When the Occupy Wall Street movement dissipated, their call against the 1 percent slowly disappeared from the news headlines only to be replaced by research that made similar points about inequality. Much of what has been said refers to Thomas Piketty’s work. Some of the suggestions made to address the differences between the rich and the poor have only created conflict. However, a civilized discussion about the factual realities of inequality and the proposed solutions may produce ideas that can address, to some degree, one of the great problems of our day.

The Gini coefficient is a standard measure of income disparity used worldwide. The Gini coefficient fluctuates between 0 and 1 with 0 indicating perfect income equality and 1 indicating total inequality (all of the wealth held by the richest individual). As a result of the above average economic growth of the United States following WWII until 1980, the Gini coefficient for the U.S. held fairly constant. But following 1980, income inequality has grown in most years.

The Great Recession, from which we are currently exiting, hurt the cause of income equality in the U.S. From 2010 to 2013, incomes increased for the richest 10 percent by 2 percent, while the median U.S. income contracted by 5 percent. The accompanying graph, which appeared as part of a guest editorial by Steven Rattner in the New York Times, tells this story.

As poverty grew in the U.S. and the middle class contracted, the true problems that have been created are much more real than statistics may make them seem. To some, who have moved on to food stamps, growing inequality is an ever existing reality.

The scary fact is that, among developed economies, the U.S. actually has the worst level of income inequality. This can be seen when efforts to redistribute income in European countries are taken into account in the statistics. Higher taxes and extended redistribution programs have been the answer for many developed nations. But some would blame the same redistribution programs for recent economic stagnation in Europe. Whether redistribution is good or bad is an important issue. Should the U.S. move toward greater
redistribution of wealth and income? Should this be part of our solution to inequality?

Liberal people will be on the side of more government programs to correct inefficiencies of free markets. Many conservatives will look to Adam Smith and his invisible hand to self-correct the problem, claiming that the best solution is to grow the pie and therefore grow the income of everyone.

We now face a crossroads. Usually, when a crossroads is reached, you have to choose one path or another. On the other hand, every so often, there is a choice that involves creating a completely new route. One choice that avoids the conservative and liberal split is to do whatever is possible to create a full employment economy. Through full employment, we could truly put a dent in the growing problem of inequality. The problem is that some are actually opposed to full employment

Jerald Adam Long, a colleague at Progress Through Business, did the research for this article.

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