Lawrence Summers, past president at Harvard University, Treasury secretary in the Clinton administration and economic advisor to President Barack Obama, took to the pages of The Washington Post on Monday to decry the growing gap between rich and poor. He then offered three suggestions that he claimed would help distribute income more evenly.
“There has been a strong and troubling shift in market rewards for a small minority relative to the rewards available to most citizens,” Summers (left) began, noting the recent Congressional Budget Office study found that incomes of the top 1% of the U.S. population rose 275% from 1979 to 2007, while income for the middle class grew only 40% (adjusted for inflation).
Why has the top 1% done so well relative to the rest, he asked?
The answer, he said, lies substantially in changes in technology and in globalization.
What Your Peers Are Reading
Using two iconic American companies as examples, he noted that when George Eastman revolutionized photography, “he did very well, and because he needed a large number of Americans to carry out his vision, the city of Rochester, N.Y., had a thriving middle class for two generations.”
By contrast, when Steve Jobs revolutionized personal computing, “he and Apple shareholders did very well, but those shareholders are all over the world, and a much smaller benefit flowed to middle-class American workers, both because production was outsourced and because the production of computers and software was not terribly labor-intensive.”
Those who call concerns about rising inequality misplaced or a product of class warfare are even further off base, he argued.