Does Inequality Matter?

The lead package of the January/February 2015 issue of Foreign Affairs deals with inequality. To complement the individual articles, we decided to ask a broad pool of experts for their take. As with previous surveys, we approached dozens of authorities with deep specialized expertise relevant to the question at hand, together with a few leading generalists in the field. Participants were asked to state whether they agreed or disagreed with a proposition and to rate their confidence level in their opinion; the answers from those who responded are below:

If left unaddressed, economic inequality will cause major political upheavals in the developed world over the next generation.

Results:

Full Responses:

DARON ACEMOGLU is Elizabeth and James Killian Professor of Economics at the Massachusetts Institute of Technology.
Agree, Confidence Level 8     
It depends what aspects of economic inequality and what types of political upheavals. It is clear that the increasing share of national income captured by the top one percent (or the top 0.1 percent) is highly visible right now and worries many citizens and pundits. It also motivates the left. This aspect of economic inequality could certainly lead to some upheaval if left unaddressed. It is probably the most important factor that fueled the Occupy movement and the more recent rise of Bernie Sanders in the United States and the election of Jeremy Corbyn in the United Kingdom.

But this effect is probably not “major.” Neither Sanders nor Corbyn is likely to get elected to office, and their influence on mainstream politicians will probably remain limited. U.S. President Barack Obama, for example, has rightly worried about the top one percent’s rising share of income and the potential negative effects on social mobility, but he has not adopted any radical, or even moderate, policies to counter economic inequality—not that such economic policies would be simple to pass through Congress at the moment or would be likely to be silver bullets.

Another potential political impact of the increased share of income of the top one percent could be more major: the growing political power of mega-billionaires. With the gutting of limits on campaign contributions and the total lack of oversight of lobbying activities in Washington, a mega-billionaire, such as Sheldon Adelson and the Koch brothers, can now wield enormous power. The most effective way of curbing such power is permanent vigilance by the media, civil society, and competing interest groups—with some help from institutional checks (the latter being unfortunately less effective in the United States than in other Western nations at the moment, so the United States would probably have to be doubly vigilant against such encroachment).

The aspect of economic inequality that is likely to have the most frequent major political consequences is not the share of the top one percent but poverty at the bottom. The health of a dynamic market economy depends on a level playing field, so that those at the bottom are not excluded and their offspring have a chance to rise up and contribute to society by working, producing, and innovating. The United States does a fairly lousy job of protecting those at the bottom and a very lousy job of giving their offspring a good shot at success. There is also increasing economic inequality in Finland, Germany, Sweden, Switzerland, and elsewhere in Europe. But those societies are doing a much better job of protecting their less well-off citizens and their families, so that the long-term consequences of increasing inequality, even if it translates into a much greater share held by their top one percent, will not be pernicious.

The United States may end up paying a much greater economic price and, for that reason, ultimately suffer much more significant political upheaval because it is complacent about the plight of its poor. So our priority should be not to fret endlessly about the top one percent—although that certainly does deserve to be noted and taken seriously—but to wake up to the terrible long-term costs of neglecting the less fortunate citizens and their children.

DANIELLE ALLEN is Director of the Edmond J. Safra Center for Ethics at Harvard University and a Professor in Harvard’s Department of Government and Graduate School of Education.
Agree, Confidence Level 7   

ANTHONY B. ATKINSON is Centennial Professor at the London School of Economics, Honorary Fellow of Nuffield College, Oxford, and the author of Inequality: What Can Be Done?
Agree, Confidence Level 6     
Intergenerational inequality lies behind many of today’s world problems.

DAVID AUTOR is Associate Department Head of the Massachusetts Institute of Technology Department of Economics.
Agree, Confidence Level 6     
One could argue that we’re already seeing this upheaval in the United States in the free-range fury of the current Republican primary. Why are non-college-educated white males so angry? I’d argue that it is because they’ve seen 35 years of stagnating incomes, declining job opportunities, and increasing economic marginalization. The falling fortunes of non-college-educated working-class Americans is the face of inequality that worries me most. It’s an irony that although Republicans don’t like to talk about inequality their party is arguably being riven by it.

ANDREW G. BERG is Assistant Director of the IMF’s Research Department.
Agree, Confidence Level 7     

JARED BERNSTEIN is a Senior Fellow at the Center on Budget and Policy Priorities.
Agree, Confidence Level 7   
There’s already simmering dissatisfaction, if not anger, among the electorate that is being expressed as nativism in the current U.S. presidential campaign. The sense that the game is rigged against ordinary folks is widespread and even bipartisan. If that doesn’t change—if it remains unaddressed or worsens due to the toxic interaction of highly concentrated wealth and money-soaked politics—political upheaval is a possible outcome.

MARK BLYTH is Eastman Professor of Political Economy at Brown University.
Agree, Confidence Level 8   
A global economy facing structural deflation with high levels of private and public debt, embedded within an inequality skew of planetary proportions (as a Credit Suisse report shows) that is on the cusp of robotizing everything. Yeah—that’s stable, sure.

