Instead of posting an article that is "fresh off the press", I thought I would mix it up by posting something written in 2007. One key thing to remember is that this is right before the Great Recession.
Do you think we have changed from the Lowenstein's perspective? If so, for better or for worse?
Are we giving income inequality more attention now because it has gotten much worse, we have changed to a liberal administration, or is there another reason?
Could there have been policy changes back in 2007 (regarding inequality) that would have reduced the recession or even reduced inequality levels?
On page 3, it states:
"When it comes to raising the bottom in the
short term, Washington basically has two choices: it can try to change
market outcomes or it can redistribute after the market results are in.
The first method is more intrusive. It includes limiting trade,
regulating the workweek or restricting access to certain jobs, through
mechanisms like licensing. Since the ’70s, the United States has moved
away from such market interventions, but Congress seems to be acting on
two of them. It just voted to raise the minimum wage, for the first time
in 10 years, and it is seeking a compromise to revise the immigration laws.
And
what about redistribution after the fact? The United States does less
of it than Europe, and less of it than we used to. Even though the
United States is richer than Belgium, a poor person in Belgium is better
off than one here. On the other hand, the price for being Belgian is
steep: Belgium’s median disposable income — what people have left to
spend after they pay taxes and collect welfare-type payments — is only
72 percent as high as ours."
Seven years later, do either of these policies seem to be viable options? If not, what do you think would raise the bottom 20% up in the short term?
http://www.nytimes.com/2007/06/10/magazine/10wwln-lede-t.html
It seems to me that the latter option is more feasible just because it would be easier to manage. Instead of proactively deciding how to re-shape the incomes of citizens, it makes more sense to me to first see the spread of incomes from citizens and then enact the preferred policy. Of course, this could set a precedent where people misreport their incomes, but we'll ignore that here.
ReplyDeleteI like the idea of a progressive income tax because it is very clear in its focus. "You have earned x amount, therefore you fall in this bracket. You are responsible for paying this percentage of your income to the government, which will then be redistributed to society as a whole." I think the most promising part of this strategy is that the collected revenue does not necessarily have to go directly to the poor. It can go to more general things, like education or better roads, which would benefit everyone. Although the focus should be on bringing the lowest up, I think a more progressive tax system would be useful in providing more public goods.