Debate: Does Income Inequality Matter?

Thursday, April 12, 2012

Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities and Scott Winship, fellow in economic studies at the Brookings Institution, debate whether income inequality is really a problem.


Jared Bernstein and Scott Winship

Comments [46]

Eugenia Renskoff from Brooklyn, NY

Yes, Brian, inequality does matter. When your belly is full and you have more than enough money in the bank, it may not be important. But when you suffer financial reverses (as I did/do) it matters a lot. it is sad to see other people having and the rest not having, going through struggles day after day, year after year. You begin to ask: Why? What is this all about? Eugenia Renskoff

Apr. 14 2012 05:44 PM

In my outlook, it is not inequality per se, but the widening gap between extreme wealth and poverty that plagues the national and global economies. A lot of focus on "the creation of millionaires" as a measure of healthy economy seemed to come into the conversation around the early nineties. Was even more recently evoked in discussion of "good" economic "growth" in developing economies like India, despite simultaneous abject poverty, apparently a mere footnote.

THE GAP amounts to suffication of a healthy middle class. When I was growing up, "middle class" referred to a broad range from struggling to affluent. Sustainable affluence was desirable; wealth was regarded to be a little far reaching, although not so much unattainable as, in fact, more botheresome, even a little suspect :)

A healthy economy for me personally would be what I call CRITICAL MASS, with some ebb and flow of discretionary resource. I work very hard in a lower management position with a major corporation-- a 35 year career. Live paycheck to paycheck-- actually three paychecks into the future.

Do the experts have the capacity to understand having to choose between this month's car insurance premium and fixing the brakes? Maintaining low debt and having groceries, soap, and deoderent on your "wish list?" It is not miserable, sometimes comical, but this much character building is just not necessary!

Apr. 12 2012 05:45 PM
Jack Jackson from Central New Jersey

From the point of view of tax revenue, income inequality sure as shootin' matters!

On 2011 income, marginal income tax rates for the 'average' income is 25% PLUS 13.2% FICA (5.65 from the worker, 7.65 from the employer). FICA Withholding cuts out at $107K so rates go DOWN 'til about $800K in income. Capital gains rates knock the stuff out of these rates, too.

Apr. 12 2012 12:59 PM
Bill from Mamaroneck

To jgarbuz from Queens:

Nowhere did I (or would I) label the system I described as "Socialist," as you did in an attempt to make it easily dismissable without any further thought. The term "socialism" is pretty much useless at this point because it has been so watered-down by distortion from both the Right and Left that it there is not enough agreement on its meaning for it to be used to communicate something reliably.

The defining concept in what I described is democracy. Please substitute the word "democracy" everywhere you used the word "socialism" in your post. Now, are you going to tell me that democracy never works? If that view had prevailed in 1776, we'd still be part of the British Empire. In 1865? African-Americans would still be slaves. In 1965? African-Americans would still not have the right to vote.

Robert A. Dahl – A Preface to Economic Democracy, 1985:
"If democracy is justified in governing the state, then it must also be justified in governing economic enterprises, and to say that it is not justified in governing economic enterprises is to imply that it is not justified in governing the state."

Change is the constant of history. There is always something new under the sun.

But I do also agree with your point about the importance of technological innovation and education.

Apr. 12 2012 12:41 PM
jmurphy from long island

1. wealth DOES equal power in this country. Simply being wealthy and operating in certain circles provides opportunity and access to people and situations that the rest of us just don't get.

2. while there is nothing wrong with working hard and becoming wealthy, the problem comes in when the requests/wants/"needs" of the few become the only squeaky wheel that gets the oil.

3. corporate influence goes hand in hand with income inequality. when corporations can be seen as individuals, who can compete with that kind of money?

4. corporate influence = board members. The same group of 500-1000 people are on the boards of most major corporations.

Apr. 12 2012 12:40 PM
Fertile Turtle

I think I heard Jared --Jared!-- say that everyone has a smart phone. Mr. Bernstein, get a grip: Not everyone is in the upper quintile economically.

Lots of people cannot afford smart phones, much less the costly data plans needed to make them functional.

