MS. DIANE REHMThanks for joining us. I'm Diane Rehm. It's a term we hear all the time in political discussions, income inequality, the growing gap between the world's most rich and everyone else is a major concern for voters in the U.S. as we approach the 2016 election and what income and wealth inequality at home and abroad could mean for our economic future.

MS. DIANE REHMHere with me, David Leonhardt of The New York Times, Gene Steurle of the Urban Institute. Joining us on the line from New York City, Branko Milanovic of the Graduate center at City University of New York. On the line from London, Gillian Tett of the Financial Times. And throughout the hour, I'll look forward to hearing your questions, comments, 800-433-8850. Send your email to drshow@wamu.org. Follow us on Facebook or Twitter. Welcome to you all. Thank you for being with us.

MR. DAVID LEONHARDTThank you, Diane. Good to be here.

MR. GENE STEUERLEDelighted to be here again.

MR. BRANKO MILANOVICThank you, Diane.

MS. GILLIAN TETTI'm glad to be on the line.

REHMAnd Branko Milanovic, let me start with you. Recent report from Credit Suisse said the top 1 percent of the population owns half the world's wealth. How surprising is that statistic?

MILANOVICYou know, Diane, actually for those who have been working on these issues, particularly on wealth inequality, it's not surprising because numbers like that have been seen before and we know that, you know, the report, actually the Credit Suisse report, has been now published for six or seven years and then basically every year, the story -- practically every year, the story gets somewhat more dramatic and I think more recently we've got more dramatic because of large gains in the top 1 percent, mostly because of the financial assets and the financial sector doing well.

MILANOVICSo it's not that surprising for somebody who is working. It is surprising for most of the people because the number itself, when you say 1 percent of the world owns half of world wealth, is indeed actually really striking.

REHMTruly striking, David Leonhardt, but, you know, we hear the terms income inequality and wealth inequality. Tell us what the similarities and differences are.

LEONHARDTSo on the most basic level, of course, income is the money you have coming in every year. Wealth is the store of money that you have in your home or in the bank account. One of the reasons that wealth inequality is bigger than income inequality is vast numbers of people in the world and even in this country have no wealth. The vast majority of households in this country have income, right, but among the poor here and around the world, their net worth is typically very close to zero.

LEONHARDTAnd so another way of looking at this statistic that says 1 percent of the world owns 50 percent of the wealth is much of the world has no wealth. And that is one of the reasons why wealth inequality is more extreme than income inequality.

REHMSo Branko, those terms take on a very different meaning when you're speaking globally.

MILANOVICYes. Actually, as David said first we have really to distinguish and I don't want to be like in producing definitions now. But as David said, there is a difference between income. Income is really what you're receive and you can -- I mean, on a monthly or annual basis and then, essentially, you spend that for consumption. And most of the people, even in rich countries, we are talking about 22 to 25 percent of Americans who don't have any wealth simply because whatever they earn in a month, they spend it.

MILANOVICAnd, of course, it's much more dramatic in the rest of the world. So as David said, you know, you have about, you know, 50 or even 55 percent of people in the world with no wealth, which doesn't mean that they have no income and they're all dying. So that's really a bit of a difference.

REHMGene Steurle, what's behind wealth inequality?

STEUERLEWell, there are a number of factors, some of them we just normally expect. Wealth becomes more unequal. We compare the older people to younger people. Younger people tend to be spending money, gathering student debt, say, things like that. As people age, they tend to accumulate more wealth. But that's not driving the great disparity that we see in these statistics. What also drive it is differences in saving rates. Also, and not given a lot of attention actually in these studies, are the fact that the wealthy tend to be in very high-return assets, in some cases 'cause they're very successful entrepreneurs.

STEUERLEBut quite honestly, even among, say, the top 20 percent or the top 10 percent, they're more likely to be in something like stocks or real estate that might earn 5, 6, 7 percent a year. And other people in assets, like savings accounts, that earn nothing.

REHMBut if you're a young person and, as you said, paying off student debt, you cannot really buy stock or put money in savings. You're simply staying, well, right there at the line.

STEUERLEWell, I wouldn't say you can't. I mean, we have evidence from place like China where people who earn 1/10 what we do, that they still stock away 30 or 40 percent of their income into savings. I wouldn't say they can't. I would say they often have much higher priorities. And we might get into this later. I would say that the policies of the government, for instance, the increase in student debt have actually exacerbated the situation.

