New Year’s Resolutions: Ten Ways to Combat Upward Redistribution of Income

by Dean Baker,

The big gainers in the last three decades (a.k.a. the one percent) like to pretend that their good fortune was simply the result of the natural workings of the market. This backdrop largely limits political debate in Washington. The main difference is that the conservatives want to keep all the money for themselves, while the liberals are willing to toss a few crumbs to the rest of the country in the form of food stamps, health care insurance, and other transfers.

While the crumbs are helpful, the serious among us have to be thinking about the unrigging of the economy so that all the money doesn’t flow upward in the first place. Here are ten ways in which we should be looking to change the structure of the market in 2015, so that all the money doesn’t flow to the one percent.

In all of these areas changes will be difficult, since the one percent will use their wealth and power to ensure that the rules are not rewritten to benefit the bulk of the country. However this list should provide a useful set of market friendly policies that will both lead to more equality and more growth.

1) Expanded trade in medical care – we still pay close to twice as much per person for our health care as people in other wealthy countries. If our trade policy were not dominated by protectionists, it would be directed towards making it easier for qualified foreign physicians to practice in the United States, potentially saving patients tens of billions every year.

2) Prescription drugs – this is part of the health care story, but a big enough part to deserve separate mention.

3) Wall Street sales tax – The financial sector continues to rake in money at the expense of the rest of the country, courtesy of bailouts, too big to fail insurance, and being largely exempt from taxes applied to other industries.

4) Limiting CEO pay – CEOs are able to arrange paychecks in the tens of millions of dollars in large part because corporate directors are effectively paid off to look the other way.

5) Limiting pay at non-profits – Non-profit organizations like universities, hospitals, and charities are hugely subsidized by tax payers.

6) Applying sales tax to Internet sales – Jeff Bezos has become one of the richest men in the world because he was successful in expanding Amazon into a huge retailer that doesn’t have to collect the same sales taxes as corner grocery stores. There is no excuse to giving special exemptions to Amazon and other Internet retailers.

7) Democratizing the sharing economy – Start-ups like Airbnb and Uber have quickly turned into multi-billion dollar businesses, in large part by evading the regulations that apply to their traditional competitors.

8) The over-valued dollar

9) Shorter work years/ work weeks — we can increase the number of jobs by reducing the amount of time that people work on average.

10) The Federal Reserve Board – The last and possibly most important item on the list is the Federal Reserve Board. It will be coming under pressure from the Wall Street types to raise interest rates. The point of higher interest rates is to slow the economy and keep people from getting jobs.

That’s my top ten list of places where progressives can focus in 2015 on restructuring the economy in ways that prevent income from flowing upward.

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