Paul Krugman: How Fares the Dream?

Rising inequality "threatens to make America a different and worse place":

How Fares the Dream?, by Paul Krugman, Commentary, NY Times: “I have a dream,” declared Martin Luther King, in a speech that has lost none of its power to inspire. And some of that dream has come true. ... When we observe Martin Luther King’s Birthday, we have something very real to celebrate: the civil rights movement was one of America’s finest hours...

King ... dreamed of a nation in which his children “will not be judged by the color of their skin but by the content of their character.” But what we actually became is a nation that judges people ... by the size of their paychecks. And in America, more than in most other wealthy nations, the size of your paycheck is strongly correlated with the size of your father’s paycheck.

Goodbye Jim Crow, hello class system.

Economic inequality isn’t inherently a racial issue... But ... there are racial implications to the way our incomes have been pulling apart. ... In the 1960s it was widely assumed that ending overt discrimination would improve the economic as well as legal status of minority groups. And at first this seemed to be happening. ...

But around 1980 the relative economic position of blacks in America stopped improving. Why? An important part of the answer, surely, is that circa 1980 income disparities in the United States began to widen dramatically...

The Times recently reported on a well-established finding..., we actually have less intergenerational economic mobility than other advanced nations. ... And there’s every reason to believe that our low economic mobility has a lot to do with our high level of income inequality.

Last week Alan Krueger, chairman of the president’s Council of Economic Advisers, gave an important speech about income inequality... Highly unequal countries, he showed, have low mobility... And ... this relationship suggests that America in the year 2035 will have even less mobility than it has now,... a place in which the economic prospects of children largely reflect the class into which they were born.

That is not a development we should meekly accept.

Mitt Romney says that we should discuss income inequality, if at all, only in “quiet rooms.” There was a time when people said the same thing about racial inequality. Luckily, however, there were people like Martin Luther King who refused to stay quiet. And we should follow their example today. For the fact is that rising inequality threatens to make America a different and worse place — and we need to reverse that trend to preserve both our values and our dreams.