US: Inequality with Full Employment

The principal indicator of poverty and inequality in Europe — and more so in Spain — is the number [of people] out of work. Therefore, it is very thought-provoking to analyze the paradox that the U.S. has become one of the most unequal societies in the world, and at the same time is at the point of achieving full employment — an official unemployment rate of 5.6 percent. Therefore, it is not surprising that faced with this reality, President Obama’s most mentioned concept last week in the debate on the state of the Union was that of inequality, “Will we accept an economy where only a few of us do spectacularly well,” he said.

Obama worries about those who cannot get on the road to recovery or turn the page.

Like here, except that the realities are difficult to compare, Obama called for “[turning] the page.” The “Great Recession” is now history in the USA, but we still live in its shadows: A phase has begun where the difference is more visible now than in those difficult times between families who have — more or less — ridden out the crisis without losing a job and without having seen their power of acquisition decrease substantially, and those who after having suffered terribly, living hand to mouth, are not capable of getting on to the road to recovery: those who “cannot turn the page.” Obama does not want it said of him what has been said of so many other world leaders — who maintain the rhetorical discourse that in order to share, first there must be growth, without ever arriving at the first part of the syllogism.

The information with which he launched this memorable speech is fairly enviable. With good reason, Obama could call to mind the Spanish mystic who said, if I contemplate myself I’m a sinner, but if I compare myself I’m a saint. The growth predicted for the current year is 3.6 percent and was 5 percent in the final quarter of 2014 — “America has overcome the crisis and has created more wealth than any other economy in the developed world;”* the unemployment rate is 5.6 percent — “since 2010 the increase in employment in the United States exceeds that in Europe, Japan, and every other advanced economy combined;” and the U.S. is at the point of reaching a public deficit of 3 percent. Obama boasted, “At every step, we were told … that we would crush jobs and explode deficits; instead we’ve seen the fastest economic growth in over a decade, our deficits cut by two-thirds, a stock market that has doubled.”

Obama proposes free enrollment for the first two years at university.

To combat inequality and favor middle-class economics, which refers to very wide sections of the population, including the working class, Obama proposes a range of measures, such as the following: fiscal reform to increase taxes for the top 1 percent — income, capital gains, inheritance and a tax on the biggest banks — in exchange for reducing them for the rest of the population; an increase in the minimum wage; free enrollment for the first two years at university in community colleges – for many families, the loans to allow their children to study at university are greater than their mortgages; a subsidy on loans for first-time home buyers; an extension of paid sick leave; tax exemptions for nursery school fees; combating tax avoidance, which leads to legal evasion, or laws that strengthen rather than weaken unions. The greater part of these proposals go in the opposite direction to those of European austerity.

The fight against inequality will determine both the campaign for the U.S. presidential elections of November 2016 and the European ideological debate about the best economic policy for getting out of the crisis. Like Thomas Piketty in the academic sphere, in the political sphere, Obama forces American Republicans and the European right to include, as a frontispiece of their policies, the discussion about inequality and its influence on the deterioration of society. With social mobility stalled, middle-class economics “means to help working families to feel more secure in an ever-changing world. This means helping people afford child care, college, health care, a home, retirement.” No comment.

*Editor’s note: Accurately translated, this quote could not be verified.