REHMGillian Tett, you hear Branko say earlier this is not really surprising. It's been edging up. Tell us the timeline on this.

TETTWell, what you've seen is basically an increase in income inequality, wealth inequality now for a couple of decades. I mean, it was improving a bit before the financial crisis, but it really is down to three things. One is the fact that, you know, the qualitative easing, the policies of the Federal Reserve and other western central banks have inflated the value of assets for people who own assets. So if you own stocks or properties and things like that, you've become wealthier.

TETTAnd the people who don't own assets haven't. Secondly, you have the issue of tax policy, which, again, has tended to favor the wealthy and exacerbate income inequality, particularly because wealthier people increasingly finding ways to avoid paying taxes through the use of offshore (word?) And then, thirdly, you have this issue of (word?) technology and the fact that you're seeing a hollowing out of the middle class jobs. And you take it together, it's a recipe for income inequality.

TETTAnd I'll just point out one thing quickly, which is that it's not just an American problem. I mean, one of the fascinating stories we're carrying on the FT website right now is the fact that China actually have more billionaires today than the U.S., according to the so-called Hurun Index. Apparently, it's got 200 -- it added 242 dollar billionaires in 215, bringing it to a total of 596 against 537 in the U.S. So it's not just an American problem.

REHMGillian, has the problem sped up since 2008 and the Great Recession?

TETTIt has, but not just because of anything the government has done. It's also because of this growing digitization of the economy. I mean, there's studies out suggesting that almost half of U.S. jobs could be replaced by automation in the next couple of decades and it tends to be the middle class jobs that get replaced so you're creating an elite of people who are (unintelligible) technology and a lot of people at the bottom who are not doing well at all.

REHMDavid Leonhardt, give us a sense of who's at the top and who's not.

LEONHARDTWell, so at the very top, we have a lot of people in finance. Finance is overrepresented at the very top. We have the classic corporate executives whose pay has soared in recent decades for a variety of reasons. Some of them are economically explainable, but many of them are because the corporate pay game is, honestly, somewhat rigged. You have increasing number of people in energy in this country because of the energy boom.

LEONHARDTI absolutely agree with Gillian. This is not a uniquely American phenomenon. It's a global phenomenon. I do think it's more extreme in the United States than in other countries and the Credit Suisse numbers show that. If you look at the share of middle class wealth in the United States, it's lower than the share of middle class wealth in Europe, for example.

LEONHARDTAnd we have had policies in this countries more so than Europe that have aggravated the market trends. So globalization and technology are driving inequality. And then, in this country, we've added on top of that by cutting taxes for high income people more than we've cut taxes for anyone else and our educational attainment has really slowed down. We used to lead the world in educational attainment and that's one of the ways to have wealth more broadly shared because educated people continue to do much, much better than less educated people.

REHMAnd Gene Steurle, David talked about a rigged pay game. Can you say more about that?

STEUERLEWell, if the people who were voting on your salary are the people with high salaries and we have studies that say, well, that I need to pay my executives at least what the median executive earns elsewhere, then the thing keeps ratcheting upwards. The decline of unions has made a difference. One could argue that unions didn't always represent most of the people, but at least the represented some of the people and so a lot of workers are not well represented.

STEUERLEBut I think there are ways to deal with this. And as has already been mentioned several times, I think a lot of policies also work to rig the system. So our tax policies, for instance, very much favor saving by upper income people. It's not that low income people don't benefit from government programs. They benefit from a lot of government programs. But they're not programs that really mainly help them accumulate private wealth or actually increase their earnings.

STEUERLEThey're more things like Social Security and Medicare when you retire or maybe welfare. Well, that doesn't add to your wealth accumulation. In fact, the way they're currently designed, they actually discourage you a little bit from saving more on wealth. So we really don't have a government policy that's oriented towards mobility at all.

REHMAnd we just learned, as a matter of fact, that there will be no Social Security increase for next year. Gene Steurle is at the Urban Institute. He's author of "Dead Men Ruling: How To Restore Fiscal Freedom and Rescue Our Future." Short break here. We'll be right back.

REHMWelcome back. We're talking about economic inequality, not only income but wealth, and not only in this country but indeed around the world. A new report from Credit Suisse indicates that one percent of the world's population owns 50 percent of the world's wealth. We have four people with us. David Leonhardt of The New York Times, Gene Steuerle of the Urban Institute, Branko Milanovic, he is at The Graduate Center at CUNY, and Gillian Tett, she's U.S. managing editor of the Financial Times and author of the new book, "The Silo Effect." Gene Steuerle, what do we know about demographic inequality here in the U.S.?

