As President Obama begins his second term, he's not lacking for challenges, such as jobs, immigration and gun control, not to mention Afghanistan and Iran. Meanwhile, recalcitrant Republicans contest very move the President makes. But Obama's biggest challenge, economic inequality, gets little attention from many politicians.
To his credit, the President continues to decry inequality. In his second inaugural address, Obama said,
"[Americans] understand that our country cannot succeed when a shrinking few do very well and a growing many barely make it. We believe that America's prosperity must rest upon the broad shoulders of a rising middle class."
The President and most Democrats recognize the gap between the rich and poor is now as large as at any time in the last one hundred years. In 2011, the Congressional Budget Office found that between 1979 and 2007, " After-tax income for the highest-income households grew more than it did for any other group" 275 percent for the top 1 percent of households, 65 percent for the next 19 percent, just under 40 percent for the next 60 percent, and 18 percent for the bottom 20 percent."
Remarkably, Republicans don't seem concerned about the growing economic divide. Many conservatives, such as Arthur Okun, believe inequality is the price America pays for an efficient economy. They argue we shouldn't worry about inequality so long as there continues to be social mobility and the economy performs well. But the last twenty years has seen a dramatic decrease in mobility and a marked increase in economic instability.
In October, Berkeley sociologist Jerome Karabel published a paper detailing the decline in US social mobility: " Family origins matter more in the United States in determining where one ends up in life compared to other wealthy democratic countries. This is a recent development. Studies of social mobility as far back as the 1950s and 1960s showed that rates of movement in the United States were generally comparable to other developed countries."
An August 16th, 2011, section of the PBS News Hour focused on the lack of public awareness of the growing economic divide. Many Americans cling to the notion that wealth is relatively equally distributed. The reality is that the top 20 percent of Americans have 84 percent of the wealth, the second quintile has eleven percent, the middle quintile has four percent, and the bottom forty percent has but .3 percent.
Despite these disquieting facts, Americans might tolerate record inequality if it was the price the US paid for a dynamic economy. But Nobel Laureate Joseph Stiglitz argues the reverse is true: inequality is bad for the economy. Writing in The New York Times Stiglitz observed,