MIT Economists Discuss Implications Of Rising Income Inequality

This article reports on a conference at MIT on rising income inequality. Two of the comments cited in the article are worth repeating. MIT's Associate Chairman of the Economics Department, David Autor, argued that the concept of meritocracy is a valuable, and widely held view in America. It is based on the idea that people who work hard and play by rules will be successful. Rising inequality and declining social mobility puts that valuable concept at risk. Noble prize winning economist, Peter Diamond, presented data on tax policy in the US. He claimed that the debate in the US is too narrow. It is focused on the small difference between the top marginal rates in the Bush and Clinton administrations. He argued the the optimum top rate should be set above 50% and bellow 70%. We had less inequality and faster economic growth in the US prior to the Reagan administration when the top rates were dramatically reduced from 50% to 25%.