Like people on limited income. They can't afford the monthy rates. They may have an emergency plain cell phone using pre-paid minutes, but, not the fancy smart phones.

Really. I've slid out of the middle class and I know lots of people who don't have smart phones.

Thanks to FDR I have SocSec and I can afford a roof over my head and thanks to LBJ I have Medicare and I can afford health care. Right now I'm trying to fix a shoulder injury I couldn't afford to take care of while I was paying for individual insurance, as I couldn't afford the co-pays on top of paying through the nose for individual health insurance. (That's where my retirement savings went -- into to huge remuneration for a big for-profit health insurance company. I had cancer, so I had to keept the insurance. I just couldn't use it for much else.)

I so hoped we had elected a Democratic president who would follow in the the giant footsteps of FDR, Truman, JFK, LBJ; but unfortunately we got a kind of slippery rerun of Reagan trying to pretend to be a Democrat.

We got austerity when we needed a real, bold, strong stimulus for those without work. We got bailouts for the big banks who caused the meltdown when we needed bailouts for the little people ruined by their rashness and greed. And now we're getting...replays of austerity.

We needed Medicare for All or, at the very least, the right to buy in to Medicare for those made redundant and a few years from Medicare. We needed immediate expansion of Medicaid for those without work. Instead, we got a profit protection plan for the for-profit health insurance companies.

Apr. 12 2012 12:34 PM
Jack Jackson from Central New Jersey

Hey ScottW -

The buying power of the average earner has been FALLING since JFK. At this point HALF the income goes to the top 10% of households. The 'middle' is being priced out of too much of the activity that makes a society. You don't see that?

Apr. 12 2012 11:41 AM
jgarbuz from Queens

Everyone interested in this topic should read

"Self-Help; with Illustrations of Character and Conduct," a book published in 1859 by Samuel Smiles. The second edition of 1866 added Perseverance to the subtitle. It has been called "the bible of mid-Victorian liberalism".[1]

Apr. 12 2012 11:40 AM
Sheldon from Brooklyn

Well - JG, I agree with you. That's the whole point of my last post. We must make sure the future Steve Jobs of America have access to education and not become drug lords - EITHER WAY - they will get theirs.

Apr. 12 2012 11:38 AM
janet from NYC

What about the concentration of wealth through inheritance. Now that inheritance taxes are also quite reduced, there is an even greater concentration of wealth at the top besides income. Ways to prevent wealth concentrating in relatively few families is something that even ancient Greeks and Romans (at least before the second half of its empire) worried about.

Apr. 12 2012 11:35 AM
jgarbuz from Queens

To Sheldon

No such thing as a "rich country." In natural resources, Russia is much richer than the US. In resources, Switzerland, Japan and Korea, ISrael and many others are much poorer than the US, some having almost no natural resources at all, yet their populations have a good standard of living.

The most important resource of all is the EDUCATED BRAIN. The brain is the main contributor to the production of wealth. The Brain of Steven Jobs is what created the most valuable company in America. If the Brain is properly educated and has the FREEDOM to try and do and fail and try again, then there is a chance for riches to be created. Where there is little or no individual freedom, and where failure means THE END, then there the phyisical resoources on or under the ground mean nothing.

Apr. 12 2012 11:32 AM
amalgam from NYC by day, NJ by night

@ gary - I understand the ideological thrust of your argument, but taking away "corporate cronyism" is not the current reality and is built into the system. The fact is that concentrated wealth parked in corporations provide "Money Power," a power that permits the wealthy elite/plutocrats to largely (and literally) write public policy. Making government smaller doesn't necessarily do anything to help this.

That means that those holding the concentrated wealth are considered superior on political/policy grounds compared to the average citizen. I think that's wrong on many levels and one the worst things to have happened in my lifetime.

Apr. 12 2012 11:32 AM
Rick from Long Island

Regarding the decrease of money for discretionary enrichment, hasn't the modern era decreased the cost of many programs that can enrich our lives? And aren't these programs being replaced by more expensive leisure activities?

Video games consoles when they first appear on the store shelves cost for $400+. For that money, I could buy a guitar ($150.00) or an e-reader ($80.00 and books published prior to 1923 are free.

