Center for American Progress

A Strong Middle Class Is the Foundation of Good Governance
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A Strong Middle Class Is the Foundation of Good Governance

CAP Event Examines Why We Need to Close the Income Gap

The Center for American Progress brought together economists and policymakers to discuss why improving our economy must start with strengthening our middle class.

For more on this event, please see its event page.

On April 19 the Center for American Progress hosted an event on why a strong middle class is essential to both good governance and a strong economy. The event was part of CAP’s yearlong series exploring how the middle class is the engine of economic growth.

In former Rep. David Obey’s (D-WI) opening remarks he discussed the widening income disparities in our country over the last three decades. He said “between 1979 and 2000, the income gap between the top 1 percent and the poorest 40 percent more than doubled … the income gap between the economic elite and everybody else is once again, as you know, the largest it’s been since the Great Depression that was triggered in 1929.”

He argued that Rep. Paul Ryan’s (R-WI) federal budget proposal would continue this trend. It caters to the 1 percent, and doesn’t provide for any kind of swift deficit reduction; in fact, under Rep. Ryan’s plan the deficit wouldn’t be for 30 years.

Rep. Obey added, “The claim that America is an equal opportunity society is a comforting myth.” For instance, 74 percent of “high-achieving eighth-graders” will earn a college education if they come from a wealthy background; 47 percent will do so if they are from the middle class; and 29 percent will do so if they come from a low-income family. The Ryan budget would exacerbate this problem, he said.

Rep. Obey pointed to the history of economic policy in the United States, saying that it is important to keep investing in infrastructure, education, and science and research to help build a stronger middle class and provide opportunity.

He asked: “Will the economic elite really be satisfied living well-off lives in an increasingly poor and weakened country?”

A panel discussion followed Rep. Obey’s speech. Moderated by Washington Post columnist Ezra Klein, the panel included Jacob Hacker, a professor of political science at Yale University; David Madland, Director of CAP’s American Worker Project; and Branko Milanovic, lead economist with the World Bank Research Group.

Milanovic said that even though no two economies are exactly alike, “Equality is crucial for growth … equality is necessary to have, first, equal opportunity for people, and if they have equal opportunities, or similar opportunities, they’re able to contribute to the best of their abilities to the overall growth.”

He continued: “And then you’ll become self-sustainable, because if you have an economy like that, where actually people are able to contribute more … there is no formation of a sort of a autocratic upper class that is then using the political levers to maintain its power.”

When asked whether policy can reverse the nation’s inequality, Madland said both market and political forces play a role in combating inequality, and that we need to revive unions and the labor movement, as these can help level the economic and political playing fields.

Hacker discussed other ways inequality may be tackled. Shareholders might grow tired of extreme levels of executive pay and start a movement to rein in compensation packages. And new technological platforms, like Facebook and Twitter, may provide new avenues for people to join and organize social movements.

Overall, the panelists agreed that the current political climate in the United States needs to change, and that helping the middle class would be good for the economy as a whole.

For more on this event, please see its event page.

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