Thank God for Janet Yellen

Moses said, “This is what the Lord has commanded: ‘Gather as much of the manna as each of you needs, an omer to a person according to the number of persons, all providing for those in their own tents.’” The Israelites did so, some gathering more, some less. But when they measured it with an omer, those who gathered much had nothing over, and those who gathered little had no shortage; they gathered as much as each of them needed.
Exodus 16:16-18

In biblical economics, a core principle is that there should not be a great gulf between those who have the most and those who have the least. The Bible is deeply suspicious of wealth. Jesus told his disciples that it would be easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of God. But Abraham, Isaac and Jacob were all rich by ancient standards, and the New Testament tells of disciples who used their resources to help others and support the early church. The biblical ideal is not economic equality, but an economy in which those with the least have enough and those with the most do not have too much.

We can (and should) debate the meaning of “enough” and “too much,” but there can be little doubt that the current widening gap between rich and poor does not fall within acceptable biblical parameters.

Last week, in an historic address at the Conference on Economic Opportunity and Inequality hosted by the Federal Reserve Bank of Boston, Federal Reserve Chair Janet Yellen spoke about the widening gap between rich and poor.

She began her remarks by noting that “The distribution of income and wealth in the United States has been widening more or less steadily for several decades, to a greater extent than in most advanced countries.” She went on to make an important declaration followed by several significant observations:

“The extent of and continuing increase in inequality in the United States greatly concern me. The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression. By some estimates, income and wealth inequality are near their highest levels in the past hundred years, much higher than the average during that time span and probably higher than for much of American history before then. It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity.”

When the Chair of the Federal Reserve Board says that something (anything) “greatly concern(s) me,” that is important. And the widening gap should concern all of us.

Her suggested solutions are neither radical nor particularly biblical. She is not about to sing with Mary about casting down the mighty and lifting up the lowly. She does not suggest that the hungry be filled with good things or that the rich be sent away empty. But she does offer a place to start.

One of her most important insights is that the widening gap between rich and poor is incompatible “with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity.” Technically, she doesn’t make that as a statement, she poses it as a question, but I’m guessing that is what she thinks.

Her proposed building blocks of opportunity are hardly groundbreaking: early childhood education and support, access to higher education, business ownership, and inheritance. She talks about how budget cuts have decimated the funds available for education and weakened the safety net, but she does not propose a graduated tax to offset the losses and fund those programs. And she does not address the ways in which reductions in the marginal tax rate and other government policies have exacerbated the problem. But it is a beginning.

Naming our demons is an important first step in confronting and defeating them. When Janet Yellen names the demon of increasing inequality, it makes a difference. She is by no means the first person to say that the widening gap in income and wealth inevitably leads to inequality of opportunity and undermines a core common value for us as Americans, but when the Chair of the Federal Reserve Board speaks, people listen.