Harvard Economics Students Protest Perceived Bias
STEVE INSKEEP, HOST:
Students at Harvard, yesterday, joined protests against income inequality.
UNIDENTIFIED WOMAN: Over the past 30 years...
GROUP: Over the past 30 years...
UNIDENTIFIED WOMAN: ...income inequality has risen...
GROUP: ...income inequality has risen...
UNIDENTIFIED WOMAN: ...to unacceptable levels.
GROUP: ...to unacceptable levels.
INSKEEP: Some students walked out of Economics 10 taught by a former advisor to President George W. Bush. The protestors included freshman Amanda Bradley.
AMANDA BRADLEY: I'm someone who is, like, lives below the poverty line, like my family's extremely poor. And having a class like this that promotes gaining at the expense of millions of people disturbs me and bothers me, like, at my core.
INSKEEP: Other students decided to stay in that economics class, saying they respected the professor. The class is taught by Gregory Mankiw, former advisor to President George W. Bush, as we mentioned, and also advising presidential contender Mitt Romney. And he's on the line now.
Professor Mankiw, welcome back to the program.
GREG MANKIW: Nice to be with you.
INSKEEP: I suppose you were a focus of protests because of your biography here. You were in the Bush administration. You have criticized the Occupy protests in recent weeks and you also wrote once about warning against what you called the politics of envy. And yet, if I'm not mistaken, you actually decided to teach on income inequality yesterday in this class. Do you accept that it's a problem, the gap between rich and poor?
MANKIW: Oh, there's no question that the gap between rich and poor has risen substantially. It's been a long term trend since the 1970s, with pretty steady increases. And I lecture about this every year. It was a pure coincidence that I was lecturing on this topic the very day they decided to walk out.
INSKEEP: So you say that it's definitely risen, but is it a matter of concern, and is it something that the government has made worse?
MANKIW: Well, I don't think it's primarily being driven by government policy. I think it's primarily been driven by a variety of forces in the economy including, for example, technology. But the question of whether it's something the government should worry about is an issue of political philosophy, as well as economics. And that's one of the things I talked about yesterday is that there's different perspectives on this.
I mean if you took a different political philosophers like, say, John Rawls versus Robert Nozick, you get very different perspectives as to whether it's a different - about what problems that the government should be worrying about.
INSKEEP: Is this something that's hard for conservatives to address, because the argument ends up just leading in directions that makes conservatives uncomfortable? You end up talking about things like a progressive income tax, higher taxes on the wealthy, government intervention in the economy. That sort of thing.
MANKIW: Well, I think conservatives and liberals have different perspectives as to what things should be done. I think the liberal position is more to try to address the outcomes through a progressive income tax. And I think the conservative position is due more to try to address the causes. And one of the primary causes, according to some economists, is the educational system.
My colleagues, Claudia Goldin and Larry Katz, have a book called "The Race Between Education And Technology," that says the problem is that we haven't been producing enough educated people to keep up with the increasing demand for high skilled workers.
INSKEEP: So you would not be fiddling with the tax code if it were up to you and you wouldn't accept those who say that, for example, President Bush's tax cuts for the wealthiest Americans, along with other Americans, exacerbated this problem in the last decade.
MANKIW: Well, if you look at the data, one thing is very clear is that the changes in the tax code - even between, say, the Clinton era and the Bush era - are very, very small compared to the huge changes in inequality we've seen. So very little of the changes we've seen are due to taxes. It's almost in data quality, almost all in before-tax incomes. So, you know, we can debate as to whether we want an extra few percent at the top or not, but that's not really going to do much to change the long-term trend.
INSKEEP: Are you a disturbed about the trend just the last few years, where you actually have seen corporate profits increase, and some people continuing to make an awful lot of money and yet unemployment is at around 9 percent?
MANKIW: The (unintelligible) has been very, very difficult for the economy. There's no question about that. These are very, very tough times. I don't think inequality has particularly increased. In fact, some of the evidence that we've seen suggest that incomes at the top have fallen disproportionately relative to the middle.
So I think rising inequality is really a long-term, you know, like a 40-year trend since the 1970s. And the short-run business cycle that shows that it's a different problem. I don't think it's related particularly.
INSKEEP: Although we - so you don't - you're not worried about the short-term trend, but you do recognizes this 40-year trend and staggering incomes in the middle of the bunch...
MANKIW: I'm not worried - I'm worried about the short-term trend and the overall economy. And I think the fact that you have tremendously high unemployment is a major problem. That's why I'm very supportive of a fairly activist Federal Reserve. And I've been very supportive of, say, Ben Bernanke, who's been trying to get the economy going again and taken some extraordinary measures.
But I think - when we think about the inequality picture, which I think is also an importance social issue, that's really a longer term - a four-year phenomenon, not a two or three-year phenomenon.
INSKEEP: We've just got a few seconds left. But Eugene Robinson in The Washington Post wrote on this issue the other day, and said the more we become a nation of rich and poor, the less we can pretend to be offering the same opportunities. If the gap is too wide you can't just say that you're going to have an opportunity.
Is there truth in that?
MANKIW: Well, perhaps some truth. I mean I think one of the great thinks of higher education in America is that we do offer a lot of financial aid. And I think the thing about opportunity in the United States, I think education is key. And the more that we can provide students the opportunity to get on the first rung of the economic ladder by getting a good education, the better it will be for society over all.
INSKEEP: Professor Mankiw, it's a pleasure. Thanks very much for joining us.
MANKIW: My pleasure.
INSKEEP: Gregory Mankiw was an advisor to President George W. Bush, is now advising presidential candidate Mitt Romney, and is a professor at Harvard, where some of his students walked out yesterday.
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