Yet many economists are reluctant to confront rising income inequality directly, saying that whether this trend is good or bad requires a value judgment that is best left to philosophers. But that disclaimer rings hollow. Economics, after all, was founded by moral philosophers, and links between the disciplines remain strong. So economists are well positioned to address this question, and the answer is very clear.
Saturday, October 16, 2010
Income Inequality: Too Big to Ignore
During the last three decades the economy has grown much more slowly, and our infrastructure has fallen into grave disrepair. Most troubling, all significant income growth has been concentrated at the top of the scale. The share of total income going to the top 1 percent of earners, which stood at 8.9 percent in 1976, rose to 23.5 percent by 2007, but during the same period, the average inflation-adjusted hourly wage declined by more than 7 percent.
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The taxes for the rich should be higher than the poor. Government can use money for infrastructure. What is more, job training should be provided to increase the level of the poor, so they could find higher wages jobs. The income gap will be smaller.
ReplyDeleteUltimately the philosophic question, though, is whether we would rather have an equal society or a rich society. The ultimate concept of a laissez-faire economy is that even the smallest slice of the pie in an unequally distributed economy is larger than the share received by everyone in an equally distributed economy. This deals with how the redistributive efforts affect growth and etc, but this is the fundamental question of economic philosophy, and I would argue that there is actually no clear answer. It is a choice each society makes for itself.
ReplyDeleteThis article is debatable to determine whether the government should raise taxes on the wealthy or not. I can't say much at this point regarding the economic philosophy but I do believe that there should be a fair plan for everybody. This is just a matter of a moral principle from everybody. Of course not everybody would agree with each other. I do agree with Becky that it is a choice for each society to make. I would love to see the benefits and the cons of having an equal society and a rich society and see how each society weighs.
ReplyDeleteThis article demonstrates that due to the rising gap in income, the benefits of having a "rich society" are largely limited to the top income earners. The pie is growing larger, but the share of the pie by the rich is growing so much (top 1% had 23.5% of wealth in 2007) and the share of the pie by the rest is shrinking so much (average hourly wage declined more than 7% since 1976) that most people would be justified in pointing out that tax cuts for the rich screw the rest of society by increasing their shares of the pie at the expense of the middle and lower class.
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