Economic inequality is already a concern, but it could become a nightmare in the decades ahead, and I fear that we are not well equipped to deal with it.
Truly extreme gaps in income and wealth could arise from many causes. Consider just a few: Innovations in robotics and artificial intelligence, which are already making many jobs uncompetitive, could lead us into a world in which basic work with decent pay becomes impossible to find. An environmental disaster like global warming, pollution or disease could sharply reduce the ability of people of ordinary means to live in specific regions or entire countries.
Future wars using ever more highly destructive technology, including chemical, biological, radiological or nuclear weapons, could devastate vast populations. And it’s not out of the question that dire political changes, like the rise of racist or otherwise exclusionary social structures, could have terribly damaging consequences for less privileged people.
Of course, I dearly hope none of these things ever happen. But even if they are unlikely, as part of our progress to a better world, we should be thinking now of how we might address them.
The current presidential campaigns in the United States have not really touched on long-range issues like these. The campaigns have instead been focused primarily on short-term concerns, and on issues facing people of middle income instead of those in extreme poverty.
In their new book “Taxing the Rich: A History of Fiscal Fairness in the United States and Europe” (Princeton 2016), Kenneth Scheve of Stanford and David Stasavage of New York University looked at 20 countries over two centuries to see how societies have responded to the less fortunate. Their primary finding may seem disheartening: Taxes on the rich generally have not gone up when inequality and economic hardship have increased.
Along with nine other economists, I contributed to a project that engaged in really long-term forecasting. The results appeared in a book edited by Ignacio Palacios-Huerta of the London School of Economics: “In 100 Years: Leading Economists Predict the Future,” (M.I.T., 2013). None of us expressed optimism that inequality would be corrected in the future, and none of us ventured that any major economic policy was likely to counteract recent trends.
For example, Angus Deaton of Princeton, commenting on what he called the “grotesque expansions in inequality of the past 30 years,” gave a pessimistic prediction: “Those who are doing well will organize to protect what they have, including in ways that benefit them at the expense of the majority. “ And Robert M. Solow of M.I.T. said, “We are not good at large-scale redistribution of income.” Both Professor Deaton and Professor Solow are fellow Nobel laureates.
No one seems to have an effective plan to deal with the possibility of much more severe inequality, should it develop. In the disturbing book “Poverty and Famines: An Essay on Entitlement and Deprivation,” (Oxford, 1983) Amartya Sen, a Harvard professor, documented an extraordinary thing: In each of four devastating famines in different parts of the world, there was enough food to keep everyone alive. The problem in each case was that the food was not shared adequately. Systems of privilege and entitlement permitted hoarding of food by people of status whose lives went on much as usual, except that they had to brush off starving beggars and would occasionally see dead bodies on the street.