from “The Market and Inequality: Progressives Lose When They Accept the Right’s Framing” by Dean Baker, TPMCafé, January 11, 2011, 7:48AM
…It is ridiculous to argue that the inequality in the U.S. is simply the result of free markets. Markets are structured by governments, and the rich have used their control of the government to structure the market in ways to make themselves richer.
The mechanisms for upward redistribution can be seen everywhere. Most recently the government bailouts of too big to fail banks meant that the top executives of Citigroup, Goldman, and the rest could continue to draw paychecks in the tens of millions of dollars. The implicit government guarantee enjoyed by these institutions amounts to a subsidy of tens of billions each year that is divided among their higher paid employees and their shareholders.
Patent and copyright monopolies are another way in which the government redistributes income upward. The income from these government granted monopolies flows overwhelmingly to people in the top 10 percent of the income distribution. These interventions in the market serve a purpose, but there are other ways to support research and creative activity that are more efficient and lead to less inequality.
The pattern of trade pursued by the United States over the last three decades, in which less educated workers are placed in competition with low-paid workers in the developing world, while the most highly educated workers are largely protected, also increases inequality. This effect is increased as a result of the over-valued dollar.
Federal Reserve Board policy that explicitly sacrifices employment in order to insure against inflation also has the effect of redistributing income upward….
read the full article at TPMCafé