Chrystia Freeland’s recent column in the Globe and Mail discusses the prevalence of the idea of income inequality in contemporary political discourse. She succinctly highlights some of the implications which this trend is expected to have on contemporary society. Her column focuses primarily on the United States, though the points which are raised are easily applicable and highly relevant to the Canadian economic situation as well.
Freeland argues that – until very recently – the idea of income inequality was a something of a taboo topic in American political discourse. However, she believes that this is changing. She cites the accusations of “class war” in the responses to President Barack Obama’s call for higher taxes on the wealthy, and suggests that Obama’s electoral victory represented a “muted, democratic version of class war,” and one in which the lower classes won.
Higher taxes for the wealthy, such as Obama is recommending, may be “a logical response” to income inequality, says Freeland, but it is becoming increasingly difficult to impose taxes on global capital flows and money tucked away in tax havens. Nevertheless, she argues that “government matters,” and the nation-state is still able to “mute the impact of the invisible hand” as long as it is steered in that direction.
Freeland suggests that the debate over inequality and what to do about is one that will only become louder in the near future. However, the most noteworthy aspect of Freeland’s column is her suggestion that many economists are being to realize that if inequality is allowed to reach a certain point, it will hinder economic stability and growth. With this, Freeland offers a fresh insight in the debate over inequality. As she puts it: “Worrying about the poor is one thing. To contend that equality is necessary for growth is an altogether different and more radical idea. Three decades later, trickle-down economics has met its antithesis. We are set for one of the great battles of ideas of our time.”