Tuesday, February 06, 2007

Income Inequality: What's the Problem? What's the Solution?

NPR is doing an excellent series on the widening gap between the super-wealthy and everyone else. Income inequality has become enough of a problem that even President Bush has expressed concern about the disparity between the haves and have-nots:

Incomes on the middle rungs of the economic ladder have stagnated, despite strong economic growth and strong productivity growth, while most of the rewards of the strong economy have gone to the wealthiest Americans. Their incomes have exploded.

One recent study shows that Americans on the top rung of the income ladder, the top 1 percent, now command nearly 20 percent of the nation's income. That's more than twice the share that group received three decades ago.

Free enterprise has been generally positive for our country, but when capitalism is left unchecked, the privileged few who control much of the wealth keep as much as they can for themselves. Economist and B-list Hollywood celeb Ben Stein, generally a proponent of the free market, fears that we are headed for oligarchy—a warning I normally associate with the likes of Howard Zinn and Kevin Phillips:

"If management and the top dogs on Wall Street are just going to continue to be able to get whatever they want," he says, "then this will become not a democracy any longer, but an oligarchy where a very few, very rich people call all the shots."

"We're way down the road to that happening already," he says.

What is the solution? (Call me a pinko commie liberal, but I've always liked the idea of a maximum wage.) The NPR piece offers the following:

But finding ways to close the income gap that don't undermine the economy will be a challenge. Already, the Congress has passed legislation boosting the minimum wage. Most economists suggest that is more symbolic than significant.

Other ideas include restraining CEO pay, strengthening unions, making health care accessible to all and increasing grants to low-income college students. Some Democrats suggest those things could be paid for by allowing President Bush's tax cuts for wealthy Americans to expire in 2010.


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