Americans may be living in the most unequal society that has ever existed, said economist Paul Krugman.
The New York Times columnist and Princeton University professor said Thursday there is zero evidence to suggest extreme inequality is good for economic growth but plenty to suggest it’s not.
“Nobody wants us to become Cuba (but) the question is, do we have to have levels of inequality that are getting close to being the highest levels anywhere, ever,” Krugman told Bloomberg News. “We’re really starting to set new records here. Is that a good thing for anybody?”
The Nobel Prize winner said this troubling trend began around 1980, when President Ronald Reagan was elected and began implementing supply-side economic policies that promised more wealth for everyone if tax burdens were lifted for the rich.
“The fact of the matter is, since inequality began soaring, around 1980, the bottom half of America has pretty much been left behind,” Krugman said. “There has not been a rising tide that raised all boats.”
But he said American political leadership had throughout history set corrective paths whenever wealth became too unbalanced.
“If we could have modern politicians speaking forthrightly about the danger of high concentration of wealth, as Teddy Roosevelt did in 1910, we would be a long toward a good solution for this,” Krugman said, “and I guess I believe that America has a tremendous redemptive capacity and ability to take a look and say, ‘OK, in the end, what are our ideals? What do we want our society to look like?’”
He said current conditions were much worse than the notorious “Gilded Age” of the late 19th Century that ushered in an era of progressive reforms to start the 20th Century.
“It’s an era of not just inequality, but increasingly what looks like inherited inequality, and I think people understand that,” Krugman said. “They’ll say, ‘No, we don’t want that to happen,’ and we can do things that are not draconian, not socialist, but in the American tradition to limit that rising inequality.”
Watch the entire interview posted online by Bloomberg News: