New Movie On Inequality Underscores Arguments For Middle-Out Economics

The argument for replacing conservative “trickle-down” policies on taxes and labor with middle-out economics got a boost Friday with the release of former Secretary of Labor Robert Reich’s documentary, Inequality For All.

Reich identifies a policy cycle in which lowering taxes on the wealthiest Americans reduced the amount of money available to fund the education programs that prepare the middle-class workforce for the modern economy. The Center for American Progress (CAP) suggested some solutions to those problems in its report “300 Million Engines of Growth” earlier this summer.

Inequality today is as extreme as it was ahead of the Great Depression. The valley in between those two peaks of inequality, which shows up repeatedly on screen in Inequality For All, represents a time of broad prosperity from which the country can draw lessons. So far the Great Recession has not produced the same kind of policy shift Reich points to as a key to that prosperity, and inequality is only getting worse. Eroding investments in education and children undermine the future workforce, low union membership undermines present-day workers, and weak financial industry oversight allow the sector that drives inequality and creates economic crises to regain its footing while leaving the middle class behind. Reich is recommending a dramatic shift in economic policy — effectively a roll-back of President Ronald Reagan’s economic legacy — and he is not alone.

A new paper from the Economic Policy Institute (EPI) reinforces the case for higher taxes on the wealthiest, greater investment in education and other public programs, not just for the long-term sustainability of the middle class but for the urgent near-term goal of regaining the level of employment the country had before the financial crisis. “In the near term, there actually is no real difference between the key priority of ‘middle-out economics’ and that of maximizing overall growth,” EPI writes, but long-run middle-class growth “means braking (and maybe even reversing) the extraordinary rise in wage and income inequality of recent decades.”


It’s no coincidence that Inequality For All includes several clips from Fox News economic coverage in which hosts and guests alike decry the idea that income inequality is bad and promote trickle-down policy notions. The conservative movement has succeeded in making trickle-down the starting point for economic policy discussions and presenting the wealthy as “job creators” who lawmakers must take care not to offend.

“When somebody calls themselves a job creator, they’re not describing the economy or how the economy works,” billionaire pillow magnate Nick Hanauer says at one point in the movie. “What they’re really doing is making a claim on status, privileges, and power. If a guy like me is a job creator at the center of the economic universe, the current economic arrangements are righteous and justified.” Policies that cater to the wealthiest people won’t produce economic growth, Hanauer explains, because “it’s actually our customers that are job creators.”

“We need to replace trickle-down economics with middle-out economics, and indeed everyplace you look on earth where you find prosperity, you find massive investments in the middle class and the poor,” Hanauer adds.