America is in principle a democracy, in which every vote counts the same. It’s also a nation in which income inequality has soared, a development that hurts many more people than it helps. So if you didn’t know better, you might have expected to see a political backlash: demands for higher taxes on the rich, more spending on the working class and higher wages.
In reality, however, policy has mostly gone the other way. Tax rates on corporations and high incomes have gone down, unions have been crushed, the minimum wage, adjusted for inflation, is lower than it was in the 1960s. How is that possible?
The answer is that huge disparities in income and wealth translate into comparable disparities in political influence. To see how this works, let’s look at a fairly recent example: the budgetary Grand Bargain that almost happened in 2011.
At the time, Washington was firmly in the grip of deficit fever. Even though the federal government was able to borrow at historically low interest rates, everyone who mattered seemed to be saying that the budget deficit was the most important issue facing America and that it was essential to rein in spending on Social Security and Medicare.
So the Obama administration offered congressional Republicans a deal: cuts in Social Security and Medicare in return for slightly higher taxes on the wealthy. The deal foundered only because the party refused to accept even a small tax increase.
The question is, who wanted such a deal? Not the American public.
Read the rest of Paul Krugman’s article here at Northwest Arkansas Democrat-Gazette