Larry Summers: Real Problem Is That Poor Have Too Little, Not That Rich Too Much


Money News
By: Dan Weil
June 10, 2014

A key point to remember in the consideration of income inequality is that the goal is to help those who aren't well off, not to hurt the wealthy, says Larry Summers, who served as Treasury Secretary during the Clinton administration and was an economic adviser to President Barack Obama.

"Unless one regards envy as a virtue, the primary reason for concern about inequality is that lower- and middle-income workers have too little, not that the rich have too much," the Harvard professor writes in the Financial Times.

"So in judging policies relating to inequality, the criterion should be what their impact will be on the middle class and the poor."

On that score, we need to provide better healthcare and education to the non-wealthy, Summers argues.

A Brookings Institution study shows that life expectancy has increased more for the wealthy than for the middle class, and more for the middle class than the poor, he writes.

These differences "more likely have to do with lifestyle and variations in diet and stress than the ability to afford medical care -- especially since the figures refer to relatively aged people, all of whom, once they reach 65, fall under Medicare."

And when it comes to schooling, "over the past two generations, the gap in educational achievement between the children of the rich and the children of the poor has doubled," Summers states.

"It would be a tragedy if this new focus on inequality and on great fortunes diverted attention from the most fundamental tasks of any democratic society -- supporting the health and education of all its citizens."

Meanwhile, Gary Burtless, a senior fellow at the Brookings Institution, cites two misperceptions in the debate over income inequality. "Inequality today is certainly below, and probably far below, its level in the 1920s," he writes in a blog.

Second, "real incomes of Americans in the middle and at the bottom of the income distribution have increased over the past 35 years," although not nearly as much as for the top 1 percent, he notes.

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This page contains a single entry by CFED published on June 10, 2014 3:46 PM.

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