By: Dan Weil
February 25, 2014
"I consider income inequality the most dangerous part of what's going on in the United States," former Federal Reserve Chairman Alan Greenspan said at the National Association of Business Economists conference Monday, according to The Fiscal Times.
"You can see the deteriorating impact of that on our current political system, and you cannot talk about politics without talking about its impact on the economy."
Greenspan also calls for immigration reform, where he sees a connection to the income inequality issue. The economy needs a boost in immigration, especially among high-skilled workers, he says.
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"We cannot manage to staff our very complex, highly sophisticated capital structure with what's coming out of our high schools," Greenspan said. "If we're not going to educate our kids, bring in other people who want to become Americans. Let them in here, and let them use their skills."
The current restraints on immigration for skilled workers act in essence as a wage subsidy for the economy's big money makers, exacerbating the unequal income distribution, Greenspan says.
Meanwhile, a new study from the Brookings Institution shows that income inequality is much greater in cities like San Francisco with high-flying economies than in more sluggish ones like Wichita, Kan.
"These more equal cities--they're not home to the sectors driving economic growth, like technology and finance," Alan Berube, the report's author, told The New York Times. "These are places that are home to sectors like transportation, logistics, warehousing."