Aug 11, 2010

Rich Man, Poor Man

“The less productive an economy, the greater the inequality of incomes. The more productive, the less the inequality.”

—Peter Drucker, The New Realities

Earlier this summer, the Center on Budget and Policy Priorities issued a study showing that the income gap between the richest 1% of Americans and the middle and poorest fifths of the country more than tripled between 1979 and 2007—the latest confirmation of a trend that would have surely concerned Peter Drucker.

When the gulf between rich and poor gets too wide, Drucker cautioned, “it destroys mutual trust between groups that have to live together and work together.”

With the ranks of well-paying manufacturing jobs steadily dwindling, Drucker was particularly worried about the fortunes of service workers—the poor cousins of today’s knowledge workers. But in his 1993 book Post-Capitalist Society, he also offered a ray of hope: Gains in productivity by service workers, he suggested, could eventually lift their incomes.

“It takes a generation or two before a society and its population catch up with radical changes in the composition of the work force,” Drucker wrote. “It takes some time—the best part of a generation, judging by historical experience—before the productivity of service workers can be raised sufficiently to provide them with a ‘middle-class’ standard of living.”

In this edition of Drucker Apps, we invite you to join our conversation about income inequality. Weighing in will be former White House and congressional advisor Ron Haskins, who co-directs the Brookings Center on Children and Families; Sam Pizzigati, editor of Too Much, a “commentary on excess and inequality” from the Institute for Policy Studies; and Reihan Salam, policy advisor at e21 and a fellow at the New America Foundation.

We open things up with this question: Will a rise in service-sector productivity ultimately shrink the income gap? Or will tackling this problem require other steps—and, if so, what?

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