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March 10, 2008

Richard Florida

Inequality

« Brain Circulation | Main | Rustbelt Rebuilding »

Inequality
Via Lane Kenworthy

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Michael Wells

This shows why the arguments about raising taxes on those making over $200,000 don't make sense. Click over to the link and scroll to the bottom. The top 5% would barely show up on this chart, topping out under $200,000. At the other end, the top .1% would be off the chart.

In today's economy making $250,000 is only upper middle class, especially in two income families. And at that level, at least for people who make most of their income by working, there hasn't been much advantage from the Bush tax breaks.

The growth curve in the Clinton years with its infamous tax hikes on the wealthy, is as steep as the later Bush years with its infamous tax cuts for the wealthy. But in the Clinton years the wealth was spreading down as well benefitting average Americans, and the Dow tripled. Since 2000 the middle class and low income have suffered and the stock market has basically stalled. The shame here isn't the growth at the top, it's the flattness at the bottom and government policies that benefit folks who don't need any help.

R. A. Student

This figure is not very surprising. Income inequality rises as new knowledge creation surges. Look at the periods shown. 1995-2000 shows a dramatic increase. That was the tech boom. It decreased with the tech bust... and rebounded after the bubble bottomed out.

Government policies will have little affect on this, supposing they don’t simply transfer the money away from the top (which would be in lock step with one of Jacobs transactions of decline).

This highlights a problem that will never go away in developed societies in the era of globalization. With new knowledge creation comes growth... with growth come rising income inequality...

The paradox with regard to growth under globalization is that the diffusion process occurs so fast and on a global scale. While vast amounts of growth no-doubt occurs, the bottom rung (within a given developed country) never truly gets a piece of the pie... as new routines diffuse to cheaper labor markets before the bottom can extract the entrepreneurial profit.

Government policies are not the fix here. You want a piece of the pie... then you must earn it by making yourself able to participate in the knowledge creation process.

In my opinion this is going to be the true test of my generation (i.e. those born 1980-1990); how to deal with increasing income inequality in the developed world without undermining the knowledge creation process (or import replacement if you will) by enacting transactions of decline.

hayden fisher

...income inequality is not necessarily a bad thing if it accompanies consumer spending and non-profit giving. Non-profit giving always gets left out of these analyses.

...and I wouldn't characterize a 2 income family making 250K as being wealthy, especially if they have children

Michael Wells

Income inequality isn't a bad thing as long as it's the rich and the not so rich. But when it's the super-rich and the destitute/homeless it's a disgrace in a fabulously wealthy nation.

Being in the non-profit giving business I can tell you that it's a drop in the bucket compared to the need out there.

As above, I agree on the 2 income family.

hayden fisher

I agree with those comments, we should be doing more, especially in the area of ensuring education and opportunity. And to the many young people in America growing up without true parental influence and care, in particular, we owe them a fighting chance at life.

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