Nobel Prize Winner Robert Shiller: Economic Inequality Biggest Problem Facing US
The Yale University professor awarded the Nobel Prize for Economics earlier this week warned Monday that rising economic inequality is the most important issue facing the United States today.
“I’m thinking this crisis will likely be resolved,” he opined. “We won’t see a default. Even if we do it will be for one day or something like that and even if it’s longer it’s not the end of the world.”
Shiller, who is known around the world for predicting the dotcom and housing market collapses of the 2000s, said growing inequality is a far more pressing problem.
“It’s not the financial crisis per se, but the most important problem we are facing now, today, I think, is rising inequality in the United States and elsewhere in the world,” he asserted.
“This is a problem that has solutions,” Shiller added. “Many of them are financial solutions.”
“We should be thinking about this now,” he continued,” calling for higher taxes on the wealthy if the gap between rich and poor continues to widen.
“I think there’s a lot more we can do and it will help make a better society,” Shiller said.
Both wealth and income inequality have soared in the United States in recent decades. Last year, the top 1 percent of US earners made 19.3 percent of all household income, the largest percentage since the Internal Revenue Service (IRS) began keeping records a century ago. In 2012, the income of the top 1 percent of US earners soared 19.6 percent. For the bottom 99 percent of earners, income rose a paltry 1 percent. Since the end of the Great Recession, 95 percent of all income gains went to the top 1 percent of US earners. According to the United Nations Gini Index, which measures income inequality by nation, the United States ranks 73rd in global income equality, tied with Ghana and Turkmenistan.
As for wealth inequality, a 2012 report from the nonpartisan Congressional Research Service concluded that the wealthiest 1 percent of US households held more than a third of the nation’s wealth, while the bottom 50 percent of households had just 1 percent of the wealth.
Shiller, who along with fellow Americans Eugene Fama and Lars Peter Hansen, both University of Chicago professors, won the $1.23 million Nobel Prize, awarded annually by the Royal Swedish Academy of Sciences, for their work on the pricing of financial assets.