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News Flash: Rich Get Richer!
Oct. 29th, 2006 01:13 amEven though it's behind a stupid login barrier over at the New Republic (Bugmenot has logins), this is a good article.
A couple of relevant quotes, sort of a cliff notes version of the story.
"This seems to run in the face of economic theory. If workers grow more productive, logic suggests, they're making more money for their employers, which means businesses will find it profitable to hire more of them. The more workers get hired, the more businesses have to bid up their price to hire them, which means that their wages will rise. Yet that final step is not happening. The vast new wealth being created by U.S. business is going to owners of capital and nobody else."
"And so, in setting about to unravel the mystery, economists (especially those on the center left) have looked closely at a deeper trend, one that has been going on much longer than the current administration: rising inequality. Although the post-1973 decline in productivity growth was long considered the primary economic problem facing the nation, lurking in the background was a more or less concurrent trend of widening inequality. Put simply, the fortunes of the very rich and the fortunes of everybody else have been diverging sharply. Over the last quarter century, the portion of the national income accruing to the richest 1 percent of Americans has doubled. The share going to the richest one-tenth of 1 percent has tripled, and the share going to the richest one-hundredth of 1 percent has quadrupled."
"I, on the other hand, you reject the theory of skill-biased technological change, you are left with an altogether more discomfiting explanation. Rising inequality must not be the logical outcome of the free market, the invisible hand working its magic. Instead, it must reflect the rising social, economic, or political power of the rich."
Cynicism about the rich: CONFIRMED
A couple of relevant quotes, sort of a cliff notes version of the story.
"This seems to run in the face of economic theory. If workers grow more productive, logic suggests, they're making more money for their employers, which means businesses will find it profitable to hire more of them. The more workers get hired, the more businesses have to bid up their price to hire them, which means that their wages will rise. Yet that final step is not happening. The vast new wealth being created by U.S. business is going to owners of capital and nobody else."
"And so, in setting about to unravel the mystery, economists (especially those on the center left) have looked closely at a deeper trend, one that has been going on much longer than the current administration: rising inequality. Although the post-1973 decline in productivity growth was long considered the primary economic problem facing the nation, lurking in the background was a more or less concurrent trend of widening inequality. Put simply, the fortunes of the very rich and the fortunes of everybody else have been diverging sharply. Over the last quarter century, the portion of the national income accruing to the richest 1 percent of Americans has doubled. The share going to the richest one-tenth of 1 percent has tripled, and the share going to the richest one-hundredth of 1 percent has quadrupled."
"I, on the other hand, you reject the theory of skill-biased technological change, you are left with an altogether more discomfiting explanation. Rising inequality must not be the logical outcome of the free market, the invisible hand working its magic. Instead, it must reflect the rising social, economic, or political power of the rich."
Cynicism about the rich: CONFIRMED
