According to a recent CBS Money article, "the gap between rich and poor is getting bigger in the world's richest countries - and particularly the United States - as top earners' incomes soar while others' stagnate."
What should we do in the face of such growing inequality? Oxford University economist Anthony Atkinson has the following suggestion: "Governments have to step up. Step up to the plate as Roosevelt did in the Great Depression." He advises the United States Federal Government to act as an employer of last resort, to fund an unemployment insurance plan, and to provide broad unemployment subsidies.
Before implementing Atkinson's strategies, however, we may do well to consider the following question: is the presence of an income gap a sure sign of economic troubles? The rich have certainly gotten richer. But have the poor been hurt by this increase of fortune, or have they, unbeknownst to themselves and the people at CBS, been brought along for the ride?
According to Bruce Meyer, professor at University of Chicago's Harris School of Public Policy, poor Americans have been brought along for the ride. He reminds us, in the March edition of Commentary Magazine, that the income of Americans in the 10th percentile of wealth has risen 44 percent over the past 30 years; the consumption of goods has grown even more drastically; the size of living units has "increased by 200 to 250 square feet"; and the number of those with home air conditioning has doubled.
The income gap is there. But does it indicate a crisis? Let's stop and answer this question before implementing an array of new spending programs.
More could be said on this but I'll be brief. Your post reminds me of a famous Margaret Thatcher teaching moment on the ends of Socialism. As she reached the twilight of her tenure as Prime Minister, an MP berated her for allegedly exacerbating the income gap problem. She pointed out that, in fact, all levels of income were better off as a result of her policies and that, more to the point, the left could care less if the poor were poorer, so long as the rich were less rich.
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