“We are now living in a new Gilded Age, asextravagant as the original,” says the NobelPrize–winning Princeton economist and
columnist Paul Krugman.
In thedays of Krugman’s youth, “the economic dis-parities you were conscious of were quite mut-ed.” But that America is “another country,”Krugman says. Once, the AFL-CIO was a fix-ture of nature, even Ike liked the New Deal,and lawyers and longshoremen felt themselvesto be peers—as men, and as Americans. Today,the income gap is as wide as it was when therobber barons built lavish mansions and keptsenators as pets. And today’s gap is just asmalign.“The United States doesn’t have ThirdWorld levels of economic inequality—yet,”Krugman warns. “But it is not hard to foresee,in the current state of our political and eco-nomic scene, the outline of a transformationinto a permanently unequal society—one thatlocks in and perpetuates the drastic econom-ic polarization that is already dangerously faradvanced.”
That we have so far failed to graspthe dangers attests to “the growing influenceof our emerging plutocracy,” which has bus-ied itself denying and obscuring the reality of the new era of inequality.
What is to be done? Economists ThomasPiketty and Emmanuel Saez, experts on themeasurement of income inequality, havefound that “the top 1 percent income share hasincreased dramatically in recent decades.” They conclude that “it is obvious that the progres-sive income tax should be the central elementof the debate when thinking about what to doabout the increase in inequality.”
ForKrugman, a corresponding bump in the open-handedness of the welfare state is also recom-mended, as is the resuscitation of the mori-bund labor movement—not to mention a campaign of disapproval aimed at the balefulchanges in culture (precipitated by the propa-ganda campaigns of so-called “movement con-servatives”) that have permitted executivesalaries to soar with neither resentment norshame.
Krugman surely speaks for many when he argues that democracy is itself atstake:Even if the forms of democracy remain,they may become meaningless. It’s alltoo easy to see how we may become a country in which the big rewards arereserved for people with the right con-nections; in which ordinary people seelittle hope of advancement; in whichpolitical involvement seems pointless,because in the end the interests of theelite always get served.
This is a dark portrait—a nightmare for lib-erals of any stripe—and its realization is to bepassionately resisted. It is in fact realized inmuch of the world, and it is a time-testedrecipe for misery and strife. But is this really where we’re headed if the income gap does notcontract?For many citizens, politicians, and celebrat-ed scholars (such as Krugman), high and ris-ing levels of income inequality are just wrong;they obviously pose a danger to the ideal of anopen-textured liberal society where disadvan-tages need not be permanent, where advan-tages of birth and good fortune do not createa self-sustaining structure of supremacy andhumiliating subordination, and where all citi-zens enjoy the respect due to free persons whoare equal under the law.But should this seem so obvious? Are themillions who nod along with Krugman cor-rect? Is American income inequality really anexistential threat to the democratic values atthe heart of our political culture? Does itthreaten imminently to transform the UnitedStates into an irreversibly stratified illiberalregime, dominated generation after generationby the rich and well-connected?Well, no. It should not seem obvious that American income inequality imperils justiceor threatens to gut our democracy, because itisn’t true. You don’t have to be duped by theplutocracy to find Krugman’s line of thinking,so representative of the views of left-leaning Americans, badly misguided. Paul Krugman is
Is Americanincomeinequality really an existentialthreat to thedemocratic valuesat the heart of ourpolitical culture?