As Democratic Perspective continued our conversation with Lane Kenworthy, Professor of Sociology and Political Science at the University of Arizona on Labor Day, we began by posing that question to him. Professor Kenworthy responded by saying, “To an extent. Nobody favors a perfectly equal distribution of income, but if you have a society like ours where a very small slice has been getting a whole lot of the economic growth, is it good for the middle class? Or is it bad? The best we can tell is that it’s not a healthy development.”
When asked how to address the growing income inequality, Kenworthy replied, “Some people favor pay limits on CEOs, but I don’t. For one thing, how do you then address the huge salaries for athletes and entertainers? It’s much simpler to raise taxes. There’s no indication that increasing the tax rate on the rich would create any harm.”
As to concerns that raising taxes on the wealthy will curtail job growth, Kenworthy said, “There’s nothing to indicate that it would. In fact, if the rich have to pay more of their income to taxes, it may cause them to work harder and actually create more jobs.”
As for the popular idea that running the federal government should be like managing a family budget – it should live within its means – Kenworthy stated, “This analogy gets back to the public’s frustration with the economy. People are looking for someone, or something, to blame. But the analogy is wrong on two accounts. It’s simply not true that families live within our means. We tend to be net debtors. We take out mortgages for our houses and borrow to get past problems such as car repair, medical emergencies, etc.”
“The same is true for government,” he continued. “There are needs that require borrowing and it’s best to borrow in times like now when the interest rates are low. Also, it’s good to run a surplus in good times. Our government was running a surplus in the 90s, but they forgot that principle in the early 2000s when they passed the tax cuts.”
Finally, we asked Professor Kenworthy what one thing we could do to fix the economy. He began his answer by saying, “First you have to separate the short term needs from the long term. The priority is to get back to economic growth and to improve employment. Then, for the longer run, we need to look for new sources of investment and boost wages for low-end service jobs. This is important because these jobs are now such a large part of our economy, and probably will be for the foreseeable future.”