Combating Inequality: Rethinking Government's Role

Description

Leading economists and policymakers consider what economic tools are most effective in reversing the rise in inequality. Economic inequality is the defining issue of our time. In the United States, the wealth share of the top 1% has risen from 25% in the late 1970s to around 40% today. The percentage of children earning more than their parents has fallen from 90% in the 1940s to around 50% today. In Combating Inequality, leading economists, many of them current or former policymakers, bring good news: we have the tools to reverse the rise in inequality. In their discussions, they consider which of these tools are the most effective at doing so. Contents Introduction: We Have the Tools to Reverse the Rise in Inequality A Growing Consensus Which Policies? Philosophy and Politics Urgency, Ambition, and Evidence The Path Ahead Acknowledgments Reference I. The Landscape 1. Ten Facts about Inequality in Advanced Economies Introduction Inequality Data Remain Scarce in the Digital Age Income Inequality Has Risen at Different Speeds since the 1980s, after a Historical Decline Rich Countries Have Become Richer but Their Governments Have Become Poorer Capital Is Back, for a Few No Sign a of New Normal after the Great Recession Global Inequality Is Now More about Class Than about Nationality Higher Inequality Is Associated with Lower Mobility Rates Gender and Racial Income Inequalities Were Reduced in the Twentieth Century but Remain High Equal Access to Education, Health, and High-Paying Jobs Is Key to Lifting Pretax Incomes at the Bottom of the Distribution Tax Progressivity Has Shaped the Dynamics of Inequality at the Top Concluding Remarks: While Designing Policy Responses to Current Inequality Trends, Future Inequality Drivers Must Also Be Factored In Notes References 2. Discussion of the Landscape Too Little Tax Revenue and Too Little Investment Equity, Efficiency, and Public Good Expenditures Climate Change and Social Security as Future Drivers of Inequality Acknowledgment References II. Ethical and Philosophical Dimensions 3. Time for New Philosophical Foundations for Economic Theory? References 4. What Kinds of Inequality Should Economists Address? The Criterion: Strict versus Lax The Scale: Domestic versus Global The Distribuendum: Snapshot Outcome versus Lifetime Opportunity Policy Implications? Notes References 5. Why Does Inequality Matter? Notes References III. Political Dimensions 6. Wealth Inequality and Politics References 7. The Political Conditions Necessary for Addressing Inequality Conclusion Notes References 8. The Political Obstacles to Tackling Economic Inequality in the United States Notes References IV. The Distribution of Human Capital 9. A Modern Safety Net A Child Allowance In-Work Supports Protection against Job Loss A Safety Net for Those Who Don’t Work Strengthening Worker Bargaining Power Conclusion Notes References 10. Education’s Untapped Potential Why Education Still Has Significant Potential as a Leveler How Public Schools Can Underpin High-Performing Systems Rethinking Higher Education Lifelong Learning: Beyond the Mantra References V. Policies toward Trade, Outsourcing, and Foreign Investment 11. Why Was the “China Shock” So Shocking–and What Does This Mean for Policy? Context: Declining Labor Market Fluidity Reversal of Fortune: The Geography of the China Shock Some Nonshocking Conclusions Notes References 12. Trade, Labor Markets, and the China Shock: What Can Be Learned from the German Experience? Introduction Trade with China and the German Experience What Makes Germany Different? Discussion and Conclusions Notes References 13. Combating Inequality: Rethinking Policies to Reduce Inequality in Advanced Economies Rapidly Rising Trade Disrupted the Global Economy Preparation for Work and Policies to Support Workers References VI. The (Re)distribution of Financial Capital 14. How to Increase Taxes on the Rich (If You Must) Reference 15. Would a Wealth Tax Help Combat Inequality? The Facts on Wealth Inequality, Income Inequality, and Tax Progressivity Wealth and Political Influence Will Wealth Taxes Work? Issues of Political Strategy Conclusion Notes References 16. Should We Tax Wealth? Wealth Concentration Tax Revenue Potential Tax Progressivity Curbing Wealth Concentration Other Economic Effects Notes References VII. Policies That Affect the Rate and Direction of Technological Change 17. Could We and Should We Reverse (Excessive) Automation? References 18. Innovation and Inequality Measuring Inequality and Innovation Three Striking Facts Lobbying Is a Quite Different Source of Income Inequality between those at the Top and the Rest of Society Should We Worry about the Rich? Conclusion Note References 19. Technological Change, Income Inequality, and Good Jobs Introduction Policies to Affect the Rate and Direction of Technological Progress Policies to Develop Worker Skills Notes References VIII. Labor Market Policies, Institutions, and Social Norms 20. Gender Inequality What Stands in the Way of Further Progress? References 21. Ownership Cures for Inequality Strengthening the Voice of Labor at Work Increasing Worker Ownership of Capital Notes References IX. Labor Market Tools 22. Guaranteeing Employment for All References 23. Making Work Work Making Work Pay Turning “Bad Jobs” into “Good Jobs” The Broken Lower-Skill Labor Market Notes References 24. The Importance of Enforcement in Designing Effective Labor Market Tools References X. Social Safety Net 25. Enhancing Micro and Macro Resilience by Building on the Improvements in the Social Safety Net Notes References 26. The Social Safety Net for Families with Children: What Is Working and How to Do More The Social Safety Net for Families with Children: Current Policies and Recent Changes Policies to Reduce Child Poverty The Social Safety Net as an Investment Notes References XI. Progressive Taxation 27. Reflections on Taxation in Support of Redistributive Policies Taxation Elsewhere Fixes to Existing US Taxes Conclusion Notes References 28. Why Do We Not Support More Redistribution?: New Explanations from Economics Research Rising Inequality but Stagnating Support for Redistribution A New, Innovative Research Tool Findings What Can Be Done? The Role of Economists References 29. Can a Wealth Tax Work? Note References Contributors Index