Inequality
Inequality has risen across the rich world since the 1970s, as financial liberalisation and lower taxes, among other things, have fuelled a rise in the numbers of the very rich. But now, resentment over inequality is growing ever more vocal, even as the rich see the crisis erode some of their wealth. Is taxing the rich more heavily necessary to buy social peace? Or do adverse effects on entrepreneurship and innovation outweigh any such considerations? And should we be concentrating on particular kinds of taxes, taxes on income from particular activities, or changes to the relationship between tax rates and income?
In both Britain and America, the period since the early 1980s has been one of rapidly widening income inequality. The top 0.1% of Americans earned about 20 times what the bottom 10% did for much of the post-war era. But in the lifetime of one generation, that multiple had nearly quadrupled, to 77 times by 2006. The world seemed, at least until the present crisis began, to be in a new gilded age.
As long as the overall economic environment was one of growth and greater prosperity, calls for using public policy to dampen the rise in inequality were muted. By and large, societies like those of America and Britain accepted greater inequality as a price for economic dynamism and increased entrepreneurship. But now, as jobs, incomes and security evaporate everywhere in the face of the biggest economic downturn since the Great Depression, that period's attitudes to wealth seem to be making a comeback, with bankers and CEOs as today's version of Roosevelt's "malefactors of great wealth". But even those who recognise that some degree of inequality is a necessary price to pay for an economic system which rewards success are asking whether matters have got out of hand. Others argue that attempting to clamp down on inequality will hurt entrepreneurial drive and eventually reduce economic growth.
Most will have noticed that the rises in inequality in the
In both Britain and America, the period since the early 1980s has been one of rapidly widening income inequality. The top 0.1% of Americans earned about 20 times what the bottom 10% did for much of the post-war era. But in the lifetime of one generation, that multiple had nearly quadrupled, to 77 times by 2006. The world seemed, at least until the present crisis began, to be in a new gilded age.
As long as the overall economic environment was one of growth and greater prosperity, calls for using public policy to dampen the rise in inequality were muted. By and large, societies like those of America and Britain accepted greater inequality as a price for economic dynamism and increased entrepreneurship. But now, as jobs, incomes and security evaporate everywhere in the face of the biggest economic downturn since the Great Depression, that period's attitudes to wealth seem to be making a comeback, with bankers and CEOs as today's version of Roosevelt's "malefactors of great wealth". But even those who recognise that some degree of inequality is a necessary price to pay for an economic system which rewards success are asking whether matters have got out of hand. Others argue that attempting to clamp down on inequality will hurt entrepreneurial drive and eventually reduce economic growth.
Most will have noticed that the rises in inequality in the