By John Leschak
Paul Krugman, an economist and Op-Ed writer for The New York Times, spoke at the University on Tuesday about the growing wealth gap in America.
Krugman is an economic professor at Princeton University, and won the John Bates Clark medal from the American Economic Association in 1991 and is one of the founders of the “new trade theory,” which analyzes international trade.
The event was sponsored by the Departments of Economics, History, Sociology, the Center for Civic Engagement and the Long Island Alliance for Peaceful Alternatives.
According to Krugman, the zenith of economic inequality in America occurred from 1870 to 1910, a time period known as the Gilded Age, when industrial capitalism was developing. The Gilded Age ended abruptly during the administration of President Franklin D. Roosevelt in the 1930s.
Roosevelt reduced disparities in wealth through a series of federal programs called the New Deal, which created social security and unemployment insurance, and included the National Labor Relations Act, which recognized workers’ rights to form unions and engage in collective bargaining.
Since the 1980s, income inequality has increased. Krugman attributed the growth of the wealth gap to the dismantling of programs started by the New Deal and the reduction in union membership. According to the Fall 2007 issue of the University’s Regional Labor Review, only 12 percent of workers nationwide are union members. Krugman claimed that the decline in union membership began as a result of President Ronald Reagan’s anti-union policies.
Krugman said that some Republican theorists worry that the growing economic inequality “will cause the lower classes to become rabidly populist and call for socialist revolution.” However, Krugman believes that the wealth gap has had the opposite effect. “Instead, the upper classes have become rabidly anti-populist,” Krugman said.
One example of this “rabid anti-populism” was the attempt to eliminate the estate tax, referring to the money that a deceased person leaves to their beneficiaries if it is over a certain amount. Last year, Congress passed a law that reduced the estate tax to zero percent by 2010, although the law expires in 2011.
Krugman said that today’s generation needs to do more than restore those lost New Deal programs. He pointed out that the New Deal was “incomplete” because it did not establish universal health care, and that racism was the reason why America does not currently have universal health care.
“FDR got support for his economic programs by forming an alliance with the supporters of Jim Crow,” Krugman said, referring to the laws created in the South that called for the “separate but equal” mandate in the nineteenth century.
“The Southerners opposed universal health care because they believed it would lead to racially integrated hospitals,” Krugman said.