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Inequality is a choice: Rewriting the rules of the American economy

“Inequality is not inevitable. It is a choice.” That is what Rewriting the Rules of the American Economy, a report from the Roosevelt Institute, asks policymakers to grapple with now that issues of wage stagnation, opportunity, and income inequality are finally front and center in today’s national conversation.

For decades, US economic policies have presented growth and equality as a zero-sum game, with many economists arguing that the country could not have one without giving up the other. However, it’s becoming abundantly clear that inequality not only hurts the American dream of opportunity for all, but it is also bad for the economy. Rewriting the Rules takes a fresh look at the policies that have rigged our economic system to favor short-term profits for the rich over shared growth and prosperity for all. It pushes against the notion that we cannot change these policies to reduce inequality and promote a stronger economy for everyone.

The report and broader work of Rewriting the Rules —which are supported by the Ford Foundation— have garnered widespread policy attention in ways that white papers from think tanks don’t always receive. Gideon Lewis-Kraus of The New York Times recently profiled Felicia Wong— the leader at the helm of the Roosevelt Institute— along with the impact that Rewriting the Rules is having on changing the politics of the US economy.

I was pleased to ask Felicia Wong a few questions about Rewriting the Rules and what it will take to create a stronger economic system that supports shared growth and prosperity for all.

Felicia Wong, president and CEO of the Roosevelt Institute Felicia Wong, president of the Roosevelt Institute

Amy Kenyon: Tell us about the genesis of the Rewriting the Rules project. What were you seeing that made you recognize this issue would be timely and important?

Felicia Wong: In early 2015, our team at Roosevelt looked around and realized that we needed a comprehensive, clear narrative to explain what had gone wrong with the economy and what we needed to do – and could do – to correct those wrongs. We also believed it was important to make this a story about driving more shared prosperity and more growth. That narrative became Rewriting the Rules of the American Economy.

There were a few important factors that led us to this project: First, there was a lot of energy on the left for progressive economic policies, including a higher minimum wage (especially the Fight for 15), equal pay for women, and paid sick and family leave. Second, there was the anger and despair felt by working people across the political spectrum – African Americans, Latinos, young people, white Americans – who had been suffering from a low-wage “recovery” with virtually no prospect of obtaining good jobs that would provide them or their kids with upward mobility. And third, there was a looming election that was likely to be fought on economic inequality. At that point, in early 2015, we realized that our national conversation would benefit from a pithy statement: How did we get here, why is it a problem, and what can we do to fix it? This was important because a lot of the conversation to that point had focused on the problems and not the solutions.

One good sign that we were right about the timeliness of the work is that a number of commentators, from The New Yorker to Vox to Time, have used Rewriting the Rules as a yardstick to measure whether Hillary Clinton’s recent nomination acceptance speech was progressive enough. That shows real impact.

 

Why was it so important to focus on both inequality and economic growth in the report? 

For too long our politics have presented a false choice between growth and equality. The thing to realize is that we can disrupt inequality without causing harm. Even eight years after the financial crisis, our economy continues to have too much slack – meaning people and other resources that simply are not being productive or achieving their full potential. 

However, by investing in those people, in their jobs and education and their futures, with both public and private dollars, we can increase our economic output without slowing growth. In fact, a number of economists suggest that we could increase broadly shared growth significantly with the right kinds of targeted investments. Making those investment decisions wisely is one of the most important political choices now before us.

 

Why is now the time for the US to create an economic system of greater shared prosperity?

It’s important for policymakers to act now and make the investments that will lead to greater shared prosperity. There’s an economic reason: capital can be borrowed relatively cheaply today; and there’s a political reason: the deep anger and anxiety and unrest you see today. The latter includes movements on the left demanding justice for black Americans and movements of young people supporting Bernie Sanders, who was essentially a democratic socialist candidate; it also includes the fear that fuels Donald Trump on the right. Obviously, these are all very, very different and have different roots, but we can address all of them to some extent by investing again in our economy. 

If we don’t, I absolutely dread the result. It won’t be simply more inequality. It will be even more gated communities and private police at the very top, and a racially charged, Lord of the Flies–style race to the bottom for the rest of us. 

 

What is the big idea that you want people to take away from this report?

Inequality is not just something that happened to us; it has been our choice. We now have three decades’ worth of data to say that the old way we managed the economy – cutting taxes and focusing primarily on the well-being of the top in order to stimulate job creation – simply has not led to better outcomes for the vast majority. And now we know that a different approach, investing across the economy, will reduce inequality for all of us. 

And the big lesson from the reaction to Rewriting the Rules is that this approach makes sense, not just to progressive economists but to mainstream institutions. The OECD, Standard and Poor’s, and Morgan Stanley are all now concerned about inequality and its effects on market participants and citizens. We’ve had very little substantive criticism of the ideas, and a whole lot of enthusiastic embrace. This says to me that we are onto something. 

