I rarely ever agree with Robert Reich but his first few sentences I agree with:
Some inequality of income and wealth is inevitable, if not necessary. If an economy is to function well, people need incentives to work hard and innovate.
The pertinent question is not whether income and wealth inequality is good or bad. It is at what point do these inequalities become so great as to pose a serious threat to our economy, our ideal of equal opportunity and our democracy.
But have we reached that point? He continues to express his opinion:
“We are near or have already reached that tipping point.”
He expresses some uncertainty here (I believe for dramatic purposes only – we know his position, right?). Then he expresses certainty when he says:
As French economist Thomas Piketty shows beyond doubt in his “Capital in the Twenty-First Century,” we are heading back to levels of inequality not seen since the Gilded Age of the late 19th century.
I don’t think Piketty’s position has demonstrated any absolutism on the issue. There is plenty to debate without Chris Giles Financial Times article. Tax data present many fallacies. His colleagues compliment the quality and effort (as I do) while questioning the conclusions (as I do). Yet there are the “worshippers” of this piece of work that will point to it as divine economic perfection to meet political ends – Krugman and Reich.
My conclusion is this: I appreciate Robert Reich’s passion, but he proposing extreme solutions to an issue that he (purportedly) is uncertain about. I believe he offers a few good suggestions:
- Infrastructure (Didn’t we propose that already? I just wish we had done it!)
- Create high earnings brackets with higher rates. Up to 55% potentially on income greater than $10 million. There would have to other concessions leading to simplification of the code, eliminated investment income tax (medicare surtax), broadening tax base, etc… But this could be valid under certain circumstances.
- “Get big money out of politics.” My solution would be term limits. Term limits could go a long way to accomplishing this goal.