May 2010: A Tobin Project conference on "Democracy & Markets: Understanding the Effects of America's Economic Stratification"

Over the past three decades, the United States has become richer, but significantly more unequal. In 2007, the most affluent 1% of American families received more than 23% of total income for the first time since 1928. While the causes of this dramatic rise in inequality are widely researched, far less is known about its potential effects on our economy, our democracy, and our society. 

In May, the Tobin Project convened an unprecedented group of leading scholars, policymakers, and practitioners to address this pressing issue at a conference on "Democracy and Markets: Understanding the Effects of America’s Economic Stratification." Chaired by Bruce Western (Harvard University, Sociology), the meeting focused on the implications of escalating inequality for U.S. economic performance, the health of our democracy, and the vitality of American families. The group identified important lines of future inquiry, including:

• The translation of top-end income concentration and growing economic power in the financial sector into disproportionate political influence;
• Potential links between income concentration at the top of the distribution and sluggish wages and household insecurity lower down the income distribution; and
• The possible relationship between income inequality and financial crises, as inequality in the U.S. has peaked twice this century, followed both times by major financial crises.

The conference sparked a new sense of urgency around these and related topics, and generated over a dozen papers of new analysis and thinking. While the effort is nascent, this early research points both to the extraordinary importance of the topic and to how much is still left to learn about the consequences of this ongoing transformation in American society.