Back in 1980, Irving Kristol, the “godfather of neoconservatism,” wrote an essay mocking the left’s obsession with income inequality: “The intensity with which economists work out their Gini coefficients, and the subtlety with which they measure income trends in the quintiles or deciles of the population, is matched—so far as I can see—by the utter lack of interest of the average American in their findings.” Having been impressed at the time by what seemed his cool logic, I checked back recently to see how the piece held up in the Age of Piketty. In retrospect, what was most striking was the setup: “It is my understanding, from surveying various studies of trends in income distribution in the United States over the past three decades, that economists have found very little significant change to have taken place.”
That was then; this is now. Were Irving still around to chime in, he would probably continue to mock. But ever the empiricist, he would have to concede that the objective realities of the situation had changed dramatically. Over the intervening years, real incomes and wealth have stagnated for the vast majority of Americans, even as they have skyrocketed for those at the very top. With some national variations, moreover, something similar has happened across the developed world.
These trends are starting to define our era. But what is driving them? What is the significance of the economic inequality that has resulted? And what can or should be done about it?