This debate reminds me of the debate over global warming, though using the word “debate” implies there is more disagreement than there really is.
The inequality debate appears to be unfolding similarly with those who would like to avoid policies to address inequality, policies such as more progressive taxation, hoping to keep the first question open as long as possible or claiming that the rise in inequality is the inevitable result of natural market forces and we should not interfere.
Cornell University economist Richard Burkhauser takes exception:
I give Mark Thoma high marks for raising the rhetorical stakes in this debate to the point where those who remain more skeptical of the evidence for substantial increases in income inequality since 1989 are relegated to the status of contrarian ideologues unwilling to sign onto Mr. Gore’s “Inconvenient Truth.” But isn’t this a bit much, even for a true believer?
Burkhauser goes on to argue that there has been no detectable increase in inequality within the bottom 99 percent of the income distribution. But, “what about that other 1 percent?” Burkhauser inquires:
Here Reynolds and [Gary] Burtless strongly disagree. Reynolds argues that even including that 1 percent in the mix there has been no great increase in income inequality since 1988 and Burtless offers counter proof based on other data sets. I am not yet sure who is right between them, but I am very sure that Thoma is wrong. It is still reasonable to be skeptical of both arguments.
Stay tuned for more from Burtless, Reynolds, and Krueger and Perri.