Income Inequality: A Rising Tide Lifts All Yachts
In Vanity Fair, Joe Stiglitz writes an excellent jeremiad on growing income inequality in the U.S. Most of what he said is factually correct, although claims about the average American being worse off (his claims, but more noisily those of various leftie groups) are simply wrong because of upward biases in inflation measures.
But so what? Comparisons matter, and it’s not just an issue of envy. Even though the average American is better off in real dollar terms than 20 years ago (despite our American national pastime of “bitching”), the concentration of economic power is growing most among a very few fragments of society. And, with the Supreme Court having handed the rich carte blanche to subsidize political candidates, the institutional framework for the economy can be changed in ways that disproportionately help the rich. Even though a rising tide may lift all boats, if giant yachts are lifted higher, the political backwash can make us paddlers of rowboats worse off!