Larry Summers sums up the cost of rising inequality to the typical American household: "If the US had the same income distribution it had in 1979, the bottom 80 per cent of the population would have $1 trillion — or $11,000 per family — more. The top 1 per cent $1 trillion — or $750,000 — less."
Behind the startling figures is a startling point, at least by the standards of the 20th Century American economy: economic growth alone is no longer enough to address normal people's desire for rising living standards. A rising tide might lift all boats, but the American economy no longer works that way.
Inequality — at least as an abstract concept — doesn't have much juice as a political issue. But income and wage growth for middle class families is the quintessential political issue. And one of the major shifts beneath the surface of American politics over the past few years is the growing conviction among the Democratic Party's wonks — including the centrist, not-so-populist ones like Summers — that you really can't deliver on the thing voters care about without addressing inequality on a policy level.
Summers is the lead US author of a recent report that offers an outline for Hillary Clinton's economic agenda, and the fingerprints of this turnabout are all over it. The "third way" idea that the state should provide education, infrastructure, and relief for the poor but not much else is really gone, in favor of a much more populist vision. And you see the same thing in the Obama administration's latest tax proposals, that would offer much stiffer rates on wealthy investors in order to reduce the burden on middle class workers.
That kind of frank redistributionism isn't the only possible approach to middle class income stagnation. But right now it seems to be the approach Democrats are converging on. And though Republicans have started appropriating populist rhetoric, I don't really think they've articulated an approach to back that rhetoric up. Whoever's able to connect these dots in a way that works substantively and makes sense to people is going to have a huge leg up in grappling with the economic issues of the years to come.