Can the center-left regain terrain?

[stpioc]

In principle, greater inequality produces a demand for more redistribution. Democratic politicians should respond by imposing higher taxes on the wealthy and spending the proceeds on the less well off. This intuition is formalized in a well-known paper in political economy by Allan Meltzer and Scott Richard: the wider the income gap between the median and average voter, the higher the taxes and the greater the redistribution.

Yet in practice, democracies have moved in the opposite direction. The progressivity of income taxes has decreased, reliance on regressive consumption taxes has increased, and the taxation of capital has followed a global race to the bottom. Instead of boosting infrastructure investment, governments have pursued austerity policies that are particularly harmful to low-skill workers. Big banks and corporations have been bailed out, but households have not. In the United States, the minimum wage has not been adjusted sufficiently, allowing it to erode in real terms.

What’s Been Stopping the Left? by Dani Rodrik - Project Syndicate

• Rodik argues that they should have pursued more redistribution to stem the rot of right-wing populism
  
• He also argues the embrace of identity politics has worsened their loss and the appeal of right-wing populism
  
• The left has bought into the neo-liberal narrative and has become too cosy with financial institutions
  
• The result has been a wholesale shift in the social base of left-wing parties towards the well-educated elite (the Brahmin left).
  
• Piketty argues that the bifurcation of the elite in the Brahmin left and Merchant right has insulated the elite from redistributive demands
  
• The Brahmin left has bought into the idea of meritocracy and blames low incomes more as the result of lack of effort rather than bad luck.
  
• In the US, very low trust in the Governments ability address inequality has defused the issue
  
• Trust in government in general has been declining, which creates an extra hurdle for redistributive policies should the left embrace these, fear of losing that battle explains the timidity.
  

Some observations:

• There is now solid evidence that extreme inequality isn't conducive to a thriving economy, so even as the political rationale seems to have waned, the economic one has been strengthened.