April 3, 2013
Dear friends and neighbors,
Throughout my time in public office, I’ve continued to make an effort to help keep you informed of the happenings at the Capitol during the legislative session. In addition, I’ve tried to bring broader awareness to some public policy discussions that we as a society need to conduct. Our system of governance and ultimately the goals of improving our society works best when citizens are informed, engaged, and participatory in the process.
One of the recurring themes I’ve tried to bring into the public context is the incredible amount of income inequality in our country. Recently, a video illustrating the findings of Building a Better American – One Wealth Quintile at a Time, published by Michael Norton of Harvard Business School and Dan Ariely of Duke University, went viral on the internet. The video can be found at: http://billmoyers.com/2013/03/06/income-inequality-goes-viral/ or by simply searching for: income inequality viral video.
Please take the time to watch this video. It is important. In order for us, as a society, to have these honest conversations about difficult issues, we need to understand the facts.
Since 2008, when our economy was in freefall, we’ve come a long way. Corporate profits and cash on corporate balance sheets are at unprecedented levels and the stock market is reaching all time highs. We’ve even seen a strong resurgence of American manufacturing. So, why are the poor getting poorer? Why is the middle-class diminishing? Why are more people falling out of the middle-class and into poverty even though they are working full time and even overtime?
Of all the productivity gains in the last thirty years, the top 1% accumulated nearly all of the benefit. The remaining 99% of Americans’ wealth essentially stagnated or decreased.
This leads to two significant policy discussions: taxes and minimum wages. Our current tax policies accelerate the concentration of wealth by the top 1% by allowing preferential treatment for income earned through capital gains, dividends, and carried interest compared to income earned in more traditional occupations. Along with silly loopholes like tax breaks for private jet ownership, this keeps money in the pockets of the wealthiest of the wealthy. The money is then reinvested to create even further disparity between those at the top of the economic spectrum and those at the bottom.
In contrast, when people at the bottom end of the economic spectrum have more money in their pockets, they spend it, bringing economic benefits to all the businesses in their area. Importantly, more than 70% of our economy is consumer spending. When consumers’ ability to purchase goods and services diminishes, our economy stagnates. We see real economic expansion and broad prosperity when people are moving out of poverty and the middle-class is expanding. But it’s difficult for people to move up the economic latter when the wealthiest Americans hold such a tight grip on such a large portion of the resources.
We have an income inequality problem in this country. Addressing that problem is going to be a tough challenge. The wealthy and privileged have an incentive to defend the status quo; and they have a lot of resources (money, influence, etc.) to do it.
That’s why I’m looking for your input. I want to hear from you! Please take the time to send me your thoughts after you’ve watched the aforementioned video. What do you think should be done to change the course we’re on?
Best regards,
Andrew Falk