Robert Frank on Inequality

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4.7 • 4.3K Ratings

🗓️ 15 November 2010

⏱️ 62 minutes

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Summary

Robert Frank of Cornell University talks with EconTalk host Russ Roberts about inequality. Is there a role for public policy in mitigating income inequality? Is such intervention justified or effective? The conversation delves into both the philosophical and empirical evidence behind differing answers to these questions. Ultimately, Frank argues for a steeply rising tax rate on consumption that would reduce disparities in consumption. This is a lively back-and-forth about a very timely topic.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	other information related to today's conversation. Our email address is mail at econtalk.org. We'd
0:33.6	love to hear from you. Today is November 3, 2010 and my guest is Robert Frank, the H.J. Lewis
0:45.1	Professor of Management and Professor of Economics in the Johnson School of Management at Cornell
0:49.9	University. Bob, welcome back to econtalk. Nice to be back with you Russ. In a recent New York
0:54.8	Times essay, you reiterated a concern of yours you've had for a long time, which is rising
1:00.7	income inequality in the United States and the implications of that for behavior and happiness.
1:06.3	And that is the subject of our conversation today. I want to begin with a very basic question,
1:11.5	which is why is this an issue that we should be concerned with as a matter of public policy?
1:17.2	Well, the simple fact is that public policy has an enormous influence on the amount of
1:24.2	inequality there is and the amount of inequality a country has matters a great deal for outcomes
1:30.6	people care about. So those are the simple reasons we ought to be concerned. Is it a bad thing in
1:36.9	and of itself? There's got to be some inequality. I think the thought experiment in which you imagine
1:46.2	everybody working all day contributing 100% of his wages to the pot and then everybody getting
1:54.3	one inch of the total in the pot distributed back to him. If you play that out in your mind,
2:01.8	it's obvious pretty quickly to most people that there would be no incentive for anybody to get
2:07.3	up and go to work in the morning. Basically, you'd essentially kill off any reasonable hope of
2:13.8	having a vibrant productive economy. There's got to be some inequality. In other words,
2:18.2	the question is how much and what the knowledge base we have so far seems to suggest clearly is
2:26.6	that beyond a certain point, additional inequality not only doesn't stimulate additional output for
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