Sunday, July 12, 2015

Rising Inequality and its apologists

There's a good and enlightening review from last month at The Economist about another book on inequality, this one by British economist Anthony Atkinson.

We get to see this chart:

and these bits of explanatory comment:
Inequality across rich countries was high before the two world wars of the 20th century. It fell to striking lows after 1945 and then began growing again around 1980 (see chart). Rising income inequality is a feature of most rich countries, especially America and Britain, and parts of the emerging world, including China. Sir Anthony is not interested in outlining any fundamental economic rules. Instead he carefully walks the reader through the ways that different forces have pushed incomes apart historically.

In America, for instance, incomes at the top of the scale began pulling away from the rest quite soon after 1945. Yet household inequality—taking account of taxes and transfers—did not rise until what Mr Atkinson calls the “Inequality Turn” around 1980. Several factors contributed to this, including changes for women and work. After the second world war, when female labour-force participation grew rapidly, high-earning men tended to marry low-earning women; the rising numbers of working women reduced household inequality. From the 1980s on, by contrast, men and women tended to marry those who earned like themselves—rich paired with rich; rising female participation in the workforce exacerbated inequality.
This line from the review:
Sir Anthony dwells on one class of contributory factors above all others: the subtle (and not-so-subtle) ways the rich are able to influence government policy in order to protect their wealth.
 put me in mind of some commentators in Australia.  Who could they be*?:

Anyhow, The Economist reviewer is critical of many of Atkinson's suggestions as to reigning in inequality, basically saying they are unwelcome throwback to the 1960's and 1970's.   And to be fair, the criticisms on some points ring true.

But overall the review obviously considers the book an important contribution to an important issue. What irks me most is the effort those in the ABC** collective put into arguing there is no issue at all.

* words in their mouths are mine, but as far as I can tell, represent their positions with only mild exaggeration, if at all in some cases

(** the Australian, Bolt, Catallaxy)

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