Skip to main content

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated Cookie policy, Privacy policy and Terms & Conditions

rodrik167_Matt McClainThe Washington Post via Getty Images_farmerstobaccotruck Matt McClain/The Washington Post via Getty Images

Tackling Inequality from the Middle

The rise of populist movements and street protests from Chile to France has made inequality a high priority for politicians of all stripes in the world's rich democracies. But a fundamental question has received relatively little attention: What type of inequality should policymakers tackle?

CAMBRIDGE – Inequality looms larger on policymakers’ agenda today than it has in a long time. With the political and social backlash against the established economic order fueling the rise of populist movements and street protests from Chile to France, politicians of all stripes have made the issue an urgent priority. And whereas economists used to fret about the adverse effects of egalitarian policies on market incentives or the fiscal balance, now they worry that too much inequality fosters monopolistic behavior and undermines technological progress and economic growth.

The good news is that we have no shortage of policy tools with which to respond to rising inequality. At a recent conference I organized with Olivier Blanchard, a former chief economist of the International Monetary Fund, a group of economists advanced a wide range of proposals, covering all three dimensions of an economy: pre-production, production, and post-production.

Important pre-production interventions are educational, health, and financial policies that shape the endowments with which individuals enter markets. Tax and transfer policies that redistribute market income fall within the post-production category.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.

Subscribe

Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.

https://prosyn.org/hXGoYeL;

Edit Newsletter Preferences

Set up Notification

To receive email updates regarding this {entity_type}, please enter your email below.

If you are not already registered, this will create a PS account for you. You should receive an activation email shortly.