And I don't know this for a fact, but I suspect our public schools offer more activities now than they did 50 years ago.

Apr. 12 2012 11:31 AM
Bill from Mamaroneck

Re: my previous post, the reference to the US Steelworkers agreement with Mondragon, for those not familiar.

Mondragon Corporation (From Wikipedia, the free encyclopedia)

Worker cooperative federation

The MONDRAGON Corporation is a corporation and federation of worker cooperatives based in the Euskadi. Founded in the town of Mondragón in 1956, its origin is linked to the activity of a modest technical college and a small workshop producing paraffin heaters. Currently it is the seventh largest Spanish company in terms of asset turnover and the leading business group in the Basque Country. At the end of 2010 it was providing employment for 83,859 people working in 256 companies in four areas of activity: Finance, Industry, Retail and Knowledge. The MONDRAGON Co-operatives operate in accordance with a business model based on People and the Sovereignty of Labour, which has made it possible to develop highly participative companies rooted in solidarity, with a strong social dimension but without neglecting business excellence. The Co-operatives are owned by their worker-members and power is based on the principle of one person, one vote.[2]

Apr. 12 2012 11:30 AM

The teen birth rates came out last week. I noticed the states with the highest teen birth rate were all RED states. All above the national average.
What should I make of that?
1. Mississippi 55
2. New Mexico 52.9
3. Arkansas 52.5
4. Texas 52.2
5. Oklahoma 50.4
6. Louisiana 47.7
7. Kentucky 46.2
8. West Virginia 44.8
9. Alabama 43.6
10. Tennessee 43.2
11. South Carolina 42.5
12. Arizona 42.4
13. Georgia 41.4
14. Kansas 39.2
15. Wyoming 39

Apr. 12 2012 11:30 AM
C.E. Connelly from Manhattan

How in the world could income inequality not matter in an avidly capitalist society? The question seems absurd. I understand that the goal of the conversation is to get at how inequality matters, but the way the issue is framed by the question invites a lot of silly debate (really, a few people having exponentially more money than the vast majority of people doesn't do anything).

Apr. 12 2012 11:30 AM
Bassett from Chappaqua

Winship's arguments are an embarrassment. What world does he live in ? Maybe he just likes to argue.

Apr. 12 2012 11:27 AM
jgarbuz from Queens

To Bill of Mamaroneck

Another "kibbutz" system? Been there, done that in ISrael. No socialist system lasts. Period. They might do it for a while, but it will not last. The Kibbutz systems in Israel were by far the best truly socialist systems on earth, and those too have gone the way of the cowboy.

Socialism does not last! It fails, though it may work only for a very brief run. Human nature has not and will not change. Trust me. I know it all. I've seen it all. There is nothing new under the sun.

Apr. 12 2012 11:27 AM
mz from manhattan

income inequality also reflects the stagnating wages of the middle and lower classes - and this matters a lot because people have so little money to spend on necessities, much less the things that make life enjoyable and comfortable. instead there is the constant stress of never making enough money. and the kind of life where if the car breaks down, a $500 repair becomes completely crippling. this is no way to live for those who work hard doing jobs that need to be done. in today's world. cost of living matters in the income inequality equasion.

Apr. 12 2012 11:26 AM
Fay from Downtown brooklyn

As an artist, I'm lucky to live in NYC where I can have a nice quality life because of services both public and private (affordable health insurance, public transportation, cheap and delicious restaurants etc.). However, what does give me pause is not whether I can whileheartedly pursue my career but passion but whether i will be able to have children and still be able to maintain my career. So as long as I remain without kids,, my low income does not matter so much. Fortunately, I don't want my own children, however, this is a very real limitation on the choices I can make. My other artist friendstalk about this all the time.

Apr. 12 2012 11:26 AM
Martin Chuzzlewit from Manhattan

Bernstein would rather we be equal in our poverty ... than unequal in our successes and eachievements.

Apr. 12 2012 11:25 AM
Sheldon from Brooklyn

JG - that's nothing new, Lenin said as much in his thesis on imperialism 100 years ago - Capital is mobile - labor is not.

