Attention Conservation Notice: 2700 words mostly by Ashok Rao reviewing--and dismissing--the arguments against worrying that rising inequality has been a major problem over the past generation.
The near-consensus view over here at Equitable Growth and at the Equitablog is that U.S. economic growth over the past generation has been very disappointing. Too-much of our economic growth has been wasted producing the wrong stuff and delivering it to the wrong people, and we have failed to properly and productively invest at the rate we could in people, machines and buildings, ideas and organizations, and institutions. The hunch around here is that these two are tightly coupled: that the rapid rise in inequality as a result of the derangement of incentives has both decoupled the links between higher measured real GDP and human economic welfare and material well-being, and has also slowed the growth of our potential to produce real GDP.
But we could be wrong. And many argue that we are. What do we think of their arguments at their best?
Overwhelmed with work, I asked the smart, thoughtful, and enthusiastic Ashok Rao--along with Evan Soltas one of the leading lights in the next generation of webloggers--to take a look at the arguments of Scott Winship (formerly of Brookings and now of the Manhattan Institute) and others. He was not persuaded: cherry-picking and tendentious shifting of the burden of proof was his assessment.
So let me turn the microphone over to Ashok Rao: