Transforming Financialization and Inequality in a Post-Covid World
During the past decade, income and wealth inequality reached peak levels not witnessed since the eve of the Great Depression in 1928. Much of the blame for this two-tier society is placed at the feet of technological change and globalization. However, two important contributors are often ignored: first, the financialization of the U.S. economy, which has heightened the role of speculative trading and capital gains, which primarily benefit the top 10% of U.S. households, and second, the suppression of wages. It is troubling that in a country as wealthy as the United States, even before the pandemic, nearly 40% of all U.S. households could not handle a one-time expense of $400 without either selling something or borrowing. The Biden administration has been doing an admirable job at elevating awareness of these issues; however, reversing them will require long-term structural changes that will require broad participation of civil society to enhance productive activity and the creation of value. Given the enormity of current challenges, policies that were adopted during the Great Depression provide a helpful historical reference point. One important feature of the New Deal was the focus on job creation, productivity growth, and wages.