America is still a rich country - she simply needs to invest in her workers so they can compete in the world labor market.

Apr. 12 2012 11:24 AM
John A.

onair Scott,
You want to see causation? Inequality allows people to not care about others due to lack of empathy, "mirror similarity" with the other, if you will. That's the cause that I see.

Apr. 12 2012 11:22 AM
Alissa from Manhattan

This conversation reminds me of the disturbing observation that:

Whereas the Left and Right used to disagree about policy, now they disagree about facts.

How can we effectively debate policy in this age of misinformation??

Apr. 12 2012 11:22 AM
Bill from Mamaroneck

From Gar Alperovitz's blog:

"The New “Union Co-op” Model

The new model for a “union co-op,” one which combines principles of worker ownership and labor solidarity—jointly announced by the United Steelworkers, the Ohio Employee Ownership Center and Mondragón on March 26, 2012—represents a major and positive historic advance in community wealth-building. Their work is helping to forge the building blocks of a new economy."

Another world is not only possible, it's taking shape now.

Apr. 12 2012 11:19 AM
jgarbuz from Queens

Again, to put as simply as possible:

Capital is elastic; labor is inelastic. Capital can travel at the speed of light to find the highest returns on the planet.

WOrkers are mostly stuck in the country, and so real wages will not grow as long as there are vast pools of cheap labor in China, India and elsewhere that can be exploited more cheaply. The only hope comes from technological innovation that increases productivity of our workers but they have to be educated to make use of them, or those too go elsewhere.

Apr. 12 2012 11:18 AM
Laura from UWS

Painful segment--I may have to turn it off. Enough with bean-counters and propagandists. Better to invite housewives to talk about REAL LIFE experiences. Also, invite historians to verify what The Founding Fathers intended about income inequality. Please. . . . . one could add a long list of ways to make the conversation meaningful. For example, what does income matter if your student loans weigh you down for decades? What does income matter if you or your family should need life-saving healthcare but cannot afford it?

Apr. 12 2012 11:18 AM
Mark from NJ

It's impossible to discuss income inequality without first coming to grips with the HUGE amount of income that is un-reported. I teach in a NJ urban school district where almost 100% of the students receive free breakfast & lunch because their families fail to meet a minimum income test. However, virtually all of these families earn income they do not report. In some cases of which I have personal knowledge this income amounts to many tens of thousands of dollars per year.

Apr. 12 2012 11:15 AM
LF from NYC

Here's an interesting way income inequality translates into civil inequality: I am being audited by the IRS for the years 09 and 10. There is no real reason that either I or my accountant can figure out. My income went from middle middle to lower middle class between those two years. Not so odd really as re all know. The most interesting part of it is that the accountant has some VERY wealthy clients as well as some others of us who are not. The accountant has volunteered the info that NONE of his wealthy clients are being audited this year.

Apr. 12 2012 11:15 AM

Just look at thism chart:

Posted before, bit it shows ehat Jared was describing.

Stunningly scary.

Apr. 12 2012 11:14 AM
jgarbuz from Queens

The unnatural situation that occurred after WWII was typical of what happens when countries win wars and destroy the enemy. The victorious country gets rich for a while, and is generous in spreading the wealth around. But as the rest of the world recovered and certainly after the Commie and socialist slave economies collapsed, the US has had to revert back down to a normal situation, where the owners of capital who can invest it abroad can reap much higher returns than can workers who cannot travel abroad to get work, and hence have to stay in the US and accept a falling standard of living.

Income disparity will remain as long as workers cannot get jobs abroad as easily as capitalists can build new factories abroad.

Apr. 12 2012 11:13 AM
Martin Chuzzlewit from Manhattan

This week in “The Nation”-


"This week a new ABC News/Washington Post poll asked voters: “what do you think is the bigger problem in this country—unfairness in the economic system that favors the wealthy, or over-regulation of the free market that interferes with growth and prosperity?” Fifty-two percent answered “unfairness,” while only “37 percent” mentioned “over-regulation.”"

This is pure politics......and Obama is winning the propaganda war.

