[SOLUTION] Income Inequality

Below are two competing views (Proposition #1 and Proposition #2) on why income inequality has beenrisingven among the lower 99%) in the United States since the 1970’s.Proposition #1:“More people are falling behind today because they’re lazy. In the U.S. anyone willing to work can earn adecent living. The income distribution is the same as the effort distribution. People who work hard earn agood living. Lazy people stay poor. The income distribution has been skewing because of a growingculture of dependency. It used to be shameful to accept handouts from the government, but now it’sperfectly acceptable. So more people opt out of the labor force and sit around collecting handouts from the rest of us. Of course their incomes are going to be lower than those in the top tiers.”Proposition #2:“The incomes of the rich and poor have been growing farther apart due to purposeful policy decisions thathave favored the rich at the expense of the poor. Starting with Ronald Reagan’s financial deregulation,and continuing with successive Republican attacks on New Deal and Great Society social programs tofinance tax cuts for their Wall Street cronies, government policy in this country has systematicallychanneled the rewards of our immensely productive economy towards the rich and away from the poor.America needs to open the gateway to prosperity for all through fair tax policies, decent minimum wages,better public schools, aid to low-income college students, and a universal health care system.”Here are the questions I want you to address:1. What is actually driving the observed changes in the income distribution, according to David H.Autor’s analysis? In the first paragraph, summarize Autor’s analysis. What does he identify as themajor cause of rising inequality? What are some of the factors Autor identifies as havingcontributed to anincrease in the demand for highly-educated workers and a decrease in thedemand for less-educated workers?2. Which proposition’s policy prescriptions are more consistent with the policies that Autorrecommends? The two propositions have very different policy implications. If you believe thatincome inequality is being driven by laziness and a culture of dependency, and your roommatebelieves it’s being driven by tax and spending policies that systematically favor the rich, you willdisagree about the kinds of policies that might address the problem. While neither of thepropositions above is wholly consistent with Autor’s analysis, in your second paragraph, tell mewhich proposition’s policy prescriptions are more consistent with the policies that Autorecommends. Use specific examples from the article to support your conclusion. (Autordiscusses policy prescriptions in the very last paragraph of the article.)


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