STEUERLEWell let me give you just a couple statistics, by age and then by race. If we compare the years from, say 1963 to 2013, that is for about 50 years, what we find is that young people, say 25- to 35-year-olds, their wealth hasn't increased at all. Now, mind you, the economy has more than doubled in this period of time and the wealth has more than doubled. But that doubling or more than doubling actually occurs for older people. Younger people are falling further and further behind, that is, their relative status is less than it has been in the past. And again, you can see it in such issues as student debt, their slowness to buy homes and so on and so forth.

STEUERLEWe turn to race, we also find that not only haven't things gotten better over the last 50 or 30 years, depending on which measure we use, but in some cases they've gotten worse. So the white wealth to black wealth used to be about 5 to 1, now it's about 7 to 1. It's similar for white wealth versus Hispanic wealth. There are a lot of factors involved in that but part of it is the fact that blacks are less likely to own homes. They're much less likely to have liquid retirement accounts. That's the type of retirement account that we're putting more and more money in, like an individual retirement accounts and 401 (k) s. So there's huge racial disparities. And as I say, by age groups, things are becoming worse in terms of the old versus the young.

REHMAnd what about parts of this country? What do we know?

STEUERLEI know less about the geographical dispersion. It's certainly different. You know, wealth is much higher on the coast than in the middle of the country. Certainly the South has more wealth than the Northeast, that type of thing. I don't have exact statistics on that.

LEONHARDTOne thing on the young and old that I think is important to think about is that, I actually think there's an argument that having no Social Security increase in benefits, which you mentioned, is a good thing for addressing the wealth gap. The old have much more money than the young. And not only that, but the old have weathered this downturn much, much better than the young.

REHMWhy do you suppose that is? Is it because they had the cushion there to begin with?

LEONHARDTI think there are two reasons. One, we have a much larger welfare state for the old than the young. Right? For the old we have long had socialized medicine and we have Social Security. We have nothing like that for children or young families. And so we just have -- with a larger welfare state, it helps people weather a downturn better. And then, two, economic research has shown that downturns really affect the young, because what it causes businesses not to do is not to hire, right? And so if you spend a few years not hiring, who are you not hiring? You're probably not hiring 24-year-olds and 30-year-olds more likely.

REHMAnd Gillian, I know you wanted to jump in.

TETTWell, the other important thing to bear in mind is that you have an older generation that have benefited enormously from all the programs that America introduced in the middle of World War II, the middle of the 20th century after World War II. And not only did that pave the way for the Social Security programs that the older generation are benefiting from now, but they also had a massive boost of social mobility as a result of all those educational programs which helped the returning GIs get into public education for the first time.

TETTSo you had an entire middle class that rode up the educational escalator in the middle of the 20th century, are benefiting from that now and that route is increasingly being denied to people today. And that's one reason why social mobility is actually declining in America today.

REHMGene Steuerle.

STEUERLESo this is an interesting statistic in terms of what's happening to the young. So we -- mentioning Social Security and let me add Medicare. So the lifetime value of benefits for an average couple retiring today, not already retired, is about a million dollars in Social Security and Medicare benefits. Some people actually count that when they think of how they compare wealth statistics -- the statistics, we're usually using our private wealth and not counting this. That number, that million dollars for Generation X or politically the millennials, I should say, is supposed to double to about two million dollars.

STEUERLESo it's not just that we've had this success in supporting the old, but the real question in terms of Social Security, Medicare, all these programs, is where do we want it to go? For the young we say, we're not going to support you in college as much anymore. We're not going to help you when you have kids. We're not going to help you as much buying a house. But, boy, when you get older, we've got all this growth built into the system.

REHMAnd Branko, we haven't talked about gender differences as far as wealth accumulation. What are the stats there?

MILANOVICWell, you know, we don't know that much about it. Recently, I've seen there is some -- this is really kind of a new area because the data that we normally have, they are based on households. And households are generally, particularly among the rich people, you have both men and women there. So it's -- really, you don't have individual level information. However, I've seen some more recent work, which shows that for the top one percent -- we are talking now, I'm talking about incomes now, not about wealth -- but for the top one percent, there has been some increase in sort of participation of women.

