Rick Lowe

One often hears the refrain that the rich just keep getting richer and the poor keep getting poorer and one is left to wonder how much of that is rank politics or jealousy or simply hot air.

Unfortunately there does not seem to be any work in this area by local economists, but Professor Tyler Cowen, or the Mercatus Center and George Mason University, has recently released and excellent piece entitled "The Inequality That Matters."

Dr. Cowen begins:

"Does growing wealth and income inequality in the United States presage the downfall of the American republic? Will we evolve into a new Gilded Age plutocracy, irrevocably split between the competing interests of rich and poor? Or is growing inequality a mere bump in the road, a statistical blip along the path to greater wealth for virtually every American? Or is income inequality partially desirable, reflecting the greater productivity of society’s stars?"

"There is plenty of speculation on these possibilities, but a lot of it has been aimed at elevating one political agenda over another rather than elevating our understanding. As a result, there’s more confusion about this issue than just about any other in contemporary American political discourse. The reality is that most of the worries about income inequality are bogus, but some are probably better grounded and even more serious than even many of their heralds realize. If our economic churn is bound to throw off political sparks, whether alarums about plutocracy or something else, we owe it to ourselves to seek out an accurate picture of what is really going on. Let’s start with the subset of worries about inequality that are significantly overblown."

Read more here…

I realise the US might not be the best example or model for us, but Dr. Cowen does provide lots of food for thought.