Last Tuesday, the Center for Women & Financial Independence (WFI) and the Department of Economics cosponsored a panel discussion addressing the issues of income inequality and related topics in the U.S. Economics Professors Robert Buchele, Roger Kaufman and James Miller mediated the panel.

“There are so many of our students who are so interested in the Occupy Movement, but there haven’t really been any economic discussions,” said WFI Director Mahnaz Mahdavi. “This is an opportunity to provide an economic insight into the Occupy Movement.”  

Professor Buchele began the panel with a basic economic overview of income inequality in America. He explained the difference between absolute poverty and relative poverty, describing a shift in focus from those who live below the poverty line, to those who are poor compared to the one percent of highest income earners.

“We have not managed to reduce the poverty rate through the last several decades,” Buchele said after the panel. “Economic growth is important and helps reduce poverty, but redistribution is also important.”

Professor Kaufman focused on the American taxation system, raising the question of how much more affluent people should pay in taxes. Kaufman concluded that due to America’s progressive tax system, people who earn a higher income are obliged to pay more than those who earn less.  

However, paying more taxes does not exempt all the “one percent” from causing further income inequality in the U.S., according to Kaufman. He stressed that it is the top one tenth percent or even one hundredth percent who usually cheat on the progressive tax system, and thus income inequality can be more of a political problem.

Finally, Professor Miller proposed some alternative views to the issue. He pointed out that income inequality might not be a problem at all because people are on the same level of consumption in some areas, notably due to improvements in technology.

Debate among panelists and among audience members heated up when Miller brought up the controversial idea that genetic factors largely contribute to income levels later in life.

Guangye Cao ’12 raised the question of inequality of opportunity, pointing out that children from less affluent families are at a disadvantage compared to middle- and upper-class families.

Miller answered the question by arguing that such inequality is also a product of genetics. “Even our willingness to work hard comes from our genes, so if you have two people whose genes cause them to make a lot of money, then those kids will get those genes,” he said.

Miller said that this genetic problem is becoming more pressing now.

“Men and women who go to the same institution are marrying each other,” said Miller. “That’s why Greg Mankiw, a top scholar at Harvard, called Harvard the most exclusive dating service.”

Both panelists and students regarded the discussion as highly successful and informative.

“I thought the Question and Answer period at the end was very good,” said Kaufman. “It’s an interesting panel discussion when people have different opinions.”

“I’m so glad we have this panel because it explains why such issues have been so heated in political debates,” said Thealexa Becker ’13. “My biggest take away from it is that different people, even the three representatives from our department, have different definitions of inequality depending on their approaches.”

WFI will hold another lecture today at noon in the Neilson Library Browsing Room. The guest lecturer Susan Jansen, a Smith alumna and former banker, will provide her insight as a former banker on the fall of Lehman Brothers.