Is Anyone Really Going To Address Economic Inequality... Beyond Empty Promises?

Last week Barbara Lee and Bernie Sanders introduced the Inclusive Prosperity Act, which is meant to make Wall Street fund the progressive agenda. "Through a small sales tax on Wall Street trades," she wrote, "our government could gain billions of dollars to invest in critical programs like Medicare for All, Debt-Free College, affordable housing, and more. It’s time for Wall Street to pay their fair share of taxes and help fix our country’s deep economic inequality. Since the day Trump stepped into office, his reckless policies have protected and enriched the wealthiest class in America at the expense of everyday families. It’s no secret that the GOP Tax Scam tilted the playing field in favor of wealthy interests, and families of color have been systematically excluded from wealth-building opportunities. To make matters worse, people of color are hit the hardest when Wall Street speculation undermines good jobs and drives productive investment out of communities."

The Inclusive Prosperity Act they introduced "would improve our economy and lead to greater equity for Americans of all backgrounds by forcing Wall Street actors to finally pay their fair share of taxes. Trump is enriching the ultra-wealthy on the backs of [ordinary Americans]."

In a statement on his website, Bernie wrote that "The legislation imposes a tax of a fraction of a percent on the trades of stocks, bonds, and derivatives. This tax on Wall Street speculation, also known as a financial transaction tax, is estimated to generate up to $2.4 trillion in public revenue from wealthy investors over 10 years. An added benefit of the proposed tax is deterring the high-frequency trading that increases the instability of the financial sector and produces no economic value."

The original House co-sponsors are Ro Khanna (D-CA), Steve Cohen (D-TN), Pramila Jayapal (D-CA), Ilhan Omar (D-MN), Jim McGovern (D-MA), Mark Pocan (D-WI), Jan Schakowsky (D-IL), Raul Grijalva (D-AZ), Chellie Pingree (D-ME), Al Lowenthal (D-CA), Tulsi Gabbard (D-HI), Adriano Espaillat (D-NY), Rashida Tlaib (D-MI), Jared Huffman (D-CA), John Garamendi (D-CA), Alcee Hastings (D-FL), Rosa DeLauro (D-CT), Mark Takano (D-CA) and Eleanor Holmes Norton (D-DC).

Early yesterday, New York Magazine published a piece by Eric Levitz, In Appeal To Moderates, Sanders Calls For Worker-Township Of Means Of Production, that makes the clear case that Bernie Sanders, and perhaps Elizabeth Warren, is the political leader to fundamentally make America a more equitable society. "The inequality is too damn high," he wrote. "In the United States today, the richest 0.1 percent of the population owns as much wealth as the bottom 90 percent combined. And the chasm between our aristocracy’s fortunes-- and those of the average Joe and Joanna-- is only growing. Since 1980, the real annual earnings of the top 0.1 percent have grown by 343 percent; the poorest nine-tenths of the country, meanwhile, have seen their earnings grow by a mere 22 percent in that time span. Absent drastic reforms of our political economy, there’s every reason to think that this income polarization will continue apace in the decades to come.

And drastic reforms ain’t easy. In fact, even modestly reducing inequality (and/or ameliorating its most troubling effects) through tax and transfer programs poses major political challenges. For example, while raising taxes on the rich is very popular, transferring income away from the upper reaches of the middle class is less so. Even when broad-based tax hikes are pegged to overwhelmingly popular forms of redistribution, such as universal health care, voters often have trouble swallowing them. A recent Kaiser Family Foundation survey found that 56 percent of Americans favored Medicare for All-- until they were told the policy would “require most Americans to pay more in taxes,” at which point support plummeted to 37 percent. The credibility of this finding is buttressed by the failure of movements for single-payer health care in Vermont and Colorado, where aversion to tax increases fueled opposition. And the unpopularity of tax hikes on the non-rich can also be seen in the reluctance of even the leftmost Democrats to present detailed plans for how they intend to finance their most ambitious redistributive programs.

Bernie Sanders appears to understand all this. Which is why the 2020 candidate is preparing to shift the focus of his economic message away from divisive “tax and spend” liberalism and toward more broadly popular approaches to reducing inequality-- like, say, worker ownership of the means of production. As the Washington Post’s Jeff Stein reports:

We can move to an economy where workers feel that they’re not just a cog in the machine-- one where they have power over their jobs and can make decisions,” Sanders said in an interview. “Democracy isn’t just the opportunity to vote. What democracy really means is having control over your life.”

Sanders said his campaign is working on a plan to require large businesses to regularly contribute a portion of their stocks to a fund controlled by employees, which would pay out a regular dividend to the workers. Some models of this fund increase employees’ ownership stake in the company, making the workers a powerful voting shareholder. The idea is in its formative stages and a spokesman did not share further details.

Sanders also said he will introduce a plan to force corporations to give workers a share of the seats on their boards of directors. Sen. Elizabeth Warren (D-MA), another 2020 presidential candidate, proposed a similar idea last year.

Sanders’s plan for giving workers at major corporations an ownership stake in their firms is by far the most “socialist” policy he has ever endorsed as a national politician. The idea is, in essence, a scaled-down version of the late Swedish economist Rudolf Meidner’s plan for gradually socializing ownership of industry by requiring employers to funnel a fixed percentage of their annual profits into collectively owned, trade-union-managed “wage-earner funds.” Meidner’s plan, and all other blueprints for “funds socialism,” is derived from a simple observation, deftly simple observation, deftly summarized by Matt Bruenig of the People’s Policy Project:

[C]apital ownership no longer takes the form of an individual business owner presiding over an empire, but instead takes the form of affluent families owning diversified portfolios of real estate and financial assets like stocks and bonds. The socialization of those assets into funds owned and controlled by workers or society would thus provide a relatively simple glide path into a kind of market socialism.

And then, in terms of the 2020 presidential nomination, there's this horrifying "alternative" (art courtesy of Nancy Ohanian):