The Growing Economic Divide in America: Paul Krugman on Wealth, Income, Education (2006)

Proposed public policy responses addressing causes and deleterious effects of income inequality include: progressive tax incidence adjustments, strengthening social safety net provisions such as Aid to Families with Dependent Children, welfare, the food stamp program, Social Security, Medicare, and Medicaid, increasing and reforming higher education subsidies, increasing infrastructure spending, and placing limits on and taxing rent-seeking. General limitations on and taxation of rent-seeking is popular with large segments of both Republicans and Democrats.



The OECD asserts that public spending is vital in reducing the ever expanding wealth gap.

The economists Emmanuel Saez and Thomas Piketty recommend much higher top marginal tax rates on the wealthy, up to 50 percent, or 70 percent or even 90 percent.

In his 2013 State of the Union address, Barack Obama highlighted the need to raise the federal minimum wage. The progressive economic think tank the Economic Policy Institute agrees with this position, stating: "Raising the minimum wage would help reverse the ongoing erosion of wages that has contributed significantly to growing income inequality." In response to the fast-food worker strikes of 2013, Labor Secretary Thomas Perez said that it was another sign of the need to raise the minimum wage for all workers: "It's important to hear that voice... For all too many people working minimum wage jobs, the rungs on the ladder of opportunity are feeling further and further apart."

Amalgamated Transit Union international president Lawrence J. Hanley has called for a maximum wage law, which "would limit the amount of compensation an employer could receive to a specified multiple of the wage earned by his or her lowest paid employees."

Ralph Nader and the United Front Against Austerity, among others, call for a financial transactions tax (also known as the Robin Hood tax) to bolster the social safety net and the public sector.

Economist Richard D. Wolff claims that greater economic equality could be achieved by extending democracy into the economic sphere.

Others argue for a Basic income guarantee, ranging from libertarians such as Milton Friedman (in the form of negative income tax), Robert Anton Wilson, Gary Johnson (In the form of the fair tax "prebate") and Charles Murray to the Green Party.

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Paul Robin Krugman (born February 28, 1953) is an American economist, Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times. In 2008, Krugman won the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography. According to the prize Committee, the prize was given for Krugman's work explaining the patterns of international trade and the geographic concentration of wealth, by examining the effects of economies of scale and of consumer preferences for diverse goods and services.

Krugman is known in academia for his work on international economics (including trade theory, economic geography, and international finance), liquidity traps, and currency crises. Krugman is ranked among the most influential academic thinkers in the US.

As of 2008, Krugman has written 20 books and has published over 200 scholarly articles in professional journals and edited volumes. He has also written more than 750 columns on economic and political issues for The New York Times, Fortune and Slate.
As a commentator, Krugman has written on a wide range of economic issues including income distribution, taxation, macroeconomics and international economics. Krugman considers himself a liberal, calling one of his books and his New York Times blog The Conscience of a Liberal. His popular commentary has attracted considerable comment, both positive and negative.

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