In a panel discussion on the Dutch radio station BNR Nieuwsradio on 8 April 2019, Bas Jacobs, Sijbren Cnossen Professor of Public Economics at Erasmus School of Economics, discusses the problem of increasing inequality with other panel members, Harald Benink (University of Tilburg) and Barbara Baarsma (University of Amsterdam).
They did so on the occasion of the statement that Ray Dalio, the Bridgewater Associates co-chairman made in an interview airing Sunday on CBS’s “60 Minutes”. He said that: 'Capitalism must be reformed because it’s not producing enough opportunities for most Americans, creating an income gap that threatens to spark conflict'.
According to Professor Bas Jacobs, the Netherlands is a country in which people are still relatively equal. However, this is rapidly changing. As such, Dalio has a point. It is namely a phenomenon that we see worldwide: at the top, both the level of income and wealth increase. This has already been a problem in the US for years. People at the bottom of the income distribution have not witnessed any increase in real income. According to Professor Jacobs, this causes political imbalances and conflicts. Dalio thinks this too and he is not the fist to think so. Many macro-economists share his opinion, because there are many macroeconomic consequences that inequality has and it could cause severe problems. Furthermore, rich people can only gain more wealth when the debt of other people increases and this means that there are severe imbalances in the financial architecture. As such, redistribution is desired since it could contribute to increasing the position of the middle class, and to ensure that the American dream becomes dream again instead of a nightmare.
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Listen to the entire panel discussion on BNR Nieuwsradio, d.d. 8 April 2019