This is other article about "What can be done about income inequality?"
Reducing income inequality is hard but what would be the most efficient tool to fix the problem? We have talked about income redistribution, more education, increase on minimum wage, tax reforms for corporations. President Obama has certainly tried to redistribute more, however, that does not seem powerful enough to make an impact on income gap. To Professor Solow, the Nobel laureate economist from the Massachusetts Institute of Technology, comments that “we have a better shot at doing something
with changes in corporate governance than with direct redistribution.”
Do you agree with Professor Solow's statement? Are you optimistic about the capacity of the American political system to redistribute income within a reasonable period of time? Do you think with the Republicans are set to control both houses of Congress, our political system would be better and things could get done?
Read more: http://www.nytimes.com/2014/11/05/business/economy/seeking-new-tools-to-address-income-inequality.html?module=Search&mabReward=relbias%3Aw%2C{%222%22%3A%22RI%3A14%22%2C%221%22%3A%22RI%3A6%22}
I do not agree with Professor Solow's statement. It seems that the inability to redistribute income is neither President Obama's fault nor the inability of our government to take action. I believe that the current gridlock in our political system prevents us from making real change to our tax system. Both Democrats and Republicans have made tax reform part of their agenda for the next two years, but they have completely different ideas on how to do this; one thinks the rich should be spared, the other thinks the opposite. It is the complete ideological divide of our political system that prevents us from properly redistributing income. Income inequality needs to be established as a problem by both parties before it can be addressed.
ReplyDeleteWhile I do agree with Bret's belief that the current gridlock system is preventing us from making any real changes, I also agree with Professor Solow. Direct redistribution is traceable and can be fought from a rich perspective. They can see who is pushing for these changes that directly redistribute their income to a lower tax bracket's income. They can lobby and take action to prevent this. If income distribution is more discrete, then it would be harder to fight. Changes in corporate governance could be that discrete method of redistribution.
ReplyDeleteWe can honestly say that no policy is adequate for redistribution because of this government system. That is not fair to the policies. Instead, investigations should be held in order to determine which policies would work best in certain circumstances. Who cares if the government is willing to pass the legislation? They aren't going to pass most of the legislation anyways. If proper research is done to determine a policy that would make the greatest impact on income inequality, then it is more likely for that policy to get passed. I personally am quite pessimistic about the likelihood of redistribution of income in this nation anytime soon. Yes I think things will get done, but it will be biased legislation which might actually be worse than no legislation, regardless of which side has the bias.
I don't like to have as much of a pessimistic outlook as Professor Solow. The article is full of facts that we've been hearing about for weeks, and we've heard them over and over. I agree with Bret in the sense that with the two parties, income distribution is not only a problem of policy implementation, but also of political polarization. The two parties need to have some unity in recognition and reform to move forward in correcting this issue. Though his outlook is stark, I think a solution begins with the two parties attempting to converge in their outlooks. As it is now, for example, even realistic solutions such as education are actually contributing to income inequality. This, no policy will be adequate until such polarization has some relief.
ReplyDeleteI feel that Solow is unfortunately vague with what he means by "corporate governance" and even more vague when it comes to how "we" would affect any changes in such governance.
ReplyDeleteMy starting point would be to replace the payroll tax with something progressive!
I agree with Bret that income inequality needs to be recognized as a problem by both parties before much can/will be done in government or in the private business realm.
ReplyDeleteI think that Professor Solow brings up an interesting point when he says “We need to think of ways to change the market determination of income.” It is important that we ask ourselves “How does capitalism generate inequality?” As long as we are operating under a capitalistic system that seems to naturally create high levels of income inequality, we also need some structural mechanism to control the levels of inequality, which I believe is government.
However, I also think that it is largely important that the culture in business management shifts away from the idea of making individual profit at all costs. What if instead business management took a more collective approach, and saw all employees as highly valuable? This ideology would likely cause companies to raise wages and benefits for all employees. However I do not think that we can expect companies to voluntarily make this shift. It is then one of those logic traps where everyone is better off if we all help out the middle and lower class, but no company is willing to do it alone because if they are the only one that does it, they will be worse off.