Tom Weisskopf on Spreading the Wealth   

Your campaign for the presidency was inspirational to millions of Americans because you promised to bring us back together again, after eight years of polarization under President Bush and his Republican juggernaut. We yearn to believe that we are really one nation, committed to each other, rather than a collection of individuals each seeking to feather his or her own nest and to prevent others from encroaching on it.

Nothing you can do as president will be as important as enabling Americans to restore our collective sense of community-our understanding that we are really all in it together.

To accomplish this, however, you will have to recognize and address a huge obstacle to rebuilding this sense of community: the enormous economic inequality that now characterizes the United States-greater than at any time since the late 1920s, and far greater than in any other wealthy industrialized nation.

During the past thirty years the share of income going to the richest 1 percent of U.S. households has more than doubled-to almost 25 percent. And household wealth is far more unequally distributed than household income: the wealthiest 1 percent enjoy an average level of wealth almost 200 times as great as the median U.S. household-a rise of roughly 50 percent since the 1970s. These sharp increases in inequalities of income and wealth have not been mitigated by increased social or income mobility. On the contrary, U.S. intergenerational mobility decreased significantly over the last 25 years; our society now offers less social mobility than in any comparable nation.

Up to a point, economic inequality can be economically beneficial. But we are way beyond the point where the beneficial effects of inequality outweigh its adverse effects, which become increasingly significant as the degree of inequality rises.

It is no accident that the Great Depression followed the spike in inequality of the 1920s, and it is no accident that the current economic crisis has come on the heels of huge increases in economic inequality over the past quarter-century. Sharply rising inequality leads to speculative excess and a variety of economic distortions, which will sooner or later undermine the vitality of the economy. Huge inequalities foster hugely unequal opportunities, thereby preventing society from tapping the latent potential of the less well-off; undermining the cooperation and trust essential to a well-functioning market economy; and increasing the costs of maintaining law, order, and public health.

Huge inequalities are not only economically counterproductive. As I am sure you are well aware, they also undermine democracy by over-empowering the wealthy, and they erode community by distancing the rich from the poor.

Last October, in response to a question from "Joe the Plumber," you remarked that "I think when you spread the wealth around, it's good for everybody." For this you were roundly excoriated by the John McCain campaign. But you had made an excellent point-one that was arguably endorsed by the American electorate on November 4. A significant reduction of the enormous inequalities now characterizing our economy can indeed be good for everybody, just as it was in the New Deal era of the 1930s.

The best way to reduce economic inequality and to increase equality of opportunity is precisely to redistribute some of the wealth of the very rich-especially that portion of it that they pass on to their heirs-so that it enhances opportunities for the poor. Instead of providing additional advantages to the children of the rich, some of their wealth should be used to help level the playing terrain for the poor. This can best be done by investing it in public institutions that provide health and educational services for children-especially very young children-in relatively low-income neighborhoods.

I urge you therefore to take immediate action in order to:

• Bring the estate tax exclusion amount back down to $1 million (its level before the Bush tax cut bill of 2001).
• Institute a new national property tax-along the lines of the French "solidarity tax on wealth."
• Establish a "solidarity investment fund," financed by the aforementioned wealth taxes, to be devoted to providing new and/or better health and educational services in low-income communities.

"Spreading the wealth" along the above lines would redistribute assets in ways that promise more economic growth, as well as more equal opportunity, helping to overcome the current economic crisis, to revitalize democracy, and to restore community in our society.

Tom Weisskopf is a professor of economics at the University of Michigan; his books include After the Waste Land: A Democratic Economics for the Year 2000 and Affirmative Action in the United States and India.