I am pleased by the attention (and I hope commitment) given this year to the urgent moral task of mobilizing resources (financial and other) to deal with the terrible poverty that blights the lives of so many people. Without in any way diminishing that focus, I hope that a related issue gets much more discussion and political support. That is the question of how within developed countries (especially the U.S.) we can combat the trend for economic growth to be promoted by means that exacerbate inequality. I do not mean to equate the two morally. Reducing grinding poverty is far more compelling, and if we had to choose only one to work on poverty reduction should win. But we do not have to choose. Indeed, politically, dealing with the problem of increasing inequality within the U.S. will help muster the necessary political support for a massive global anti-poverty effort. And allowing inequality in the U.S. to continue to get worse will drain support from American policies that respond to the imperative of aiding the world’s poorest. I am a supporter of capitalism, and I therefore believe that inequality is economically necessary, since the market does not function without creating it. But in America today (and our model is being preached to Europe and others) we are creating more inequality than is either necessary for efficient operation of the free market, or that is socially healthy.

At a nightcap on Friday I was challenged to say how we democrats plan to update our thinking and be relevant to the problems of 21st century. My answer (not expressed on the spot as clearly as it should have been) is that within the US, the central 21st century economic problem is that, to quote Alan Greenspan from Cong. Testimony in April, all of the gains from increased productivity in the U.S. lately have gone to the owners of capital, and virtually none in compensation paid in wages. Some of this is caused by market forces, especially in a globalized economy. But public policy in the U.S. deliberately works today to re-enforce this tendency, whereas we should be trying to alleviate it. Working people in the U.S. who lose their health care, received no increase in real wages, and see their right to bargain collectively increasingly under attack will react in many cases contrary to those policies aimed at diminishing the gap between their countries and much poorer ones. Policies which seek to reduce terrible inequality globally will have a hard time mustering support if they are accompanied by policies which make inequality much worse within countries.

So I hope at Davos and elsewhere that business leaders will deepen their commitment to fighting abject poverty. But the claims of middle and lower-middle income people within the U.S. should also get attention, if not for moral reasons–although I believe that their claims have moral legitimacy– but as a political precondition for the fight against poverty. If working people in the U.S. see the business community mobilizing to help the world’s desperate poor, while their own economic position deteriorates (relatively, and in many cases absolutely) their support to the millennium challenge will he much harder to muster.

– Congressman Barney Frank (29 January)