I recently finished reading Anthony B. Atkinson’s recent
book Inequality: What Can Be Done? It doesn’t duplicate what Piketty did in Capital in the Twenty-First Century, but
in some ways I like it better. Atkinson’s examination of the determinants of
income distribution focuses more on product and labor markets, and on the
social context in which markets operate. Atkinson does not believe that we are
condemned to increasing inequality because r
is greater than g. He points to other
times and places where inequality has been reduced even though growth rates
were low.
Atkinson points out that government policy had a lot to do
with decreasing inequality in the past, and he proposes a long menu of options
to consider at this point. In this he differs from Piketty, whose policy
proposals are mostly limited to a global wealth tax. His fifteen proposals
include comprehensive redesign of the income tax, to make it more progressive
and to introduce an “earned income discount”, rather than the present discount
for capital gains. He proposes a progressive lifetime capital receipts tax in
place of the estate tax. He believes that all young people should receive a
capital endowment when they reach adulthood, and that there should be a taxable
“participation income” and a substantial child credit.
Many of these ideas would not get a lot of support in the
U.S. today, or even in the U.K., Atkinson’s home. But they are cleverly
designed to deliver help to those in need while preserving incentives and garnering
strong political support. Everyone is eligible, but benefits are taxable at progressive
rates. They borrow their best features from the design of successful programs
like Social Security. Political action may be long coming, but planting these
ideas in the public imagination now is important.
