Thread: NY Times: Low skilled immigration creates inequality.

Op-Ed Columnist
Inequality as Usual


Not long ago, liberals were insisting that income inequality was America’s most serious economic problem.

Now there are more immediate crises: A 9.8 percent unemployment rate, a yawning budget deficit. But the inequality issue hasn’t gone away.

The latest census figures show the gap between the wealthiest Americans and everybody else widening — rather than shrinking, as some economists expected — during the crash of 2008. An August report from Bank of America/Merrill Lynch suggested that middle-income Americans, buried in real-estate debt, will have to wait much longer than the rich to see their finances rebound.

This landscape will put liberalism to the test. Since Ronald Reagan was elected nearly 30 years ago, Democratic politicians have promised that their program could reverse the steady post-1970s growth of income inequality without sacrificing America’s economic dynamism.

But having promised win-win, they may deliver lose-lose. In the short run, Barack Obama could preside over an America that’s more economically stagnant and more stratified.

There’s only so much that politicians can do about broad socioeconomic trends. The rise of a more unequal America is a vexingly complicated issue, whose roots may wind too deep for public policy to reach.

Liberals, though, have spent decades telling a more simplistic story, in which conservatives bear all the blame for stagnating middle-class wages and skyrocketing upper-class wealth. So it’s fair to say that if a period of Democratic dominance doesn’t close the gap between the rich and the rest of us, it will represent a significant policy failure for contemporary liberalism.

It’s also fair to point out some reasons failure is a likely outcome.

For one thing, the lazy liberal’s cure for income inequality — soaking the wealthy with higher tax rates and cutting taxes for everybody else — simply isn’t going to happen.

In part, this is because the Democrats have become as much the party of the rich as the Republicans, and parties rarely overtax their own contributors. (That’s why the plan to pay for health-care reform with a “surtaxâ€

So the illegals and poor will step on the faces of the middle class until both classes are all poor and the elites get richer.