It’s a good team. They’re competent and they care, in sharp contrast to Trump’s goon squad. Many of them were in the trenches with Biden and Barack Obama in 2009 when the economy last needed rescuing.
But reversing “structural inequalities” is a fundamentally different challenge from reversing economic downturns.
They may overlap last week the Dow Jones Industrial Average hit a record high at the same time Americans experienced the highest rate of hunger in 22-years. Yet the problem of widening inequality is distinct from the problem of recession.
Recessions are caused by sudden drops in demand for goods and services, as occurred in February and March when the pandemic began.
Pulling out of a recession usually requires low-interest rates and enough government spending to jump-start private spending. This one will also necessitate the successful inoculation of millions against Coronavirus (COVID-19).
By contrast, structural inequalities are caused by a lopsided allocation of power. Wealth and power are inseparable wealth flow from power and power from wealth. That means reversing structural inequalities requires altering the distribution of power.
Franklin D Roosevelt did this in the 1930s when he enacted legislation requiring employers to bargain with unionized employees. Lyndon Johnson did it in the 1960s with the Civil Rights and Voting Rights Acts, which increased the political power of Black people.
Since then, though, not even Democratic presidents have tried to alter the distribution of power in America.
They and their economic teams have focused instead on jobs and growth. In consequence, inequality has continued to widen during both recessions and expansions.
For the last 40 years, hourly wages have stagnated and almost all economic gains have gone to the top.
The stock market’s meteoric rise has benefited the wealthy at the expense of wage earners.
The richest 1 per cent of US households now own 50 per cent of the value of stocks held by Americans. The richest 10 per cent, 92 per cent.
Why have recent Democratic presidents been reluctant to take on structural inequality?
First, because they have taken office during deep recessions, which posed a more immediate challenge. The initial task facing Biden will be to restore jobs, requiring that his administration contain COVID-19 and get a major stimulus bill through Congress.
Biden has said any stimulus bill passed in the lame-duck session will be “just the start”.
Second, it’s because politicians’ time horizons rarely extend beyond the next election. Reallocating power can take years.
Union membership didn’t expand significantly until more than a decade after FDR’s Wagner Act. Black voters didn’t emerge as a major force in American politics until a half-century after LBJ’s landmark legislation.
Third, reallocating power is hugely difficult. Economic expansions can be a positive-sum game because growth enables those at the bottom to do somewhat better even if those at the top do far better.
But power is a zero-sum game. The more of it held by those at the top, the less held by others.
And those at the top won’t relinquish it without a fight. Both FDR and LBJ won a significant political cost.
Today’s corporate leaders are happy to support stimulus bills, not because they give a fig about unemployment but because more jobs mean higher profits.