Bruce Judson doesn’t buy the argument, made on the front page of the WSJ last week, that “the deepest downturn in the U.S. economy since the Great Depression may finally shrink the gap between the very best-off Americans and everyone else.” Yes, the highest incomes do tend to drop sharply during market downturns, thus reducing income inequality. But then, when markets recover, inequality just starts rising again. Writes Judson:
Once income concentration becomes a reinforcing cycle of the kind we are witnessing, it is never stopped by pure market forces. Only extensive government intervention, of the kind that will inevitably create high controversy, reverses this trend.
Judson is a former Time Inc. executive turned serial entrepreneur turned Yale School of Management senior faculty fellow who has a book on income inequality and its consequences, It Could Happen Here, coming out next month. He fears that without such “extensive government intervention,” rising income inequality could lead to some really scary things. Like, you know, revolution and stuff. Which I guess would be a bigger deal than a few twits going Galt.