Federal Reserve Chairman Ben Bernanke has spent this week on Capital Hill addressing various Congressional committees on the state of the U.S. economy (we're doing OK). The topic du jure (de la semaine?), however, has been wealth and income inequality. Senate Committee on Banking, Housing and Urban Affairs chairman Chris Dodd's (D-CT) first question to Bernanake was:
Do you share Chairman Greenspan's concern, Mr. Chairman, that continued economic growth of inequality is a significant threat to our nation's fundamental promise of economic opportunity?
Sen. Chuck Schumer (D-NY) followed suit and opened his line of questing with this:
My first question deals with the issues of income inequality and the speech you gave yesterday, where you pointed out that this is just in an ideas, almost instantaneous economy, wealth agglomerates to the top.
Wealth and income inequality is a real and growing problem (despite the carping of the Wall Street Journal's editorial board). Policy makers are now in hot pursuit of the causes and possible remedies (if any).
Bernanke believes "[t]he very important drivers of economic growth and prosperity in this country include free and open trade and technological progress," but that the gains from these changes will have deleterious effects on some workers while "those who are going to benefit the most from globalization and technology are those who have the skills." In other words, income inequality is the result of an unequal distribution of education and skills.
