There is no such thing as a perfect freemarket, government sets the rules by which the market functions. These rulesare necessary to construct a free market. Although, who do these rules benefitand who do they hurt? Over the past 30 plus years, when the economy began toshift many of the rules governing our market began to shift as well. There is acorrelation between political polarization and widening economic inequality.
With money comes the capacity to control polices. People abuse their wealth bylobbying for bailouts, subtilizes, and taxes that are going to benefit theirwealth. In the last presidential election there were billionaires contributingmoney to candidates. Thus, putting the government on the auction block, andshowing how we are losing equal opportunity in America. When inequality waslowest top tax rates were higher.
When inequality was highest tax rates on thewealthy went down. Taxes at the top were never below 70% until president RonaldRegan dropped these taxes. Most of the income the rich makes are capital gains,which is only taxed at 15%. (https://www.
schwab.com/resource-center/insights/content/taxes-whats-new ) This causes anegative trickledown effect, and where it starts is in Washington. If thewealthy are not paying their fair share, and if the middle class is stagnantand do not pay much in taxes because they do not make as much money.
Then, abudget crisis happens along the line causing less revenue sharing for thestates. This can lead to low support for public higher education, so when statefunding went down tuition prices went up to compensate. People would be lessconcerned with income inequality and wealth if people had an equal chance tomake it.
If everyone had a chance to work hard and have an upward mobilitythere would be no inequality, but as income inequality rises forward mobilityis less than it was before. “The same technology,that brought globalization and automation bestowed ever larger rewards for peoplethat had the right education and connections to take advantage ofglobalization.” (Robert Reich) Higher education is what lifted people out ofpoverty and into the middle class during the great depression. In America, 42%of kids in poverty will not get out, compared to Denmark where only 25% staythere. So, who should we emulate? The best answer is the United States. After WWII, “The great prosperity” happenedand the economy boomed causing for low inequality. The United States, madeeducation a national priority, particularly higher education. By 1940, only 5%of adult Americans had a 4- year college degree, then over time it exploded.
The government paid college for those who returned from war. Also, universitiesmade it cheaper to afford college. In the 1950’s, the United States had thegreatest educated work force than anyone in the world. We also had laborunions, “by the late 1950’s almost 1/3rd of workers were in a union.”(http://www.nytimes.com/2011/01/22/business/22union.
html)This gave average workers leverage to get a larger share of the growingeconomic pie. The United States, built the largest middle class during thistime. When the economy expands, productivity grows, then wages increase, aswell as tax revenues. This causes workers to buy more and companies to hiremore creating a larger job market. By the government investing for a highlyskilled work force we can successfully compete in this new global economy.