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Tackling Inequality from the Middle

Summary:
The rise of populist movements and street protests from Chile to France has made inequality a high priority for politicians of all stripes in the world's rich democracies. But a fundamental question has received relatively little attention: What type of inequality should policymakers tackle? CAMBRIDGE – Inequality looms larger on policymakers’ agenda today than it has in a long time. With the political and social backlash against the established economic order fueling the rise of populist movements and street protests from Chile to France, politicians of all stripes have made the issue an urgent priority. And whereas economists used to fret about the adverse effects of egalitarian policies on market incentives or the

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The rise of populist movements and street protests from Chile to France has made inequality a high priority for politicians of all stripes in the world's rich democracies. But a fundamental question has received relatively little attention: What type of inequality should policymakers tackle?

CAMBRIDGE – Inequality looms larger on policymakers’ agenda today than it has in a long time. With the political and social backlash against the established economic order fueling the rise of populist movements and street protests from Chile to France, politicians of all stripes have made the issue an urgent priority. And whereas economists used to fret about the adverse effects of egalitarian policies on market incentives or the fiscal balance, now they worry that too much inequality fosters monopolistic behavior and undermines technological progress and economic growth.

The good news is that we have no shortage of policy tools with which to respond to rising inequality. At a recent conference I organized with Olivier Blanchard, a former chief economist of the International Monetary Fund, a group of economists advanced a wide range of proposals, covering all three dimensions of an economy: pre-production, production, and post-production.

Important pre-production interventions are educational,...

Dani Rodrik
I am an economist, and a professor at the Harvard Kennedy School. My most recent book is Economics Rules: The Rights and Wrongs of the Dismal Science (Norton, 2015). I was born and grew up in Istanbul, Turkey. I still follow Turkish politics very closely, as you will find out if you spend any time with this blog.

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