New Book Explains Why U.S. Has Worst Income Inequality Among Developed Nations

Posted Dec. 23, 2015

MP3 Interview with Les Leopold, author of the new book titled, "Runaway Inequality: An Activist's Guide to Economic Justice," conducted by Scott Harris

inequality

The American dream for many has turned into a nightmare, with millions of workers stuck in dead-end, low-paying jobs and few prospects for a brighter future. For the younger generation lucky enough to afford a college education, many are now confronted by the stark reality of being burdened with tens of thousands of dollars in tuition debt and limited career opportunities. Inequality is at an all-time high in the U.S., which has the most unequal income distribution across the entire industrialized world.

One signpost of the major changes in the U.S. economy can be seen in the dramatic shift in the pay ratio between the top 100 CEOs and average workers, which was 45 to 1 in 1970, but today stands at 829 to one. Other factors contributing to growing economic disparity include the deregulation of Wall Street, a tax code favoring the wealthiest Americans, the decline in the power of labor unions and the computerization, robotic automation and offshoring of good-paying jobs, as well as the slashing of critical social safety net programs.

While the trend of worsening inequality has been a feature of the U.S. economy over the last 35 years, the 2011 Occupy Wall Street movement, the ongoing campaign for a $15 minimum wage and the popularity of Vermont Sen. Bernie Sanders’ presidential campaign are indicators that many Americans are increasingly angry over diminished living standards and joining others to demand change. Between The Lines’ Scott Harris spoke with Les Leopold, author, cofounder & director of the Labor Institute in New York City, who talks about his new book titled, "Runaway Inequality: An Activist's Guide to Economic Justice," which urges the building of a new national progressive movement.

LES LEOPOLD: Between 1947 and 1980, roughly, as productivity went up in the United States, so did the real wage of the average worker. That's how you got that robust middle class and virtually every segment of society improved. Yes, there were differences by race and gender, but there was improvement going all over the place which allowed us to tackle those problems. After 1980, a new economic policy came into the United States. It was embraced by both political parties, and we called it the better business climate model; academics call it neoliberalism. But it had three basic tenets. It was cut taxes primarily on the wealthy, cut back government regulations on the economy and cut back social spending and labor rights so the people would have more incentive to go out and work and this was supposed to lead to a tremendous economic boom – profits would go up, investment would go, and jobs and income would rise for everyone.

But the dirty little secret was in that little patch of deregulation. Deregulating AT&T or trucking or airlines is one thing. But they also deregulated finance and that absolutely tore the economy apart. That's the primary driver of runaway inequality, because when they deregulated finance, they set in motion what we call "financial strip-mining." Rather than adding value to corporations, finance found ways to take money and wealth out of corporations and into Wall Street. So that by 2006, 40 percent of all corporate profits went to Wall Street firms. They had only five percent of the employment; they had 40 percent of all the profits.

The core of the book, the analysis is to show how this finance strip-mining actually works. For me, it was an eye-opening story.

BETWEEN THE LINES: I think one of the most important points you bring out in the book is that record inequality in the United States is not a result of some accident of history or some natural economic cycle gone wrong, but our inequality is actually a natural outcome of conscious policies chosen by politicians from our two major political parties. When you look at what happened over these years, Les, do you believe the outcome that we've now seen with the divide between the haves and have-nots growing ever wider is something that was desired by the political parties that signed on to what you call the "better business climate?"

LES LEOPOLD: I think it's a complicated story, because what I think happened was when they unleashed Wall Street, they set in motion a process that fed on itself. The financial strip mining is absolutely unbelievable because when they deregulated it, it allowed corporate raiders to come in and buy up companies by the bucketful and after awhile this happened to thousands of companies, and they loaded up these companies with debt. It's as if you bought a car and then with debt and the car pays back the loan instead of you paying back the loan. So, yes, the people who put the policy in the place I don't think saw this coming. But once it started happening, then the rich financiers used all their lobbying muscle, both political parties started going after this campaign money and it became more and more deregulation. President after president deregulated Wall Street more and more and more, and more money got strip-mined out of corporations and into the coffers of Wall Street.

BETWEEN THE LINES: You close your book with a chapter titled, "A Open Letter to New Movement Organizers." Les, why don't you capsulate the main message that you have there, that a progressive, multi-issues organizing drive has to happen to address all these issues simultaneously and have to get away from the single-issue organizing model – silos and such.

LES LEOPOLD: Right. I've been engaged in dialogue with younger organizers and it's been very fruitful. There's a recognition now that the way we've organized ourselves for the last 30 years is good, but not good enough. We've been organized around single issues that I term "silos." We're very good within the silos, but overall, we've been losing ground. And so, the letter is a call to younger movement organizers to start thinking about building a broad national movement with a coherent agenda that cuts through the silos, that makes the silos more porous. It's a big challenge because silos are supported often by foundations that have staff that are also broken into silos, and you get this reinforcement again and again and again. But it's not going to work. We need a much broader mass movement that starts to talk about, in general, the country we want to see. I think the younger generation of organizers can do it, the talent is there and I think we need to help them. I'm very fortunate I get a chance to go around and give a lot of talks to groups ranging from 100 to 1,000.

At the end of the talks, I say, "How many people here would like to be trained to be an economics educator the way the Populists had? They had 6,000 of them in the 1880s. We need about 30,000 now." And about 95 percent of the people raised their hands and volunteered. So this book is designed to be kind of a primer for those volunteers. It has questions at the end of each chapter you can use in a book club, as a study guide. You can drive your relatives nuts over the holidays because it's got over 100 charts and graphs so you'll be armed to the teeth.

But really, what we want to do is build a national economics education campaign to be the infrastructure for a broader movement.

For more information about the book, visit "Runaway Inequality: An Activist's Guide to Economic Justice," at runawayinequality.org/product/runawayinequality.

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