Inequality is a social ill

We know that the percentage of income that went to the top 1 percent of Vermonters tripled in 25 years — from 5.9 percent in 1981 to 19.1 percent in 2005.

Public Assets published that fact a year ago in a report about the decline of Vermont’s middle class.   What we didn’t discuss in that report was why the middle class was slipping and what it meant for society as a whole.

In a New York Times commentary on Saturday (Jan. 19), Nobel prize-winning economist Joseph Stiglitz offered a stark warning about the dangers of the growing gap between rich and poor, which is now the worst it’s been since before the Great Depression. “[T]he American dream — a good life in exchange for hard work — is slowly dying,” he wrote.

His readable piece discusses what led to this inequality, how it is slowing the country’s economic recovery, and what we can do to reverse this destructive trend. Stigliz’s prescription includes investment in education, increasing tax progressivity, and taxing financial speculation.

Gov. Peter Shumlin had it half right in his Inaugural Address earlier this month.  He was right when he said: “Our education system, from pre-kindergarten to higher education, is the state’s greatest economic development tool.” But he was wrong when he proposed to fund an expansion of child care for working families through higher taxes on Vermont’s lowest-wage workers. That would only exacerbate inequality and, as Stiglitz explains, weaken the economy the governor says he’s trying to build.