Obama wants to help the middle class - and he has a point

Barack Obama's pontificating may not go very far, but inequality is a real problem in need of a real solution, says Matthew Gwyther.

by Matthew Gwyther
Last Updated: 15 Jun 2015

Say what you like about Obama but he remains a powerful public speaker. The problem that many have had with him is the gap between talk and action.

Far too often he appears like some kind of latter-day, middle aged Hamlet in $400 calfskin shoes, agonising and soliloquising beautifully, but finding it tough to get up and actually do anything like run through his stepfather with a rapier. (Not that Barack would have any reason we know of to waste any elderly relatives...but you get my drift.) His critics bemoan his refusal to get down and horse trade with his opponents in the heat of Truman’s kitchen. He appears aloof and cerebral, not a great presser of flesh.    

The great irony is that now Obama finally looks as if he wants to make his mark in the final quarter of his presidency, he finds himself in a straitjacket with both houses run by Republicans who dislike him with a real vehemence. But last night’s big speech in Washington was filled with practical ideas, swagger  and urging.     

In his State of the Union address - you can if you wish read the whole 6,500 words here  - he dealt full square with the issue of rising inequality. Urging  Republicans to join him in embracing 'middle-class economics’, he said the shadow of crisis had passed.

'It’s now up to us to choose who we want to be over the next 15 years, and for decades to come. Will we accept an economy where only a few of us do spectacularly well? Or will we commit ourselves to an economy that generates rising incomes and chances for everyone who makes the effort?'

For many it was easy enough to scoff about this issue when Polly Toynbee was banging on about it in glorious isolation years back but it’s now getting harder and harder to ignore. The opening couple of days of Davos this year have been dominated by responses to Oxfam’s shock tactic report. However, much careful unpicking and analysis it may require, the bald statement that the wealthiest 1% will soon own more than the rest of the world’s population put together has some power.

It is a fair point to make, for example, that if that 1% put its wealth to the kind of uses that Bill Gates has then that would be a very good thing. Far too many of them blow it all on super yachts and £40 millions pads in London. However, the super-rich have a growing reputation problem. In the absence of a new Peasant’s Revolt we need to think of something else.

In the US the Gini coefficient currently looks pretty ugly. In 2013, the real (inflation adjusted) income for a household 20% from the bottom of the income distribution (technically, at the first quintile) had risen by 1.4% over the previous 40 years. For a rich household right up in the top 5% of wealth the figure was 44%. Trickle down, even in the States, has its limits. Trying to do something about this is a worthy cause as Obama approaches the twilight of his political career and it’s a baton that Hillary Clinton is bound to take on.

Here in the UK we have succeeded in exiting the worst slump ever without the kind of awful unemployment rates that exist elsewhere in Europe, but the jobs that have been created in recent years are far too often lowly paid. Meanwhile, the mega rich’s piles grow towards the sky.

We’re pretty good at the politics of envy in this country. We have all the additional class baggage that makes it a far uglier discourse than in America. Trying to do something about inequality will require more than tokenistic bashing of the ‘rich’ by the introduction of a ‘mansion tax’ which threatens to strangle a load of middle class families in the south east who could almost certainly no longer afford to buy their houses at the daft prices they currently fetch.

But neither is it productive to bash the poor to justify pulling up the ladders of social mobility - ‘an I’m alright, Jack’ mentality that is both cruel and economically illiterate. A prosperous and cohesive middle class is not only the biggest spender but also best long-term securer of democracy, and a necessary bulwark against the special interests of the super rich.  

Time perhaps if not for another Tony Blair (God forbid), then at least another third way. I can’t see any serious political party running on that ticket over here at the moment but Hillary might give it a try.

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