Question

Why has Income Inequality been rising since the 1970’s?

Consider the following two propositions.

Proposition # 1: More people are falling behind today because theyre lazy. In the U.S. anyone willing to work can earn a decent living. The income distribution is the same as the effort distribution. People who work hard earn a good living. Lazy people stay poor. The income distribution has been skewing because of a growing culture of dependency. It used to be shameful to accept handouts from the government, but now its perfectly acceptable. So, more people opt out of the labor force and sit around collecting handouts from the rest of us. Of course, their incomes are going to be lower than those in the top tiers.

Proposition #2: The incomes of the rich and poor have been growing farther apart due to purposeful policy decisions that have favored the rich at the expense of the poor. Starting with Ronald Reagans financial deregulation, and continuing with successive Republican attacks on New Deal and Great Society social programs to finance tax cuts for their Wall Street cronies, government policy in this country has systematically channeled the rewards of our immensely productive economy towards the rich and away from the poor. America needs to open the gateway to prosperity for all through fair tax policies, decent minimum wages, better public schools, aid to low-income college students, and a universal health care system.

Assess the degree to which each of these propositions is consistent with David H. Autor’s well- researched explanation of the same phenomenon. That is, for each of the propositions tell me whether or not Autor would agree that the underlying factor described in the proposition is the major cause of the pattern of income inequality since the 1970’s.

Answer 1

Over the last 30 years income inequality has increased in the United states. David Actor,professor of MIT says that growing inequality is due to technology and education,trade and globalization and US government policies .He said that government policies has increased inequality.Of the two propositions mentioned here , the first proposition that people are lazy, do not want to work and depend on government handouts is not the cause of inequality according to Autor. However the second proposition that inequality is due to government policies which favoured the rich and moved away from the poor, is what Autor suggested.According to him there are certain policies which reduced wages and employment since 1970 like deregulation,de-unionization,changes in tax,monetary policies of the Federal government etc.So increased unionization,increasing the minimum wage ,monetary policy to bring full employment will reduce inequality.