MILANOVICBut the further you go towards the top, like, you know, let's suppose one-tenth of one percent or one-hundredth of one percent, really the changes are nonexistent. So essentially, I mean, the message is kind of mixed, is that actually there has been some improvement, an increased number of women who are quite well off on their own. And but then there is clearly a ceiling about which really nothing is happening.

REHMDavid, turning to Tuesday night's presidential debate, certainly Bernie Sanders, certainly Hillary Clinton, talked about income inequality, wealth inequality. How do you think the candidates approached it? And do you think there is something that a new president could do to diminish this huge and growing inequality?

LEONHARDTSo I think there are really two different answers -- set of answers to this question. There is, what are the economic things that we could -- what are the policies we could plausibly design that would affect wealth and income inequality? And that's a really interesting discussion. But it is separate from the discussion of political reality, which is the Republican Party -- which controls the House and almost certainly will control the House in 2017, the Senate is more up for grabs -- is not interested in its current incarnation in doing anything to address the wealth and income gap.

LEONHARDTIf you look at the plans of Jeb Bush and Marco Rubio, they both would actually -- would grow the gap because they would cut taxes for the wealthy much more than they would for other people. And so, given that, there is no way that Hillary Clinton or Bernie Sanders can do anything fundamentally different from what Barack Obama has done as president.

REHMUnless the state of -- or the makeup of the Congress itself were to change.

LEONHARDTThat's correct. Although the Republicans, it's worth knowing, have an enormous advantage in the House. I mean, they have dozens of seats above the Democrats. And it...

REHMHowever, they are a divided House.

LEONHARDTThey are a divided House. They are dysfunctional. But it is very hard to see how the Democrats get control in 2017. Now, anything can happen. But there is this real political issue in the United States today, which is Democrats have concentrated themselves into cities. And so I know people often blame gerrymandering but it's not just gerrymandering. It's also the fact that if you look out across much of the country, Democrats have concentrated themselves in tight little places: in San Francisco, in Washington, in New York. And they have left vast parts of the United States that are Republican essentially.

LEONHARDTAnd so for the foreseeable future, I think we should assume we have a Republican House. And we should assume that there are not going to be any huge new pieces of legislation that address inequality. That's just the immediate future. And I don't want to foreclose the possibility of bigger change in the medium term.

REHMGillian.

TETTI just wanted to add an even more sobering note to what David said, which is that if you believe, as I do, that there are three factors driving this inequality right now, namely, a tax and government policies, secondly, the issue of quantitative easing and super loose monetary policy, raising the value of the assets that the rich hold, and then, thirdly, the digitized economy, then frankly the Congress can only act, even if it wanted to, on those -- first of those three issues, which is the tax and government policies. It doesn't mean that it shouldn't act. It absolutely should do something about trying to tackle this issue, in my view.

TETTBut unfortunately, until the era of quantitative easing comes to an end and until some of this digitization essentially blows out the revolution in digitization, it's going to be very hard to stop this inequality trend.

REHMGene Steuerle.

STEUERLEInterestingly enough, in my book, "Dead Men Ruling," I point out that one of the things that boxes us in is all the commitments we've made for the future. So I view this actually as a time of extraordinary opportunity. It's just that we're standing with our backs to this ocean of possibilities. So if you look at numbers about 10 years from now, under a Democratic budget or current law or Republican budget, we're supposed to spend about $1.4 trillion more in real dollars as we do today. And it's all committed to Social Security, Medicare, health and retirement on the one end and higher interest on the debt because we're not willing to collect enough taxes to pay our bills on the other.

STEUERLESo Democrats are opposed to doing anything about switching some of the money to younger people, although they say they are, but at the end of the day they're not willing to tackle all the -- where all the growth's going. And the Republicans aren't willing to collect enough taxes to stop these interest costs from growing.

REHMGillian, I am utterly fascinated with the U.K.'s new Labor Party Leader Jeremy Corbyn. He's made this idea of income inequality central to his message. How different -- how much power does he have to change what is happening in the U.K. and perhaps become an example for the rest of the world?

TETTWell, actually, I was at dinner just last night with a group of people who are deeply involved with the U.K. government on both sides of the political aisle. And the reality is that, at the moment, he doesn't have very much power to do anything because of the way that the U.K. parliamentary system works. But Jeremy Corbyn's unexpected victory as the main opposition party leader in the U.K. should come as a very significant warning for anyone who watches U.K. politics -- U.S. politics or the economy. Because what it shows is that there are a growing number of people among the voters who essentially feel so angry with the system that they're willing to vote for protest characters.

