Engine of Inequality

Chapter 1Inequality: Why It's So Much Worse and What to Do About It

Nobody had our backs in office, not Democrats or Republicans. I'm tired of being sugarcoated and being robbed in the process.… [Politicians] are so out of touch with reality and real people. All of them.

– An autoworker who voted twice for Barack Obama and then for Donald Trump*

This bitter sentiment was voiced by an autoworker in May 2019. One month later, the US achieved a seemingly remarkable milestone: the longest economic recovery ever, at least as tallied by economists.¹ The Federal Reserve's chairman took comfort from this milestone, spelling out the broad benefits of this putative recovery – it was good for all Americans, not just the wealthy – or so he said.² But the Fed was wrong, and the autoworker and hundreds of millions of Americans just like him were right: the economic recovery after the 2008 “great financial crisis” was extraordinarily unequal. When the COVID-19 pandemic hit in March 2020, the shared-prosperity facade disintegrated – unemployment ravaged millions and millions of households and millions of Americans also took to the streets not just to protest George Floyd's murder, but also to mark a decade of extraordinarily unequal growth. No wonder.

If more Americans had had more savings with which to buffer the shock of sudden unemployment and had the American financial system been more equitable, then COVID's economic cost would still have been dear, but not disastrous. But as the ...