FRANÇOIS BOURGUIGNON is Professor of Economics at the Paris School of Economics, former Chief Economist of the World Bank, and the author of The Globalization of Inequality.
Agree, Confidence Level 8     
The issue of constantly rising inequality beyond an already high level, and the sociopolitical risk it entails, applies mostly to the United States. For the time being, the situation is rather different in other developed countries: inequality is lower and seems to have stabilized over the last decade. The assumption of “left unaddressed” is also debatable. One may argue that inequality issues will be addressed precisely as soon as the probability of “major political upheaval” becomes significant. However, this will not prevent inequality from causing serious economic damage.

PAUL COLLIER is Professor of Economics and Public Policy at the Blavatnik School of Government at the University of Oxford.
Agree, Confidence Level 4     
I think there is a danger that rising inequality will feed on itself, through a gradual undermining of social cohesion, leading to unstable, polarized, and sporadically populist politics.

TYLER COWEN is Professor of Economics at George Mason University.
Disagree, Confidence Level 7
Inequality is correlated with political disengagement, not with political upheaval. That kind of turmoil is better predicted by rising expectations.

ANGUS DEATON is the Dwight D. Eisenhower Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs and the Economics Department at Princeton University.
Agree, Confidence Level 8
Our new work on rising death rates in middle-aged white Americans is yet more evidence of the consequences of being left behind, of not sharing growth more equally. At the top, there is danger of plutocracy. We are not there yet, but the danger is real.

JAMES K. GALBRAITH holds the Lloyd M. Bentsen Jr. Chair in Government/Business Relations and a professorship of Government at the Lyndon B. Johnson School of Public Affairs, the University of Texas at Austin.
Neutral, Confidence Level 5  
There is no known method for predicting “major political upheavals.” Nor is it necessary to predicate action on the possibility that some major upheaval might otherwise occur. As such, sensible control of excessive inequality is sensible policy.

JACOB HACKER is Director of the Institution for Social and Policy Studies and Stanley B. Resor Professor of Political Science at Yale University.
Agree, Confidence Level 7     
The evidence is accumulating that rising economic inequality undermines economic opportunity and political equality. Citizens of developed democracies are becoming more aware of and concerned about this reality (which, of course, varies in severity and salience across nations). As awareness and concern rise, the incentive to mobilize citizens in response to rising inequality grows. Whether this mobilization will be constructive or destructive—leading to egalitarian political and economic reforms or angry reactions to scapegoats or economically destructive policies—that is the fundamental question.

FREDRICK C. HARRIS is Professor of Political Science and Director of the Center on African American Politics and Society at Columbia University. He is also a Nonresident Senior Fellow at the Brookings Institution.   
Strongly Agree, Confidence Level 8   

DOUGLAS HOLTZ-EAKIN is President of the American Action Forum and is a former Director of the Congressional Budget Office.
Disagree, Confidence Level 5
There is a difference between addressing inequality and addressing poverty and growth in low-income populations. Inequality is less of a big deal than the latter.

LANE KENWORTHY is Professor of Sociology and Political Science at the University of Arizona.
Disagree, Confidence Level 6
I’m interpreting “left unaddressed” to mean that the top one percent’s share of income will stay at its current (high) level. If we return to the rate of economic growth we averaged between 1870 and 2007, and particularly if wages in the middle and below increase, I think it’s unlikely that economic inequality will cause political upheavals. That’s what our experience in the 1980s and 1990s suggests. If inequality continues to rise or economic growth slows and wages remain stagnant, all bets are off.

WOJCIECH KOPCZUK is Professor of Economics and International and Public Affairs at Columbia University’s School of International and Public Affairs.
Disagree, Confidence Level 6
The primary factor behind the evolution of inequality has been technological change, and as a result there is no easy fix to it. Predicting where we are going to be 20 years from now is just guesswork. I tend to be optimistic that in the long run technological progress benefits all; that’s what prior waves of innovation taught us.

BRANKO MILANOVIC is Lead Economist in the World Bank Development Research Group and a Visiting Professor at the University of Maryland School of Public Policy.
Agree, Confidence Level 8     
I don’t think the question is very clearly posed. National inequality within a domestic population may have some (more limited) effect, but global inequality (that between countries), by spilling into migration and increasing national inequalities, might have much more of an effect.

KIMBERLY J. MORGAN is Professor of Political Science and International Affairs at George Washington University.
Agree, Confidence Level 7     
I believe we already see a rising upheaval in the United States, where we now have a very high degree of political polarization and, as a result, an angry political discourse. As scholars such as Nolan McCarty, Keith T. Poole, and Howard Rosenthal have shown, inequality and political polarization have risen and fallen in tandem for at least 100 years. And we know from other parts of the world and historical time periods that economic inequality can breed social and political acrimony, and even violence. Economic inequality is one of the major challenges of our time, and we must grapple with it not only because of its wider political ramifications but also because of its consequences for the well-being of our citizens.