TETTAnd you're seeing that right now in the U.S. race, both in terms of the rise of support for Bernie Sanders, for Donald Trump and otherwise. So we're creating a very volatile political climate and one driven by a deep sense of frustration with the system, the status quo, and increasingly protest politics.

LEONHARDTThe Republican side is remarkable on this. I mean, I was wrong about this, nearly everyone who looks at politics was wrong about this: the extent to which Donald Trump has remained at the top of the polls. And it's not just Trump. If you add up the share being won by Donald Trump, a reality TV star, Ben Carson, a neurosurgeon who's never held office, and Carly Fiorina, a failed chief executive, they are now, together, over 50 percent in many polls -- state polls. It is remarkable. I still would be surprised if any one of them got the nomination.

LEONHARDTI think Marco Rubio is the most likely nominee. I think Jeb Bush is the second most likely nominee. But it -- you really see the kind of dissatisfaction that Gillian's talking about. And you see it in all kinds of places right now.

REHMAnd you're listening to "The Diane Rehm Show." Branko, I know you wanted to jump in.

MILANOVICYes. I just wanted to be very brief, actually. I'm not going to talk about, you know, different politicians. But let me bring one aspect which actually we have overlooked. And this is about global inequality, income inequality -- that inequality has been on the decline over the last 10 years, thanks to the rise of China and India and the middle classes in those countries. So this is a good news globally.

MILANOVICThe problem is that it's ambivalent news, and actually maybe negative news for the U.S. to the extent that you can argue that the U.S. middle class, or actually rich countries' middle classes are being hollowed out by the rise of Asia. And if this is continues -- if it continues -- and I think it would continue -- I don't see what politicians of any kind can do about that, short of them dropping globalization altogether. So I think there are some really fundamental issues that one politician or another really cannot solve.

REHMI think we have to add another factor here, Gillian, the migrant crisis and how that's going to affect the world economy, the world's income inequality.

TETTWell, I think what you're seeing right now, in the 21st century, is a phenomena I write about in my book, "The Silo Effect," which is a society which appears to be superficially hyper-connected in the sense we all have cell phones that link us all together, supposedly. And yet the way we live and think and act is increasingly fragmented. And most people do not understand the migrants who are coming into either Europe or the U.S. The wealthy elite are living in a little bubble, a social ghetto. They don't understand why people are getting so angry and going out and voting for Donald Trump or others.

TETTAnd a large part of the people are feeling -- of society are feeling increasingly excluded from the system and the economic gains that are being created. And they feel like they're trapped in ghettos too. So you have this sense of polarization, social fragmentation and anger building, which is, you know, bubbling up in everything to do -- ranging from the immigrant, the migrant crisis, through to, you know, the anger you're seeing in the Republican Party expressed by Donald Trump.

REHMBut help me understand, David. How is the anger that is pushing Donald Trump to the top going to be alleviated if you have a Donald Trump as a Republican nominee? How does he help the income inequality -- one of the richest men in the country?

LEONHARDTOh, he doesn't. And if you look at his tax plan, it's clear it would not help address inequality. But politics, of course, is not -- it's not about people reading white papers, right? People react emotionally and we all react emotionally. I mean it's -- look, it's not just poor people who vote against their economic interests, right? There are all kinds of really high-income people who vote for higher taxes on themselves because they're liberal. And so all kinds of people do it. Politics isn't just a strict thing.

LEONHARDTI would say I am a little bit more optimistic than Branko and Gillian about whether government could address this. I do think government could address this. I think that if you imagine a plan that introduced substantially better education in this country, both better education for the schools that we have and more ambitious education for things like pre-K. That would make a difference.

REHMAnd of course, Hillary Clinton has talked about helping individuals get through college.

LEONHARDTYes. And I think Hillary Clinton has been quite interesting on things like pre-K and helping individuals get through college. I think it'll be interesting to see what she says about holding existing schools accountable. I think Obama has pushed his own party on that. We've had a lot of public schools in this country for a long time that have been mediocre. And Obama has been willing to take them on and say we need to ask our public schools to do better. I think it'll be interesting to see whether Hillary can do that. I also think tax policy can matter. Look, we can tax the rich more and we're not doing it.

REHMDavid Leonhardt, a New York Times reporter, and editor of The Upshot. That's a website covering politics and policy. Short break here. Your calls when we come back. Stay with us.

