Summers: U.S. risks becoming a Downton Abbey economy

|By:, SA News Editor

"The U.S. may well be on the way to becoming a Downton Abbey economy," Larry Summers writes in the FT, due to the increasing share of income "going to the top 1% of earners."

However, "it is not enough to identify policies that reduce inequality," Summers says. "They must also raise the incomes of the middle class and the poor."

Summers identifies tax reform as having a major role to play. "Closing loopholes that only the wealthy can enjoy would enable taxes to be cut elsewhere," he writes.

Summers also argues that market forces should be used to address inequality. "Policies that aim instead to thwart market forces rarely work, and usually fall victim to the law of unintended consequences," Summers says.