Say it enough.....over and over.....”It’s our biggest problem”........over and over........again and again........then have your “news organizations” ask people in a poll, “gee, what’s our biggest problem?”……….BINGO!!!

Somewhere, Saul Alinsky is smiling.

Apr. 12 2012 11:13 AM
Sheldon from Brooklyn

Hmm - Gary - Your Govt gives billions to giant agro-businesses, oil companies and banks. And you pick the Volt as your example of cronyism? Ok then.

Apr. 12 2012 11:11 AM

@MartinC -

Your posts BEFORE the segment shows how clouded your thinking is...Facts be damned for the closed mind!

Why are you so gleeful in your ignorance?

Apr. 12 2012 11:11 AM
tuviya from NYC

Craig is wrong! Look at northern Europe. Much less income inequality and yet stronger growth, lower debt, innovative companies and --free- education.

Apr. 12 2012 11:10 AM
Sheldon from Brooklyn

The problem is not inequality per se - it has always been the byproduct of capitalism. If someone works a bit harder, takes more risk, or have a unique skill - they should rewarded as such.

The real problem is the widening gap between working people and the wealthy. Working people's wages have stagnated the last 30 years as the net worth of politically connected upper classes have shot through the roof - compounded with their tax cuts and bail outs.

Right or wrong - that leads to resentment, and once that happens, (working) people will start voting for quacks - who will REALLY try to "redistribute" wealth. You think Obama is a socialist? Wait 10 years - look at any third world country if you don't believe me.

Fair or not, Rich Americans, for their own long-term survival, NEED viable working and middle classes - it's the cost of doing business.

Apr. 12 2012 11:05 AM
Gary from queens

Dear Amalgam

gotta leave for work now, so this is may last comment. you express a common complaint. But normal free market forces correct and mitigate for inordinate balances in wealth. Corporatism (crony capitalism) is when government places a hand on the scales to change outcomes that GOVERNMENT prefers. Like taking our money and giving it to Chevy Volt purchasers!!! That perverts the market. Only GOV can grant such preferences, and monopolies like for cable TV companies. And our healthcare system.

You say that rich people can lobby more effectively than you or me. True. But ask yourself why is lobbying legislators a full time job for anyone, such as rich people and corporations. It's in order to retain their wealth! For preferential tax benefits and rules of commerce. There's too much at stake for them NOT to try to influence gov.

Therefore, you take away the corporate climate, by maiking government small, with fewer rulle making and rule enforcing bureaucrats, and you make attempts by the rich to influence public policy much lesser.

gotta go. sorry

Apr. 12 2012 10:59 AM
Bill from Mamaroneck

Income inequality isn’t the problem -
It’s the symptom of the real problem:
Inequality of power in our corporations and workplaces.

This country, to fulfill its destiny as the champion of democracy, needs to recognize the right to a democratic workplace as a fundamental human right. This should be the number one issue in the national political debate.

I think we need a single-issue advocacy organization to spearhead a movement to advocate for the civil right to a democratic workplace.

This organization would call for the abolition of the practice of human rental, with the ultimate aim of encouraging the transformation of all conventional dictatorially-structured corporations into employee owned and democratically managed cooperative enterprises across the nation, organized voluntarily and non-violently on a company-by-company, workplace-by-workplace basis.

Brian: people you might consider having on the show if you want to explore this idea:

David Ellerman
Gar Alperowitz
Leo Gerard, Steelworkers union
Melissa Hoover, US Federation of Worker Cooperatives
Richard Woolf, Democracy at Work

Apr. 12 2012 10:57 AM
cory from New York

Of course income inequality matters, and particularly in a society where social capital, cultural capital and economic capital are linked. Those with less economic capital are likely to have less connections to make friends within other social classes, and certain ethnic/racial groups and poverty are associated and therefore stigmatized.

Income inequality shapes where we live, how we live, what kind of future we have, what kind of health care we have, etc. People with higher incomes have higher life spans, less mortality, etc.

Poverty has always been tough, but there is a typical narrative in the U.S. among older people that "Although we were poor, we had values and we had a strong work ethic, and because of our values we were able to succeed."
But this is a superficial way of looking at inequality and the economy of yesterday versus today.

