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Income inequality

The source may be liberal but the graphs here are just that – graphs. They tell a depressing story about the rise of income inequality in this country. What they do not tell us is either the cause or the solution. As Ross Douthat points out in today’s New York Times increasing the tax rate on millionaires does not (by itself) solve the problem. Why has the financial sector taken a much larger slice of the pie? Why have millionaires’ incomes risen so dramatically? Why have the incomes of working people fallen behind so dreadfully? Why are so many people out of work? Is it all the fault of excessive government regulation and uncertainty about the future? My own take on which I plan to spend a few words in coming weeks is that something deeper is taking place. We are in the midst of huge demographic change and equally huge workplace changes resulting from the Internet. Put those two together and I think one has a fairly decent explanation of what has happened and one begins to get a glimmering of the huge changes that will need to take place in our thinking about the economy to solve these problems.

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