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A year ago, with the economy improving, it seemed the U.S. was well along in this cycle. The wrath against Wall Street had died down, replaced by a more familiar conservative politics blaming “big government” for America’s ills.
Suddenly, though, the rich are once more under attack, with protesters even marching this week on the swanky Upper East Side digs of JP Morgan Chase chief Jamie Dimon. What happened?
Hard times stuck around, that’s what happened. And, looking ahead, the old rules about class and politics may cease to apply. If high rates of unemployment continue, as many economists predict, the chasm between the wealthy and everyone else – now at near-record levels – could become one of the hottest issues in national life.
Inequality has surfaced as a political issue in all the recessions of the past three decades, particularly the downturn of early 1990s, which came on the heels of the “greed is good” excesses of the Reagan era. Opinion polls during these periods showed rising public concern about corporate power, CEO pay, and the fairness of American society. Writing in 1993, the political prognosticator Kevin Phillips argued that middle class anger at getting shafted was hitting a “boiling point” and could remake American politics. A newly elected Bill Clinton raised taxes on the rich and sought to limit CEO pay.
Just a few years later, though, amid happy boom times, Americans were too busy swapping stock tips to worry much about inequality. The recession of 2001-2002 briefly put inequality back on the agenda, only to have Americans get distracted once more by all the play money created by the housing bubble. So what if the Gini co-efficient (which measures inequality) is going up as long as re-fi rates are falling?
Class resentments are built into the political DNA of many European countries, with their long histories of feudalism. But attacking inequality has always been an uphill battle in the United States, thanks to the mythology that anyone can get ahead with enough pluck. The American Dream ethos – which political scientist Jennifer Hochschild has called the nation’s “dominant ideology” – puts the onus for economic betterment on the individual, leading people to blame themselves, not the economic system, for setbacks and hardship.
That’s usually the case, anyway. But prolonged hard times can snap Americans out of this disempowering trance. A century ago, the gross inequities and recurrent crises of early industrial capitalism fueled a powerful Progressive movement that won reforms to curb the clout of moneyed interests and protect worker rights. Later, the deep and sustained economic pain of the Great Depression led to a bigger push for more equity, with a vast expansion of labor rights and the creation of a modern social safety net.
Today’s hard times, it is often said, are the worst to grip the nation since the Great Depression. So it should be no surprise if the current crisis begins to resemble past traumas by putting inequality on the political agenda.
What would this mean in practice? While Occupy Wall Street may lack specific demands, there are plenty of detailed plans lying around to force the Haves to share the wealth. In fact, President Obama laid out one such plan a few weeks ago when he called for $1.5 trillion in tax hikes on the affluent. The White House is also making a big push to get the new Consumer Financial Protection Bureau up and running by seeking confirmation for its first director, Richard Cordray.
Steps like these – while very popular with the public – face intense opposition on Capitol Hill. For now, anyway. If times remain bad, even today’s Republican Party may find that defending the rich is a losing proposition.
David Callahan is the author of Fortunes of Change: The Rise of the Liberal Rich and the Remaking of America (Wiley).
Photo: Members of the Occupy Wall St movement shout while demonstrating outside the home of JP Morgan Chase CEO Jamie Dimon during a march through the upper east side of New York October 11, 2011. REUTERS/Lucas Jackson