Read a great article discussing
- The Great Depression
- The Great Compression
- The Great Divergence
Economists Larry Mishel and David Autor recently debated the topic why America has received the most significant increase in income inequality in our country's History.
Mishel's position on why we have arrived to the point where we are started when politicians from both parties began to think of America as a nation of consumers, not of workers. President Jimmy Carter deregulated the airline, trucking and railroad industries in order to help lower consumer prices. Congress chose to ignore organized labor’s call for laws strengthening union protections. Ever since, Mishel said, each administration and Congress have made choices — expanding trade, deregulating finance and weakening welfare — that helped the rich and hurt everyone else. Inequality didn’t just happen, Mishel argued. The government created it.
David Autor's position is technological change is the contributor for the rise of income inequality. Computers, Autor says, are fundamentally different. Conveyor belts and massive steel furnaces made blue-collar workers comparatively wealthier and hurt more highly skilled craftspeople, like blacksmiths and master carpenters, whose talents were disrupted by mass production. The computer revolution, however, displaced millions of workers from clerical and production occupations, forcing them to compete in lower-paying jobs in the retail, fast-food and home health sectors. Meanwhile, computers and the Internet disproportionately helped people like doctors, engineers and bankers in information-intensive jobs. Inequality was merely a side effect of the digital revolution, Autor said; it didn’t begin and end in Washington.
Who is right ? who is wrong?
Frank Levy, the M.I.T. labor economist who hasn’t fully committed to any one particular view has suggested seeing how inequality has played out in other countries.
In Germany, for example the average worker might make less than an American, but the government has established an impressive apprenticeship system to keep blue-collar workers’ skills competitive. For decades, the Finnish government has offered free education all the way through college. It may have led to high taxes, but many believe it also turned a fairly poor fishing economy into a high-income, technological nation. The Organization for Economic Cooperation and Development has carefully studied the relationship between inequality and growth. The fastest-growing industrialized economies (South Korea, Estonia and Poland) have remarkably low inequality. A few low-growth countries (notably Mexico and Turkey) have high inequality. The rest of the world is all over the place, with no obvious connection between a country’s level of inequality and its economic growth.Yet the scattershot nature of the data does provide some guidance. Inequality has risen almost everywhere, which, Levy says, means that Autor is right that inequality is not just a result of American-government decisions.
But the fact that inequality has risen unusually quickly in the United States suggests that government does have an impact. Still, economists certainly cannot tell us which policy is the right one. What do we value more: growth or fairness? That’s a value judgment Levy states .... And for better or worse, it’s up to us.
I'm of the opinion neither is right nor wrong as both positions (Deregulation . Too big to fail , tax policies , and Technological advances) are all major contributors to America's wage and income inequality disparities. The solution (IMHO) True Tax reform is but one important change needed to help right our listing ship.
So what are your opinions?
What do you believe are contributing factors?.
What solutions would you propose?
Semper Fi