REHMAnd welcome back. As we talk about wealth and income inequality, not only here in this country, but throughout the world. Here's an email for you, Gillian, from Steven in Norman, Oklahoma. In addition to a tax on income, he says, France has a wealth tax, paid by individuals with assets greater than 1.2 million Euros. Clearly, this hasn't removed the problem of wealth inequality in France, but it is a place to begin. Given the notable popularity of Bernie Sanders in this election, could such a tax be imposed in this country with receipts directed at various welfare items like national single payer healthcare or free college tuition? What's your response to that?

TETTWell, one of my responses is that there is a difference in the way that wealth distribution insofar as it does occur, materializes between the US and Europe. Because in the US, there is a much stronger tradition of philanthropy. And that is one of the reasons why, to a certain degree, higher extremes of wealth inequality have been tolerated in the US compared to Europe. I think that there certainly is a level of anger developing in the US which needs to be addressed. Whether it's best done through a wealth tax, I'm not entirely sure.

TETTI do think, though, the top priority right now is to address the question of social mobility above all else, and that means really looking at the question of education mobility. And wouldn't it be nice if we could bring back something today like the GI Bill, or some kind of system to enable kids from any social strata to get a decent education and a decent shot at joining the middle class and having a good life.

REHMBecause Gene Steuerle, education is key.

STEUERLERight. I think one way to divide this question is to think about what you do at the very top and then what you do about the broad middle class and lower income people. And at the top, there is this question of taxing the rich more. I think a lot of people would favor doing that. I should say, however, that most studies that say that just simply raising tax rates on the wealthy or even implementing the type of wealth tax that France has only adds a modest amount.

REHMWhat about a value added tax?

STEUERLEWell, the value added tax would be on everyone.

REHMExactly.

STEUERLESo that would support a larger government. But to be clear, government does spend about 60,000 dollars per household right now on various subsidies and taxes and stuff like that. About 35,000 are actually transfers to the individual in social welfare issues. And I say most of this does not support the development of wealth among lower income people. The type of thing David talked about, putting more money into education, things like that.

STEUERLESo, the middle, in the bottom, you gotta decide what you're going to do with the money and are there better ways to do that to promote greater wealth and income inequality. At the top, you've got issues like taxation, but I should also say, stuff like a better competitive policy anti-trust, which can stop some of these large accumulations of wealth.

REHMBranko, talk about what the possible long term implications of wealth and income inequality are, both for the US and around the world.

MILANOVICWell, you know, it is, of course, actually a difficult question. First, one has to realize that as countries get richer, actually the wealth to income ratio, right away, they are getting actually, more affluent. So, but individuals, you know, if you get richer, then you have definitely also more wealth. So, the issues then are if this wealth were distributed in an approximately reasonable or a justifiable way. And I think the problem that we face now is that, actually, there is general sort of a feeling that the wealth concentration is way too high.

MILANOVICAnd I believe that one of the ways to possibly start (unintelligible) the issue is to focus more on what is called free distribution. In other words, not taxation of current income so much, but (unintelligible) of wealth and an attempt to redistribute or actually make it more interesting, more profitable for middle class to hold financial assets. You know...

REHMSpell that out. Yeah, spell that out.

MILANOVICI'm sorry?

REHMSpell that out. I'm not sure, I'm not clear on what you mean.

MILANOVICWell, what I mean, and I'm not saying that it's very easy, because people really live hand to mouth and they don't have much, you know, money in order to save. But you remember that in 1979, 1980, when the Dutch Revolution (unintelligible) started, the language that was used was peoples' capitalism. And the idea was redistribute more assets to the middle class so that they have a stake in the system. And that got totally forgotten.

MILANOVICActually, we now have greater concentration of wealth and actually greater income inequality in the UK and in the US than was the case in 1979 or 1980. So, I think that should be measured taxation or maybe sort of encouragement of employee stock ownership plans or other things that would actually have, that would make, for many of the people, really have a stake in the system.

LEONHARDTYou know, Ta Nehisi Coates and Richard Rothstein and others...

REHMWho was just on this program.

LEONHARDT...have made some really interesting points about just how much the United States government excluded African Americans from wealth accumulation programs in the post war decades, which is a really important and chilling point. It is worth thinking about the flip side of that, which is remembering the United States government actually did undertake a very deliberate program of wealth accumulation for white people. Right? And so, setting aside, for a second, the racial gap and hoping that if this were to happen again, it wouldn't just be for white people and exclude African Americans.

