Should everyone get a minimum inheritance at birth? How about a government-guaranteed income or job? In the face of a growing income gap, we may need to get revolutionary.
If you’re going to talk about solutions to inequality in America and globally and don’t want to piss anyone off, one of the best things to talk about is skills and education. Workforce training and college affordability are popular topics partly because they work (sometimes) and partly because they go nowhere near the red/blue sore-points of the body politic. No wonder getting more skills and education to people—opening up opportunity—is the preferred thing for polite politicians, policy wonks, business people, and the great bipartisan middle of America to discuss.
But it’s arguable if “skills and education” is really a sufficient response to the inequality problem, which has been growing. We’ve seen spiraling incomes at the top-end (the 1%) and, more importantly, long-term stagnation in many workers’ wages. Given the divergence, we need policies that go beyond ones tried before—and that continue to not solve the problem.
To economists, the focus on skills and education unnecessarily leaves a lot of other good ideas in the shade. There are many other things we could try, and, as the economist Tony Atkinson says in his new book,Inequality: What Can Be Done?, it might be taken for granted that we would invest in people’s skills and education anyway. “The standard response to the question ‘How can we fight rising inequality?’ is to advocate increased investment in education and skills,” he writes. “I would like to highlight more radical proposals—proposals that require us to rethink fundamental aspects of our modern society and to cast off political ideas that have dominated recent decades.”
Atkinson, a senior professor at the London School of Economics, has spent a lifetime investigating inequality. He first proposed the “Atkinson Index”—a way of measuring contributions to inequality within a society—back in 1970. His new book sets out 15 concrete proposals—five of which we discuss further below—for reducing inequality. They all fall in the camp of redistributing wealth in some way, Atkinson says, but not necessarily in the ways you might think. “I start from the pragmatic concern that current levels of inequality are too high, and that this outcome in part reflects the fact that the balance of power is weighted against consumers and workers,” Atkinson writes.
One idea Atkinson explores is pay codes, where executives are bound by mandatory or voluntary ratios of pay relative to workers. For example, the Swiss have voted to impose pay controls on managers, including the right for shareholders to veto pay proposals and bans on “golden parachutes” for departing executives. In the U.K., companies have come together under a decent-pay accreditation plan run by the Living Wage Foundation (both the Chelsea Football Club and Barclays are members).
These codes help start a conversation about the distribution of income and the wider question of who gains when the economy improves. In the last 20 years, we’ve seen steadily rising productivity but wages haven’t caught up. The question is who shares in a company’s prosperity when it’s making money. In America, it hasn’t been workers, of late.
The Latest on: Reversing Income Inequality
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