I’ve been studying inequality for more than 30 years, and for most of that time it’s been an issue well out of the limelight. And so I’ve been delighted to see it enter the political conversation in a big way recently.
But something major is missing from that conversation, which centers on questions of fairness. Fairness clearly matters, but focusing on it presupposes a zero-sum competition between different classes. That’s consistent with the conventional view that inequality is good for the rich and bad for the poor, and so the rich should favor it while the poor should oppose it. But the conventional view is wrong.
High levels of inequality are bad for the rich, too, and not just because inequality offends norms of fairness. As I’ll explain, inequality is also extremely wasteful.
It’s easy to demonstrate that growing income disparities have made life more difficult not just for the poor, but also for the economy’s ostensible winners — the very wealthy. The good news is that a simple change in tax policy could free up literally trillions of dollars a year without requiring painful sacrifices from anyone…