Redistribution?
All of the McCain campaign’s rhetoric about “socialism” and “redistribution of wealth” obscures the truth about the American economy. The fact is that we already have undergone a significant redistribution of wealth since the Reagan presidency. In the past 25 years, inequality in both wealth and income have grown, and wealth has been redistributed significantly from the majority of Americans to the very rich.
As the new report from the Organisation for Economic Co-Operation and Development (OECD) demonstrates, the U.S. has the third highest level of inequality and poverty among the 30 OECD nations (only Mexico and Turkey are worse). This inequality has grown since the mid-eighties, and grown even faster since the beginning of the George W. Bush administration.
Conservative economic rhetoric greatly distorts the issue of income redistribution. Such rhetoric suggests that the economic policies of the “left” (Obama, in this case) redistribute wealth, while conservative principles - low taxes on the rich, deregulation, “small government,” etc. - do not “redistribute,” but are somehow the “natural” state of economics.
The facts clearly show otherwise. The OECD report shows that “Income inequality and poverty [in the U.S] continue to increase, especially since 2000.”
Some of the report’s highlights:
-Rich households in America have been leaving both middle and poorer income groups behind…nowhere has this trend been so stark as in the United States….
-The distribution of earnings widened by 20% since the mid-1980s which more than most other OECD countries. This is the main reason for widening inequality in America.
-Redistribution of income plays a relatively minor role in the United States. Only in Korea is the effect smaller. This is partly because the level of spending on social benefits such as unemployment benefits and family benefits is low - equivalent to just 9% of household incomes, while the OECD average is 22%. The effectiveness of taxes in reducing inequality has fallen still further in the past 10 years.
-Social mobility is lower in the United States than in other countries like Denmark, Sweden, and Australia.
-Wealth is distributed much more unequally than income: the top 1% control some 25-33% of total net worth and the top 10% hold 71%.
The economic lesson here is that income redistribution works. Generally speaking, and assuming economic growth, if you employ conservative economic principles, income and wealth will be redistributed to the wealthy, at the expense of everyone else. If, however, you employ social democratic (”big government”) principles, the result will be a more egalitarian society and less severe economic stratification - in other words, a much healthier “redistribution” of wealth.
Despite Republican rhetoric, it has been the Bush administration that has been redistributing America’s wealth.
