Daily Archives: November 30, 2015

Income Inequality in the United States

ECON PROJET IMAGE 2Income inequality in the United States is at historic heights (Pew Research, 2013). Unless the underlying structural drivers of income inequality are addressed, an increasingly restive populace could fundamentally undermine the efficacy of the institutions that promote peace, prosperity and progress in American society. For instance, (1) increasing disillusionment with the political establishment could compromise the delicate balance of power between despotism and anarchy through the rise of authoritarian or populist forces (Hamilton, 1781), (2) associating the pursuit of knowledge as an exploitative attribute of the economic elite could result in a skepticism for education that stymies the nation’s economic potential (Lyngar, 2015), (3) directing the frustration compounded by inequality towards hard-working and productive immigrants could result in the compromise of humanitarian values and the nation’s human capital (Dustmann, 2004).  In short, the growing resentment with the economic and political elite as a consequence of increasing income inequality could result in the adoption of measures that exacerbate various negative social and economic trends. There is thereby a pressing need to understand and address the structural drivers of income inequality. Unfortunately, rather than proactively address the key structural drivers of income inequality, policy makers tend to reactively appease the public subject to the negative effects of income inequality. This paper specifically analyzes one such significant case of appeasement in the recent past where policy makers increased access to housing as a response to voters on the wrong side of the rising income inequality trend (Rajan, 2010).

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