Inequality is Back with Vengeance

I spend much of my time thinking about how to help families at the bottom half of the earning scale increase their economic security and mobility. While many highlight the central role of wages and jobs, I believe there’s a broad range of complementary policy supports that should be included in the discussion. We focus on policy ideas that can help families build up saving and assets over time because these are the resources that can be deployed productively to respond to uncertainty, invest in the future, and expand opportunities. Still, there is no getting around the fact that income and assets work in tandem. I’ve argued that raising the levels of both for those at the lower end should be a major goal of our social policy system. When making this argument I often emphasis the advantages of bringing up those at the bottom and increasing economic mobility, and I leave aside issues of inequality.

But for a variety of reasons, economic inequality is re-entering the discussion. It is coming back with vengeance. In the coming months I expect its profile as a policy issue in its own right to rise. For starters, the numbers are just staggering and have become so out of line with the expectation of the society. While it is true that we have long been a country with concentrations of income, wealth, and power, we also have experiences and expectations that prosperity will be shared and mobility is possible. Yet since the late 1970s, the levels of income and wealth concentration at the top have been dramatic and there is some uncertainty as to why this has happened. Today almost half the income goes to the top 10 percent of earners and wealth in concentrated to an ever greater degree. Tim Noah’s recent and excellent multi-part series in Slate describes the current state of income inequality and helpfully reviews the rival explanations and debates. He sets out to crack the mystery and does a pretty good job fingering the primary suspects of executive pay, the decline of organized labor, and various failures in our education system. Although I think he lets tax policy off the hook, he weaves a compelling tale that shines some light on the phenomenal rise of inequality.

Secondly, there is a growing recognition that excessive inequality has real social costs. Steven Pearlstein makes this point in his Washington Post column, and describes the political challenge of addressing it. Previously, there was a prevailing assumption that the rising tide would lift all boats, and gains at the top would be matched by gained at the bottom. By as we realize more and more that our dynamic economy is rewarding the few at the expense of the many, I think there will be a demand on policymakers to address these inequities. This is a policy debate that I think is overdue and one I think the country is getting ready to have on a national scale.