JERRY Z. MULLER is Ordinary Professor and Chair at the Catholic University of America.
Disagree, Confidence Level 6
The “developed world” is too varied to hazard valid generalizations. But some of what seems likely for the United States will also hold elsewhere. Economic inequality is likely to increase in the United States, not least because the interaction of familial structures (more stable and education-oriented two-parent families at the top; less stable one-parent families with less time and inclination for education at the bottom) and economic trends (the declining market value of physical labor and of routine mental labor, increasing inequality of market rewards) is leading to greater polarization of human capital endowments.

That is to say, social classes are becoming more caste-like. That will not necessarily lead to political upheaval. First, because it is far from clear that most people equate relative inequality with inequity. If the absolute standard of living rises, however slowly; if fundamental needs for food, shelter, and medical care are met by welfare state provisions; and if the means of information and entertainment provide an outlet for emotional and intellectual energies; then one can well imagine inequality with political volatility perhaps, but without political upheaval.

JONATHAN OSTRY is Deputy Director of the Research Department (RES) at the International Monetary Fund.
Strongly Agree, Confidence Level 10 

BRUNO PALIER is CNRS Research Director at the Center for European Studies and Co-Director of the Laboratory for Interdisciplinary Evaluation of Public Policies at Sciences Po.
Strongly Agree, Confidence Level 8  
A lot of research shows that current political turmoil in the world—and also the development of extreme parties (especially in Europe)—are explained by increasing inequality. There are too many losers in the last wave of globalization. The problem was reinforced by the financial crisis and now by the disappearance of many jobs due to technological changes. If not balanced, these unequal developments will lead the losers to want to get their revenge. That has led to catastrophes in the past.

EMMANUEL SAEZ is Professor of Economics and Director of the Center for Equitable Growth at University of California, Berkeley.
Agree, Confidence Level 4      

REIHAN SALAM is Executive Editor of National Review.
Neutral, Confidence Level 7  
One important variable is the extent to which economic divides map onto ethnocultural or ethnolinguistic divides. If wealth is concentrated in the hands of a market-dominant ethnocultural minority, while members of some other large ethnocultural community are generally in the lower economic strata of the population, I would expect conflict. In contrast, if the society in question is relatively cohesive, I’d expect fewer threats to the legitimacy of its core institutions, even if the level of economic inequality were fairly high.

ALLISON SCHRAGER is a New York–based economist and writer.
Disagree, Confidence Level 7
Inequality needn’t be a big issue if there is sufficient economic mobility.

THEDA SKOCPOL is the Victor S. Thomas Professor of Government and Sociology at Harvard University.
Agree, Confidence Level 7     
Rising economic inequality in and of itself does not cause political upheavals—certainly not upheavals that better the situation of the less privileged. The less privileged need some organization to push back effectively. Rising inequality can result in decay, social disorganization, and political apathy. For the United States in particular, I worry that this could be the outcome. Alternatively, there could be upheavals of the xenophobic and nativist variety.

SEAN TRENDE is the Senior Elections Analyst for RealClearPolitics.
Disagree, Confidence Level 3
“The developed world” is fairly broad, and my experience is mostly with U.S. politics, which is one source of my large degree of uncertainty. But the U.S. experience does not demonstrate much of a relationship between inequality and political upheavals: the 1920s, with a relatively high degree of inequality, had fairly stable politics; whereas the 1970s, with relatively low inequality, had, at least by U.S. standards, multiple political upheavals. (Note: if one believes that inequality is likely to end in an economic catastrophe, then this analysis would be different.) The other source of my uncertainty is that, unlike the 1920s, we seem to be in a low-growth stage. If the middle and lower classes don’t feel relatively good about their prospects, we might have different outcomes than we have had in the past. At the same time, public opinion polling suggests that inequality still commands a low degree of interest from the general public.

MICHAEL WALZER is Professor Emeritus of Social Science at the Institute for Advanced Study and Co-Editor of Dissent.
Agree, Confidence Level 4     
I hope for upheavals in the form of social movements pressing for greater equality. But given the strong oligarchic tendencies in our society, and in parts of Europe too, I don’t have the confidence I would like to have.

PETER WEHNER, former Deputy Assistant to the President and Director of the White House Office of Strategic Initiatives, is a Senior Fellow at the Ethics and Public Policy Center.
Disagree, Confidence Level 7
The problem isn’t economic (or income) inequality as much as a lack of social mobility. If people feel that the game is rigged and living standards stall or fall, inequality can become convulsive. If not, it’s far less of a problem, since we know that inequality is part of the human experience. We don’t resent Tom Brady for making more than Kirk Cousins.

MARTIN WOLF is Chief Economics Commentator for the Financial Times.
Agree, Confidence Level 8     
If wealth is increasingly concentrated in relatively few hands, democracy will cease to be a stable political system. This will be particularly true if the economy ceases to perform well. The wealthy will want to limit the franchise to minimize redistribution of their wealth. They will also seek the support of those whose economic interests clash with their own. This can only be done by a mixture of diversion of anger onto other groups and obfuscation of reality. Promotion of rage as a fundamental political tool will undermine political stability and ultimately lead to antidemocratic populism or antidemocratic plutocracy.

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