Inequality didn't matter as much in the past is because in the past, there was less *relative* inequality than there is now--communities were more homogeneous and the price of remaining in the "working class" wasn't as high.

In the past, there were alternative ways of life than to work like a dog--you could live like a bohemian if you wanted. Now, that is not an option because of the cost of living that has risen astronomically.

Apr. 12 2012 10:54 AM
amalgam from NYC by day, NJ by night

@ Chuzzlewit and gary - Sure, some form of economic inequality is necessary for capitalism, but its exponential growth is decidedly not.

For more than 20 years academics have been showing how high levels of concentrated wealth and income inequality - as propagated in its current neoliberal economic globalization form - pose problems to democracy.

The problems with wealth concentration is not so much an economic one, although that's a part, but a democratic one. Right now, the greater the amount of money a person, business or industry have, the more political access and clout they have. In other words, "one person one vote" is nullified in favor of "multiplied dollars = multiplied influence."

That means that average citizens have much less influence in democratic process and do not have their voice and policies represented, whereas the wealthy elite and plutocracy often do.

Apr. 12 2012 10:46 AM
gary from queens

Inequality is good!

I'm paraphrasing Rick Santorum, who made the mistake of saying something like that on the campaign trail. There's no way he could have explained that in sound bites, and no way Obama's media wouldn't have demagogued that to death----which of course they did.

But enter Moore and Ferrara with a outstanding explanation of the necessity and morality of inequality. This is a must read for anyone who believes that equalizing income and wealth is a good thing. To the contrary, it is immoral, unworkable, and paradoxically, it leads to more poverty and more inequality.

The Poverty of Equality
By Stephen Moore & Peter Ferrara from the April 2012 issue

Apr. 12 2012 10:36 AM
John A.

I was speaking truth to power 15-20 years ago when income ratios were something like 150:1. Now we get more like 750:1. This is a sore thumb par excellance.

Apr. 12 2012 10:35 AM
Joe Mirsky from Pompton Lakes NJ

From my book Ornamentally Incorrect, second editon Bijoux and Beyond, talking about the Citgroup "Plutonomy" memos.

I'm no dismal scientist, but it seems to me that everybody's income ultimately derives from middle class people buying stuff. We're the plankton in the economic food chain. So if middle class people can't afford stuff, what will become of the 1%? Indeed, what will become of us all?

Apr. 12 2012 10:35 AM
fuva from Harlemworld

As usual, the right wing report Chuzzlewit cites is a collection of minor points that neither address nor disprove the undeniable trend toward increasing income/wealth inequality and its autocatalytic ripple effects.

Apr. 12 2012 10:08 AM
fuva from Harlemworld

In addition to clearly illustrating how the gap has increased to Gilded Age levels, true understanding here requires a deconstruction of monetary wealth in the US -- who has it, who gets it, how, its advantages, what is done with it, and the effect on the social contract and national productivity.

Apr. 12 2012 09:48 AM
Martin Chuzzlewit from Manhattan


Please ask Mr.Bernstein exactly how the bloated payouts to George Clooney, A Rod/Derek Jeter and Mark Zuckerberg make the lives of average New Yorkers more miserable.

This is another concocted, phony "crisis" that David Axelrod (Obama’s brain) has discovered does very well in focus groups and polling. It doesn't directly affect the daily lives of any of the other 99%, who suffer much more from the ineffective Obama policies that have given us the poorest recovery from a recession in modern history.

What do you care what someone else makes as long as you are comfortable? It wouldn’t make YOU any wealthier. LOL, you will never see that income "redistributed" to YOU. It's just more divisive class warfare by our President the "Healer" to distract your attention from his ineptitude. So, Obama and his puppets incessantly keep telling “folks” that they should REALLY be angry about that they can have something harmless (to him) about which to feel angry. (And, of course, to rationalize their massive January 2013 tax increases.)

See the new report this week from “e21”, a nonpartisan economic policy-research institute - (Bernstein is from Krugman's think tank)

Full Report here-

Apr. 12 2012 09:34 AM

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