Tags: Farrell | income | inequality | revolution

MarketWatch's Farrell: Income Inequality Might Lead to Revolution

By    |   Friday, 17 April 2015 10:19 AM EDT

While many are concerned about growing income inequality in this country, MarketWatch columnist Paul Farrell says it might lead to revolution.

"America may soon be at what we call Bastille Day levels, an inequality gap so great it is the fuel and trigger that can ignite an angry people into revolution," he writes.

Farrell cites 14 possible triggers for such a revolution, borrowed from a 2013 blog by famed money manager Barry Ritholtz. The list, as written by Ritholtz, includes:
  • "Inequality in America today is twice as bad as in ancient Rome, worse than it was in in czarist Russia, Gilded Age America, modern Egypt, Tunisia or Yemen, many banana republics in Latin America, and worse than experienced by slaves in 1774 colonial America.
  • "Extreme inequality helped cause the Great Depression, the current financial crisis and the fall of the Roman Empire
  • "Inequality isn't happening for mysterious or uncontrollable reasons. Bad government policy is responsible for runaway inequality
  • "Bush was horrible, but income inequality has increased even more under Obama than under Bush
  • "It's a myth that conservatives accept runaway inequality. Conservatives are as concerned as liberals regarding the stunning collapse of upward mobility."
Americans as a whole are concerned about income inequality, but they don't see the government as a solution for the most part, according to a new study by four esteemed professors for the Washington Center for Equitable Growth.

"The survey shows that while respondents who view information about inequality are more likely to believe that inequality is a serious problem, they show no more appetite for many government interventions to reduce inequality — with the notable exceptions of increasing the estate tax and the minimum wage," the professors write.

They are Ilyana Kuziemko of Princeton University, Michael Norton of Harvard University, Emmanuel Saez of University of California-Berkeley and Stefanie Stantcheva of Harvard.

For the survey, more than 10,000 respondents were randomly assigned to view a short online presentation conveying information about income inequality or to a control group that did not view this presentation.

When respondents were given the actual data on the growing income gap in the United States, their concern about the problem increased by 35 percent.

After reviewing the presentation on income inequality, support for raising the minimum wage jumped 4 percent (from an already high baseline of support of 69 percent) in the treatment group relative to the control group.

"Our working hypothesis is that those surveyed alighted on the estate tax because it applies to many fewer Americans than respondents had assumed," the authors say.

"And respondents favored increasing the minimum wage because doing so does not necessitate heavy government involvement, unlike, say, the Supplemental Nutrition Assistance Program, or food stamps for low-income Americans."

Bottom line: "The survey reveals a deep mistrust of the federal government's ability to administer programs effectively and efficiently even after confronted with the importance of these programs in alleviating poverty among those Americans at the bottom of the ladder," the professors conclude.

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While many are concerned about growing income inequality in this country, MarketWatch columnist Paul Farrell says it might lead to revolution.
Farrell, income, inequality, revolution
Friday, 17 April 2015 10:19 AM
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