Income Inequality: The Hard Truths

Income inequality has become a defining moral challenge of our time, a division between rich and less well off that threatens the fabric of our society. How did we become the most unequal developed nation in modern times? What should we be doing to help those who have been on the losing side of this tectonic shift? Steven Rattner, who has been studying and writing about this issue for nearly 20 years, will offer a stunning presentation of the magnitude of the income inequality problem, including fascinating international comparisons and a thoughtful look at causes and solutions.

[TheBalancedAmerican]

Great Lecture!  Obviously income inequality is growing, and if history is any indicator it will become a serious problem.  There are two arguments that puzzle me about rising income inequality:

1)  Income is not a perfectly accurate way to determine standards of living.  For example, based on incomes, it appears that certain socioeconomic groups are falling behind, but in reality everyone's standard of living has been getting better; longer lifespans, larger homes, better medicine, cheaper entertainment, shorter average hours worked, free information, amazing technology, etc.  My point being, if we focus purely on income, we are not seeing the whole picture.  Although income inequality is growing, everyone is still winning (although some MUCH more than others).

2)  Why is income inequality growing, while simultaneously government transfers have increased drastically in the last 50 years.  If government transfers are the key to solving inequality, why have increases in transfers resulted in growing inequality?

I don't know the perfect answers to these problems, but I don't think that this lecture addresses the whole picture.  As is typical, it is much easier to see a problem, than it is to fix it.  But, it is a great survey of a growing problem. =)

[Floccini]

1. The change is smaller is you look at individual income of only those in prime earning years. Households have gotten smaller and more people are retired and in school longer.
2. USA taxes though lower are more progressive.

But most of what he says is true and relevant.