There is a lot of talk about extreme income inequality. The fault, many say, is with capitalism. Often these capitalist critiques come from the progressive left. But more and more, warnings about the excesses of “late-stage capitalism” are coming from very wealthy individuals, such as billionaire investor Warren Buffet and BlackRock CEO Larry Fink. These financial titans beat their breasts publicly and draw a lot of media attention along the way. They express deep concern about rising inequality. They make tax-deductible contributions to particular causes (usually education) to try to ameliorate the effects and then go back to making gobs of money.
The most recent call for capitalist correction comes from Ray Dalio, founder of the world’s largest hedge fund. His article on LinkedIn, “Why and How Capitalism Needs to be Reformed” — and a related appearance on 60 Minutes — has garnered significant attention. The LinkedIn article is rich in data, showing everything from declining economic mobility to wage stagnation low educational attainment among the poorest Americans. After going through the (depressing) data, Dalio writes, “Capitalists don’t know how to divide the pie, but progressives don’t know how to grow the pie.” As though the answer to crushing income inequality is budget management.
These smart people never seem to make the connection to the fundamental causes of inequality: those who are disproportionately rich are also disproportionately powerful. And they will not give up their position of strength because most people don’t relinquish power voluntarily.
When it comes to proposed solutions, Dalio calls for “leadership,” bipartisan efforts to “redesign the system,” and tax structures that raise more money from the top but don’t “disrupt productivity.” Those relatively abstract notions are all well and good. But why not take a leadership role in promoting specific steps to address economic inequities and put some pressure on those who could make these changes.
Here are eight I can think of off the top of my head:
- Advocate that all Fortune 1000 companies pay all their employees, contractors, and suppliers a living wage — say $20/hour
- Support an increase of the federal minimum wage to $15/hour
- Increase the marginal income tax rate to 75% on all income over $10 million
- Propose legislation to provide no-cost, quality and accessible childcare for all workers making under $100,000
- Support two years of free education or training for all citizens after high school
- Propose $500 billion investment in affordable housing combined with a massive expansion of building trade apprenticeships for women and people of color
- Support a 75% tax on all financial incentives provided to any for-profit company with assets of over $100 million
- Propose eliminating the tax deduction on charitable contributions over $10 million
There are plenty of ideas to address income disparity but the folks who have the power in the U.S. Senate —and their rich corporate donors — will never let it happen.
If you don’t call this out, then you are just blowing smoke.