Adverse effects
Although it is clear that inequality is increasing in this country, conservatives are proposing decreases in taxes on the wealthy and cuts in programs that help less-fortunate people. Such changes can only increase inequality.
Conservatives should reconsider their proposals, as inequality can have the following adverse consequences.
First, while some inequality is necessary for incentives, a major research paper from the International Monetary Fund shows that societies with less inequality tend to have faster economic growth.
Second, while efficient free markets are desirable, economist Joseph Stiglitz found that much of our inequality is the result of market distortions, such as a special tax break for wealthy people (the capital gains tax rate) and forbidding Medicare from bargaining with drug companies for lower prices.
Third, researchers have found that there is less economic mobility in America than in “socialist” Europe. Better schools can increase mobility, but this requires government spending.
The U.S. is one of the few advanced countries that spends less government money educating the average poor child than the average rich one.
Let’s hope that future government policy will help to prevent the adverse effects of inequality.
Bob Michaelsen,
Denton
