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June 12, 2007

Inequality is the new black

There have been dozens of stories on inequality in the mainstream press recently: some bad, some awful, some pretty good. It's clear that the burgeoning interest in this topic even among mainstream pundits is a clear sign that "the establishment" is working over time to explain this away and get the rhetorical upper hand, before somebody proposes something that could actually DO something about inequality and wage stagnation. (Even the good stories try to delineate the fault lines of the debate as the statesmen-like economic GOP-style conservatives, the statesmen-like economic Dem-style conservatives, and the rabidly unpredictable populists. Guess which option gets discredited?)

You have Roger Lowenstein of the New York Times, never one to let facts or analysis get in the way of a good story, who Dean dissects on the intellectual property point in greater detail at Beat the Press. But one of the things that annoyed me about this piece was this passage:

Why isn’t prosperity spreading more equally? The leading theory has been that a global, high-tech economy creates big winners and losers. That is surely part of it. But Europe has computers, too, so where are all of its billionaires? Countries like Sweden are more equal, but to some economists, they are probably too equal. There is a rough trade-off between equality and growth: if you try too hard to make everyone equal, you get fewer entrepreneurs, fewer Silicon Valleys and a lower standard of living.

Okay, so I'm the blogger here, but I think this passage is shockingly cavalier. First of all, the global economy creating winners and losers?? That's not "part of it." That's it! Especially if you consider those things that have directly to do with public policy choice (the number of workers effectively in competition with one another through trade, immigration and regulation) and also those things that are less directly about policy choice (high tech booms).

As for Scandinavia, I'm not advocating we wholesale import their social model, but it's difficult to argue that there's been much downside for the region from following its model. On low wage inequality, high collective bargaining coverage, low rates of incarceration, high life expectancy, controllable health care costs, high math and science literacy, high national income, high hourly labor productivity, and more, the Scandinavian countries have performance that meets or exceeds the U.S. level.

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