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5 ways to fight wealth inequality, according to economists


Quotes from article:

“We could tax more from all the folks at the top to spend money making investments in the people who are being left behind,” says University of Maryland economist Melissa Kearney.

That includes access to affordable health care, job training, apprenticeships and vocational education. Most important is improved basic education, beginning with prekindergarten programs for 3- and 4-year-olds.

“I don’t think education by itself is a solution to income inequality,” says MIT’s David Autor. “It’s the best tool in our toolkit.”

In recent decades, the rise of “shareholder capitalism” in the American system has reduced the influence of workers in economic decision-making and enhanced the influence of business owners. Government and corporations can alter the social contract.

“The idea that corporations should just maximize profits without any regard to any other objective is fairly recent,” Autor says. “It’s possible to imagine adjustments to the structure of corporate governance that would think a little harder about additional stakeholders and potential beneficiaries aside from just owners.”

For example, Democratic presidential candidate Elizabeth Warren has proposed that workers at a corporation be allowed to elect 40% of the board of directors. Similar arrangements in Germany have resulted in much more limited use of one manifestation of shareholder capitalism — stock buybacks.

“If we compare ourselves to Germany, to Canada, to Sweden, to Switzerland, Norway — these are all a spectrum of market economies. We all have mixed economies, ranging from sort of cowboy capitalism in the United States to kind of cuddly capitalism in Norway. And those countries have made different choices about how much they want to push against those forces through a variety of programs.”

The question is whether public policy is susceptible to big changes. The 2020 campaign will tell whether discontent has grown powerful enough to force them.