Morici: Obama Policies Make Inequality a Lot Worse
NEW YORK (TheStreet) -- Income inequality has been growing since the 1970s, but President Obama's economic policies are making it worse and much faster than Presidents Bush or Clinton.
Globalization is driving the sinking fortunes of many ordinary Americans.
Prior to World War II, the U.S. economy was largely isolated. It traded with the world much less than rivals like Germany, labor was scarcer and wages were higher for ordinary workers than just about anyplace else.
The New Deal strengthened unions and the post-war growth of manufacturing created a thriving middle class. Competition for workers tended to raise wages in service activities too.Subsequently, the United States championed freer trade through the WTO. Cheaper ocean freight, then jet travel and now the Internet blurred boundaries between national markets. Combined with the rise of Japan and China, those severely injured U.S. electronics, auto and other manufacturing, and are now eroding employment in many professional services. An open global economy created broad opportunities for college educated Americans with sophisticated skills in advanced technology, finance and the creative arts -- like film making. First National City Bank, a dominant player in New York State, became Citigroup, a dominant force in global finance. All of this decimated unions and lowered wages for workers with only a high school education or soft college degree, while enriching the relatively few in engineering, finance or other highly technical areas. The top 1% now earn nearly one-fifth of the country's household income, and the top 10% more than half. That's the most since 1928, and Obama's policies have made things worse -- faster. In a globalized economy, America has to play its strengths, but during the Obama recovery the international trade deficit has nearly doubled. Bans on offshore drilling and in parts of Alaska require expensive oil imports, and send purchasing power and high paying jobs to the Middle East and Russia. The flood of manufacturers from China keeps growing, thanks to an undervalued yuan and other subsidies the administration refuses to address. Dodd-Frank bank reforms have not stopped reckless and unethical behavior on Wall Street. Witness JPMorgan's London Whale and how often that venerable institution and Goldman Sachs are dragged into court these days.
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