- Rising income inequality in the US is a result of a broken educational system, an open border with Central America, and Chinese mercantilism.
- The price of unskilled labor has become globalized at a low level.
- The American education system overproduces unskilled workers.
- If the Left is sincere about raising the living standards of the working class, it will close the Mexican border and impose tariffs on Chinese manufactured goods.
Personally, I don’t care about the GINI ratio, because it does not speak to the living standards of working Americans; American workers are not injured by the income levels of the rich. A society without rich people is very poor indeed, as any 16th (or 21st) century artisan will tell you. No rich, no Michelangelo or Shakespeare. A better measure of economic justice is real income by cohort, which paints a dispiriting picture today, particularly for the working class. So, to me, the problem is the real income of the working class, not the real income of the rich. Envy is a political problem, not an economic one. (Another important measure is the cross-national standard of living of the bottom rung, which is for another post.)
Today's unionized blue collar worker with a house, a family, two cars and a mortgage can’t compete with penniless Honduran immigrants living ten to a room, nor can he compete with Chinese teenagers living in a dormitories adjacent to their employer's factory. Unfortunately for President Obama and his aspirations, America has no monopoly on people who work hard (quite the contrary), and no control over what Chinese factories pay their non-unionized workers (a lot less than $10 an hour). And yes, China also has a nasty income inequality problem, with some of the poorest workers and richest elites in the world. China is a fascist plutocracy run by the 1%. The CCP is far to the right of the GOP: just try organizing a labor union or organizing a strike. China is America in 1895, minus the philanthropists.
The American worker of today is competing with millions of undocumented Central American immigrants who are driving the price of unskilled labor to Central American levels. Until the wages of American workers are driven down to Guatemalan levels, the supply of eager Guatemalan workers will continue unabated. The US simply cannot have income equality and an open border.
The reason that the white working class has become conservative is not because they are stupid; they have become conservative in reaction to unrestricted immigration, the aristocracy of federally protected ethnic groups, and the growth of state-dependent classes who don't pay taxes. The difference between the Democratic coalition and the working class is that the working class actually works for a living in the private sector. White blue collar workers now vote Republican, something that Harry Truman would have real trouble understanding.
The Left has no understanding of how labor markets actually work, and what that means in the lives of actual working Americans. The Volvo community are still playing Pete Seeger records and watching Oscar-winning movies about Nelson Mandela and Cesar Chavez. They don't understand that it wasn't the capitalist class which voted for George Wallace, and it wasn't the working class who voted for George McGovern. The working class always and everywhere hates enforced "equality". Just ask the Poles, the Estonians, the Cubans, the Slovenians, or the Ukrainians. No workers want state-imposed "equality".
Globalization Of Manufacturing
If President Obama wants to do something to improve living standards for the working class, he will follow Mitt Romney’s advice, declare China to be a currency-manipulator, and ask Congress to impose countervailing tariffs. It should be just as easy for Chinese companies to export their manufactures to the US as it is for American companies to export manufactures to China--i.e., impossible. Ask Apple how many Macs it has sold in China.