Finally, we are working on an effort to make sure that the rule-writers in the next presidential administration are progressive – that they understand Rewriting the Rules as a policy frame; that they are road-tested independent actors who clearly put the common good ahead of private gain; and that they are diverse with respect to gender, race, and ways of thinking. Anyone who has worked in any kind of organization knows that the mindset and background and experience someone brings to problem-solving is essential to the outcome. So, personnel really matters in our ability to rewrite the rules. I have been pleasantly surprised at the reaction we’ve had to this project; it has a lot of momentum, because movement activists and political insiders and the media understand that specific people make all the difference.

 

The economic message from Rewriting the Rules seems to be resonating with people across the political spectrum. Why do you think that is?

Our polling, conducted by Stan Greenberg of Democracy Corps, suggests that when you begin with a “rewriting the rules” approach that acknowledges economic pain and argues that rebalancing the top will help grow the middle, you can reach a very wide audience. First, take a look at swing voters. The Clinton vote margin with white working class women is five points stronger with a “rewriting the rules” message than it is with a message that touts “building on our current progress.” The “rewriting” message is also 12 points stronger with voters who do not like Trump or Clinton. Secondly, Democratic base voters consolidate under “rewriting the rules,” which gains nine points with young voters and 10 points with people of color.

These numbers are astounding, especially because the difference between a “rewriting the rules” message and a “build on our progress” message is the framing, not the policies. Our takeaway from this is that despite all the division in the electorate – division that is real and will take a lot of work to overcome – we do agree far more on what it will take to fix our economy than it might appear on first glance.

 

You recently released another report on racial inequality and how the "rules of the economy" are set up in ways that have been especially harmful to people of color. What are the implications of the current US economic system on other social justice issues, such as racial justice and gender equality? 

Yes, Rewrite the Racial Rules is a follow-up to Rewriting the Rules of the American Economy. My colleagues Dorian Warren, Andrea Flynn, and Susan Holmberg and I wrote it because, as we have seen even in this election cycle, too often progressive leaders mistakenly assume that colorblind economic policies alone can sufficiently address the obstacles to equal opportunity and equitable outcomes for people of color. But this just isn’t so. To understand racial and economic inequality in America today, we must look below the surface and understand the web of rules and institutions – some as old as the slave codes, some as new as the retreat from racial integration in schools – that lead to unequal outcomes. 

Race-neutral policies and trickle-down economics came of age together in the 1980s and share the same flaw: the assumption that individual competition in a free market will lead to optimal outcomes. Decades of experience now show us that this isn’t so and we ignore other approaches to actively redress centuries of racially discriminatory rules at our own peril.

With race as with the economy, there are rules we can rewrite to change outcomes. Our agenda should include not just the front-and-center work of reforming our criminal justice system, from prison financing to sentencing, which of course is monumentally important, but also making sure that real people have real jobs and access to housing and credit and the basics of a middle class life.

 

The rules that structure our economy have been skewed toward the rich and powerful at the expense of the middle class and working families. Experts from the Roosevelt Institute explain why we need to address economic and racial issues together in order to make real progress.

 

At the end of the day, what you and your colleagues at Roosevelt are doing is trying to create long-term, structural change in the US economy. What advice do you have for philanthropies that want to support this type of work?

Long-term structural change takes long-term investment and patient capital, put to use across a strategic set of actors. Campaigns to restructure our economy are complex, involving ideas and political influence and boots on the ground.

We are seeing a lot of movement right now. Sometimes change – changing hearts, minds, and policies – can actually happen quickly. But groups working on issues as complex as economic inequality need to be able to count on multiyear support from funders who understand that impact is important, but that measurement of impact is not always obvious or direct. So it’s really important to have funders, like Ford, who can balance clear goal setting with faith in organizations’ ability to see the long game and stick with a long-term plan.

 

The New York Times profile called the Roosevelt Institute a unique kind of “think tank.” Could you share some of what you’ve learned through this process about making your research and policy platforms relevant for other kinds of groups?

One thing that the New York Times Magazine piece didn’t focus on but is absolutely essential is that we at Roosevelt could not do our work well if it weren’t for the work of many others. Our value is as a research group speaking to people from various parts of the progressive economic continuum. And as such, we depend heavily on others, from the Economic Policy Institute, which does terrific wage and inequality research on which we draw, to the Center for Popular Democracy and Americans for Financial Reform, which have found ways to campaign on otherwise arcane issues of the Federal Reserve or regulatory reform. I saw that the Movement for Black Lives published a broad and expansive policy platform that has a lot of economics ranging from wealth-building and job creation to invest-divest. I look forward to diving in since that work and the voice of that movement is so important.

At Roosevelt, we work with a range of academics and economists, including those who specialize in gender or race or labor history. And we work very closely with our own Roosevelt network members and alumni, college students and young people who are passionate about policy and social change and also call for “changing the rule-writers.” It’s only by being a part of this larger ecosystem that we’re able to have impact.

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