reduce the economic “rents” claimed by this over-sized sector.
–Amply (not overly) fund state and federal government to accomplish these initiatives.
An area he didn’t mention specifically, and this would fall under manufacturing policy, is investment in the retooling of the automotive industry as urged by the physicist, Amory Lovins, to create the super-efficient electric cars of the future.
Regarding the tax situation in Oregon, Bernstein said, he’s not opposed to sales taxes as long as they are not initiated until the state deals with corporate tax breaks that are too regressive and would thus put too much of a revenue-raising burden on the sales tax.
He cited the state’s recent deal with Nike that gave the company a 30-year lock on a lucrative tax break as an example of a regressive measure. “Apportioning corporate taxation at the state level is—or should be—a balancing act between factors of production in the state—payrolls and property—and sales,” he said. “States should not chase factories,” he said, “it doesn’t work.”
In the end Bernstein mulled a question from the floor on how we as a nation will ever break the current strangle hold of the top 1% on U.S. Policy. “I think it comes back to campaign finance reform,” he said, “that is the best way to get money out of politics.”