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Timothy Noah: Why the Rich Are Getting Richer and the Middle Class Is Disappearing

In his new book "The Great Divergence," Noah digs into the causes of America's rapidly increasing inequality. In this interview, he talks to AlterNet about what he found.

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SJ: While I was preparing for this interview, I went back and looked at this chart that Matt Stoller at Naked Capitalism wrote about as Wisconsin was happening. It was a chart on the frequency of strikes in the US. When I went back and looked at it, the time that it dropped was also at the beginning of the Great Divergence, probably right around 1982, after PATCO [the Professional Air Traffic Controllers Organization].

TN: It’s sort of ironic because logically the breaking of the PATCO strike shouldn’t have had any effect at all on private sector labor. PATCO was a public union. But nonetheless it was a signal to management that the federal government would not hesitate to break a union. That, combined with the appointments to the NLRB of Donald Dotson, also under Reagan, that really was a very significant rollback to labor’s power and it capitalized on opportunities that had existed all the way back to 1947 as a result of Taft-Hartley.

SJ: When looking at your prescriptions for helping revive labor you talk about the need for labor and management to work together better. I was talking to Stephen Lerner recently, who is a long time organizer with SEIU, and he said, “Find me one boss who is willing to let his workplace voluntarily go union if we want to work in partnership and we’ll happily do it,” but no one is ever willing to do that.

TN: Partnership was an idea that became fashionable when the chips were down for management, but when the Rust Belt was the Industrial Belt, when it was riding high, managers would tell Walter Reuther that they agreed with his ideas, but they weren’t going to act on them because they were his ideas. That adversarial culture was the creation of management, not labor.

SJ: We were just talking about the decline of labor and what that has done to the Democratic Party. You look at the growth of inequality under both parties and find that Democrats are generally better for equality. But under Bill Clinton we got welfare reform, we got NAFTA, we got Wall Street deregulation. We got increasing inequality under Clinton, we just got enough of a wage bump for everyone that it didn’t occur to people to be upset about it.

TN: Well, it was significant that it was a wage bump for everyone because the previous boom of the 80s had not been a wage bump for everyone. But I would say that Clinton’s record is mixed. In the book I say there are really two divergences. There is the skills divergence you and I have been talking about so far and then there is this largely separate phenomenon of the 99 percent versus the 1 percent. Clinton’s record on skills-based divergence is quite good. His record on the 99 percent versus the 1 percent is notably bad. I think it was worse than Reagan. Although partly that was because many of the policies that Reagan had moved forward came to fruition under Clinton.

There is this very dramatic difference between the income gains under Democrats and Republicans – opposite trends. Under Democrats the biggest gains are at the bottom and they diminish as you go up the income scale. Under the Republicans the biggest income gains are at the top and they diminish as you go down the income scale. But if you look at the top you see that as you’re getting up to the 95th percentile that distinction starts to disappear. So the 99 percent versus the 1 percent part of the Great Divergence has proceeded under both Democrats and Republicans.

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