Wednesday 20 November 2019

President plants seeds of equality but can they grow?

'I sat down with one of Mitt Romney's advisers to try and winkle an admission from him that redistirbution of welath still needed to be at the heart of any serious economic policy platform'
'I sat down with one of Mitt Romney's advisers to try and winkle an admission from him that redistirbution of welath still needed to be at the heart of any serious economic policy platform'

David Usborne

Most of us might have felt it within our rights to skip the State of the Union address. Already in the lame-duck quarter of his two terms and his party reduced to minority status in both chambers of Congress, what could President Barack Obama say that would matter in the real world?

It was clear even before Mr Obama made the short trip up to Capitol Hill that the proposals at the heart of his speech - to raise taxation levels on the wealthiest Americans and impose new fees on the biggest financial institutions to help out the middle class - would be a non-starter with the Republicans and would never, ever become law. Another exercise in sad futility was in the offing.

But he did not come just to needle Republicans or tout those things he has achieved during his six years in office. Nor was he only there to gloat about the newly ascending economy. Instead, he took one issue and planted it right at the heart of political conversation.

Watch how it flourishes and how it puts Republicans on the defensive just when they thought their backs had the wind.

The topic is inequality and its time has very obviously arrived.

The stretching of the rubber band between the super-rich and the rest of us was highlighted in this week's Oxfam report which claimed that, if current trends continue globally, the 1pc will own more wealth than the 99pc by next year.

It is what the folks in Davos are talking about today also. But the US, as it emerges from the Great Recession, may be the perfect model for what's at stake.

Recession

"We have risen from recession freer to write our own future than any other nation on earth," Mr Obama declared.

"It's now up to us to choose who we want to be over the next 15 years and for decades to come. Will we accept an economy where only a few of us do spectacularly well? Or will we commit ourselves to an economy that generates rising incomes and chances for everyone who makes the effort?"

While the latest US statistics tell us the Recession is over, median household incomes in America nonetheless continue to fall.

The old assumption that an expanding economy is all that's required to improve the fortunes of all seems to have faltered.

On his way to Davos, the former US Treasury Secretary Larry Summers unpacked one statistical nugget in a column for the 'Financial Times' that gave some perspective on the problem. "If the US had the same income distribution it had in 1979," he wrote, "the bottom 80pc of the population would have $1trn - or $11,000 per family - more. The top 1pc $1trn - or $750,000 - less."

Mr Summers was two letters short of using the word "redistribution" that causes Republicans to quiver.

Wealth

In 2012 on a flying trip with a certain Mitt Romney I sat down with one of his advisers to try to winkle an admission from him that redistribution of wealth still needed to be at the heart of any serious economic policy platform precisely to keep society in kilter.

He wasn't having any of it. To him, redistribution implied economic engineering by big government and was thus anathema.

On Tuesday Mr Obama plunged right in. It will take actions by government to restore the balance - the economic equality - that has been eroded. Another Democratic President said the same in his address in 1952.

"I think everybody knows that social insurance and better schools and health services are not frills, but necessities in helping all Americans to be useful and productive citizens." That was Harry Truman. (© Independent News Service)

Irish Independent

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