Lots of folks are circulating an essay in today’s NYT that highlights the problems of income inequality, as if it’s a surprise. It’s not. A more important question is: What can we do about it?
I’m not 100% sure what could help smooth out the harsh effects of income inequality. The majority of folks on both sides of the spectrum agree that is was a huge contributing factor, no doubt. What these sides disagree about, however, is what were the main drivers of that gap because the weight applied to each factor ends up informing what a person would suggest to help smooth things over with policy, incentives, etc.
Instead of today’s NYT essay, check out this series in Slate.com, which is well-organized and quite balanced for what some at Slate.com typically put out: http://www.slate.com/id/2267157/
The most important question we can ask is “What could be done now?” rather than debating the origins/drivers of this. With that as a frame, and recognizing that attempting to tighten any income inequality gap could take decades, a few scattered ideas come to mind:
- Immigration Reform — to bring the best talent & eventually best company formation within our boarders
- Better early education and vocational training — early education (pre-K) is pretty weak here and then by the time high school rolls around, citizens can’t complete listed jobs
- Some type of inheritance tax changes
- Increased philanthropy — one of the great virtues of American democracy and capitalism is that there are terrific tax incentives for those on the shinier side of income inequality to donate most their fortune back into civil society, a function that saves us the dearth of government spending, programs, etc. I don’t personally see this happening as much, putting folks like Buffet and Gates aside.
Finally, I used to work (years ago) on this idea of employee-ownership in private, closely-held businesses. I sourced an op-ed about this that made The Economist (“A Capital Idea” on 3/27/03). The basic idea is that rather than rewarding employees with incremental raises, which may never keep up with inflation and cost of living, it’s better for workers and owners alike to reward employees with ownership in capital-producing assets tied to the success of their employer. After a period of vesting, federal rules require that the worker diversify their holdings to avoid an Enron-like situation.
This isn’t a silver bullet by any means, but probably one of many examples of the types of things that the U.S. needs to try. When other countries have had a gap this wide, the results haven’t been pretty.