LEONHARDTIt is a reminder that over time, through things like housing, the government has decided that helping lower income and middle class people accumulate assets was a valuable role that it could play. And to come back to where this conversation started, millions of people in this country have no net worth, none at all. Right? Branko said, what, it's about a quarter of people in this country have no net worth? And so, thinking about how to help them accumulate net worth.

LEONHARDTMaybe housing is not the best way, I think, is a really interesting question to think about in that bucket of policies that might make a difference, even if they're not realistic in the next year or two, politically.

REHMAll right, I want to open the phones now. Let's go first to Joe in Cleveland, Ohio. You're on the air.

JOEHi, thank you. It's interesting. The panel, there seems to be an underlying assumption on the panel, one, that income inequality is per se bad. Why not look at the whole pie as opposed to a division of the pie? Second is somehow, there's this assumption, I mean, it's been hit a little bit, that raising taxes will necessarily solve this. I mean, sure, if you take away a lot of money from rich people and dump it into a bureaucracy that doesn't do anything with it, okay, maybe the rich people are hurt a little bit, but that proves nothing that the poorer people are going to benefit.

JOEThird, there's this consensus that conservatives and Republicans don't want to address this issue or haven't addressed this issue, when in reality, your panel just disagreed with the conservative view of this. I mean, I would argue that if you looked at government concentration in the last 30 years, the increase in regulation, the difficulty it has been to start new businesses. I'm a lawyer and an economist who have dealt with this type of thing. It is much harder, what we've developed into is a corporatist society where the liberals put in policies that benefit big corporations that make it harder for small and mid-sized businesses to compete with these.

JOEConservatives, you know, some conservatives do the same thing. And this whole idea that, oh, let's just tax the rich more and that's some sort of solution or let's just hand out, give people money is not a solution to this.

REHMAll right. Gene Steuerle.

STEUERLEWell, actually, I'm going to agree with you on two points. One, I alluded to a little bit before. I think if you're worried about the accumulation of wealth at the top, it's not just tax policy that you have to address. You really have to address competitive policy, a more competitive economy usually deters some of the vast accumulations at the top except for those very successful entrepreneurs and inventors there. So, I think the less concentration of business power, we almost need a new anti-trust policy.

STEUERLEBut, as you say, we also need to deal with regulations. Regulations tend to deter the middle class and others from being able to engage. And on the tax side, I agree with you also. Taxing people at the top does not necessarily increase wealth at the bottom. I can tax all I want to and throw more money into transfer programs. We've talked about social security and Medicare. Social Security and Medicare don't encourage people to save or work. They encourage people to retire earlier. So, you're right. Taxing by itself is not enough. However, having said that, and Dave has already alluded to this.

STEUERLEWe spend 350 billion dollars a year to promote housing and pensions. 20 percent of the population at the top gets 80 percent of those subsidies. So, when it comes to policies to promote mobility and wealth accumulation, they do not apply to the middle class and the poor. The policies that apply to them are, as you alluded, transfer policies to help them consume more. But they are not policies that help them accumulate wealth.

REHMI certainly hope when we're talking about regulation, we are being very specific in how we talk about regulation. I think about VW's scandal with their emissions program. And how that become a scandal that could indeed bring down the German economic system. Because of what they've done. You know, regulation is part of a democratic system, and I hear a great many people calling for less and less and less regulation.

LEONHARDTI agree with that. But I also agree with the caller, that we suffer from both under regulation and over regulation. So, in environmental areas, VW is a great example of it seems that we suffer from under regulation there. But we suffer from over regulation. I mean, for decades, we had, in our big cities, this crazy taxi system, in which people were not allowed to go out and enter the market and compete. And as a result, taxi fares were much higher and that really hurts lower and middle income people.

LEONHARDTUber, whatever you think about that, has busted that open. Our school system, our higher education system suffers from regulations that it isn't, and our health care system, that it's important to say, raise prices and lower quality for poor and middle class people. And so, I do think regulation is something that, as you say, is a crucial part of society and we need it, and we suffer from under regulation in some areas. But I do think we suffer from over regulation in others.

REHMBranko.

MILANOVICYes, well, I actually would like only to mention on the, regarding the caller's first point. We do not take, and actually, in my work, I do not take a position that inequality, per se, is bad. Actually, you can even think that there are levels of inequality which are way too low. Which don't give incentives for people to study, you know, innovate or do things like that. But when I move to the questions that you have asked, like what should we do? I'm actually really responding to what seem to me a ground swell of popular support or concern with inequality.

