Thursday, January 25, 2007

Rising Inequality

More than meets the eye

Tyler Cowan's column in the NY Times today is a must-read if you are interested in the "myth of the disappearing middle class". As workers has blogged about before yes the rich get richer but the poor get richer too, unfortunately (or actually just definitionally) the rich get richer at a quicker rate and this is what bothers people. But this is what is called economics, and it goes back to the "rising tide raises all boats" of Adam Smith. The alternative is forced redistribution in which case everyone loses as the wealth-creators in society will leave that society for a more liberty-enhancing situation.

Cowan says basically, 1) the educated earn more than the uneducated, 2) there are large differences in wealth/income between the educated, 3) the less wealthy have more leisure time than the wealthy (and no, not, you cynics, because of unemployment, which as we know at least in the U.S. is very low) and 4) alot of the increasing wealth/income differences are due to the greying population because they have had more occasion to earn or not-earn, workhard or not work so hard, for longer periods in their life. Cowan also gives references for the findings. And also mentions another workers theme which is that the rising tide also decreases absolute poverty, eg which is the whole point I think.