Saturday, February 13, 2016

Wall Street and Income Inequality

Regulating Wall Street is a side-show to the question of economic inequality. More regulation of Wall Street can prevent, we hope, a repetition of the financial crisis of 2008, but it will not, on its own, narrow the gap between the 1% and the rest of us. The difference between "reinstating Glass-Steagall" vs "strengthening Dodd-Frank" does not change life for ordinary Americans. And, sending some Wall Street executives to jail is just a satisfying fantasy.

The steps to start to equalize the income in the country are more basic: strengthening unions, raising the minimum wage, increasing social security benefits, further subsidizing the purchase of health insurance, expanding medicare, lowering the total cost of college education.

And, increasing the taxes on the wealthy and spending that money on public goods, which will indirectly raise the standard of living of the many: better school buildings, better education, better roads and bridges and public parks, better public transit, free, fast, and universal WIFI, efficient electrical grids and updated water and sewage systems, post office banking.

The problem with the financial sector is that it has too much money. Too much money is available for investment through the private capital markets and too little is available for investment through the government for public infrastructure and improvement. We are at the point where capital goes hunting for places to invest, driving the price of equities sky high, while the state is starved and our infrastructure falls apart. More taxes on the wealthy starts to change that imbalance.

2 comments:

housecalls said...

And the people say, AMEN!

No-Nonsense said...

What is it the responsibility of the wealthy to fund everything? Shouldn't the government get its house in order? The government has never shown responsible stewardship of money, yet you want to give them more? That's absurd!