MILANOVICAnd believe that it has gone over the tipping point that at which it was a good thing. To actually have become something that we have to be concerned, for political reasons, and even for economic reasons in the sense that it may be slowing down the growth. So, that was, I would like just to distinguish these two things.

REHMAll right. And here's an email from Patricio, who says it's becoming pretty obvious that with automazation and robotization, we are able to build and create more goods and services than what we need. We need to create a sharing economic model to keep everyone employed with corresponding incomes. Please have your guests address this. Gillian.

TETTWell, I think that it's very clear, that at the moment, there just needs to be a much wider, more creative debate on a number of levels about this issue. And I (unintelligible) a number of points that David made on this one, which is that, you know, by and large, there (unintelligible)

REHMOh dear. We're losing you. I'm afraid we've lost you. David, pick up on that.

LEONHARDTWell, I won't do as well as Gillian was going to, but I think what's hard about the robot question is I do think there are really serious questions about whether technology is going to take jobs. On the other hand, we have been worrying about that for hundreds and hundreds of years. And the pessimists have essentially always been wrong, right? I mean, it was not the case that when the horse and buggy manufacturers lost their jobs, we didn't have enough work. And so, I think it's really hard to think about. I'm probably more optimistic than pessimistic on technology.

REHMAnd you're listening to The Diane Rehm Show. To Willy in Norman, Oklahoma. You're on the air.

WILLYHello everyone. Hello Diane.

REHMHi.

WILLYMy question is, why in America don't we have a CEO pay cap? And why, also, are we not paying high school and college students to actually attend college? These seem like successful things that have happened in other countries and I hope that you and your guests will talk more about those.

REHMThat's an interesting idea. Do you want to talk about that, Gene?

STEUERLESo, on the pay cap, it's basically -- this is one of these cases where maybe you think we can come up with the right design, but nobody can figure out how to actually implement that type of regulation.

REHMBut how did that percentage of wealth disparity between those at the top in the executive office -- I mean, it used to be 35 to 1. Now it's 800 to 1. How did that grow so much?

STEUERLEWell, we talked about this a little bit earlier. It's basically the power within the corporate boards and the mutual relationships among them. So you vote for my higher salary, I vote for your higher salary. Maybe we drag in David and he votes that we can have higher salaries too. And then we keep having this notion that every corporate executive, if you're at the top, has to earn more than the median. (unintelligible)

LEONHARDTIt's a change in norms. I mean, George Romney, Mitt Romney's father, famously rejected some pay, because he thought it was, for himself, because he thought it was obscenely high. It's impossible to imagine too many people doing that today.

REHMGillian.

TETTI couldn't agree more. I mean, I recently chaired a session with Paul Volcker, the former Governor of the Federal Reserve. Who was pointing out that, you know, when he started his career, bankers on Wall Street did not expect to earn many, many multiples of ordinary professionals or ordinary people. And now, there is this culture of competitive inflation, if you like, among salaries at the top. And that's more and more pernicious in terms of its overall impact on expectations. And also, the anger of ordinary people.

LEONHARDTThe caller asked specifically about a pay cap, which I do think, and some people would disagree with this, I think is sort of un-American. I think a lot of Americans would view it as un-American. They would say, wait, you're going to tell private business they cannot pay someone more than this? Even aside from the logistical difficulties that Gene raised. So, to me, the bigger issue is, look, there are other ways to do this. You can tax those high salaries much, much higher than they're taxed.

REHMOr you can build a culture within a corporation that says, we will have this kind of ratio between the upper and the lower.

LEONHARDTYes.

REHMFinally, an email from Mandy in Melbourne, Florida. I'm a college educated minority female millennial in the stem field. I work in local county government. My wages are stagnant. I owe more in student loans than I make and will continue to do so for the foreseeable future. Is there hope for the future for people like me? Gene Steuerle.

STEUERLEWell, I think very much so, particularly, as you say, you're in the stem area, which I think is actually, gives you an advantage over a lot of other people. Let me also mention, you mention a couple factors.

REHMAnd I'm afraid we are out of time. What a great discussion. Thank you all. David Leonhardt, Gene Steuerle, Brako Milanovic, and Gillian Tett. Thank you all for listening. I'm Diane Rehm.