Writing Friday in the New York Times, columnist Paul Krugman asks all of us to give President Obama’s big inequality speech a serious hearing. Speaking at the Center for American Progress Wednesday, our President pointed to a combination of growing income inequality and a lack of upward mobility as “the defining challenge of our time.”
Our political class has spent years obsessed with a fake problem — worrying about debt and deficits that never posed any threat to the nation’s future — while showing no interest in unemployment and stagnating wages. Mr. Obama, I’m sorry to say, bought into that diversion. Now, however, he’s moving on.
…The wrong turn we’ve taken in economic policy — our obsession with debt and “entitlements,” when we should have been focused on jobs and opportunity — was, of course, driven in part by the power of wealthy vested interests. But it wasn’t just raw power. The fiscal scolds also benefited from a sort of ideological monopoly: for several years you just weren’t considered serious in Washington unless you worshipped at the altar of Simpson and Bowles.
Now, however, we have the president of the United States breaking ranks, finally sounding like the progressive many of his supporters thought they were backing in 2008. This is going to change the discourse — and, eventually, I believe, actual policy.
So don’t believe the cynics. This was an important speech by a president who can still make a very big difference.
Many of us, including myself, tend to discount our President’s remarks about inequality because his administration has consistently favored Wall Street over Main Street. His support for raising the minimum wage comes too late– unless the Democrats re-take the House next year, he will likely be the first President since Franklin D. Roosevelt in 1938 not to sign a minimum wage law.
Economist Arindrajit Dube:
[T]he evidence suggests that around half of the increase in inequality in the bottom half of the wage distribution since 1979 was a result of falling real minimum wages. And unlike inequality that stems from factors like technological change, this growth in inequality was clearly avoidable. All we had to do to prevent it was index the minimum wage to the cost of living.
The question is, should we take President Obama’s inequality rhetoric seriously, as Krugman suggests?