The Solution to Inequality in America is Simple--Getting There Not So Much

Inequality in the United States (and in other rich countries) has grown large enough that politicians on both sides of the aisle agree that it is a problem. We have been through this before over the past 150 years, as Thomas Piketty has reminded us in great detail. The answer is simple--redistribution of income from those with a lot to those with not enough. I am not a Marxist who believes that there should be a leveling of income. All of the evidence in the world suggests that such schemes rob society of the kind of innovation and enterprise that we need in order to promote societal welfare. But I am a social scientist who recognizes that we live in a society that depends upon sharing and cooperation for social and economic survival. If the rich share too little then that also shuts off innovation and enterprise. Aristotle's idea of a happy medium, of all things in moderation, still resonates. Indeed, it is a shame that modern Greeks have forgotten the lessons of their predecessors. A new Pew Research poll shows that many American are more interested in the fairness of the tax system than in the actual amount of taxes they are paying. But there is an increasing political divide on the issue and that's where the problem lies:

Today, Republicans are 20 points more likely than Democrats to say they are paying more than their fair share in taxes (50% vs. 30%). In the 2011 survey, nearly identical percentages of Republicans (37%) and Democrats (38%) said they were paying more than their fair share.

A story in today's New York Times lays out the problem in a very straightforward manner: the wealthy resist paying more in taxes and since they are now in a position to fund the election campaigns of members of Congress, they have the advantage (one might call it a corrupt advantage) when it comes to reforming the tax system. The wealthy have a tendency to take all the credit for their success and to blame lack of success on those who don't succeed. Sometimes that it probably correct, but mostly we humans live in social groups where others provide opportunities for us, and where others can also keep us down, no matter who we are. Human capital, rather than just financial capital, is necessary for success. Scandinavians have figured out that modest (not drastic) redistribution is not only fair, but it is economically beneficial. That is the simple answer to inequality, but politically hard to implement in this country.