Inequality Understanding and Fixing American Economic Malaise, 1970s to Present

The Problem Slowing American economy Stagflation: simultaneous high inflation and high unemployment Oil shocks Competition from Europe and Japan (and later all Asia and Latin America)

Solutions Keynesian “pump priming” – no longer effective Economic restructuring – long term and painful solution Remove “barriers” to economic innovation Maintain living standards to encourage consumption

Balance of Power in the White House and Congress Congress –House – Democratic (28 years); Republican (12 years) Democratic Republican Democratic –Senate - (Democratic 23 years; 17 years) Democratic Republican Democratic Republican Republican/Democratic Republican Democratic White House: –Republicans – 28 years ( ; ; ) –Democrats – 12 years ( ; )

Balance of Power, Presidency RRRRRRRRDDDDRRRRRRRRRRRRDDDDDDDDRRRRRRRR House DDDDDDDDDDDDDDDDDDDDDDDDDDRRRRRRRRRRRRDD Senate DDDDDDDDDDDDRRRRRRDDDDDDDDRRRRRRRDRRRRDD

Balance of Power, Presidency RRRRRRRRDDDDRRRRRRRRRRRRDDDDDDDDRRRRRRRR House DDDDDDDDDDDDDDDDDDDDDDDDDDRRRRRRRRRRRRDD Senate DDDDDDDDDDDDRRRRRRDDDDDDDDRRRRRRRDRRRRDD

Conservative Solutions: Reagan/Bush I Era Tighten monetary policy to control inflation End welfare and coddling of criminals Curb the power of unions Ease civil rights enforcement and affirmative action Deregulate industry to create more competition: –Airlines, 1978 –AT&T breakup, 1984; –loosen environmental rules. Cut taxes - to rein in big government and free private markets.

How Effective are the Solutions? What are the underlying dynamics? Who is helped or hurt (long run and short run) by: –Economic restructuring –Policy changes

1970

1969

Willie Horton adHorton Bush and Dukakis on crime Bush supports the death penalty for first-degree murderers Dukakis not only opposes the death penalty, he allowed first-degree murderers to have weekend passes from prison One was Willie Horton, who murdered a boy in a robbery, stabbing him 19 times Despite a life sentence, Horton received 10 weekend passes from prison Horton fled, kidnapped a young couple, stabbing the man and repeatedly raping his girlfriend Weekend prison passes. Dukakis on Crime [political message paid by National Security Political Action Committee].

Median Family Income by Age Cohort,

Inflation Adjusted Median Family Income,

Median Family Income by Age Cohort,