Archive for July 9th, 2011

Adding to my prior posting on rising inequality, you would probably like to raise the question what to do about it.

With reference to Kenneth Rogoff, professor of economics at Harvard University, we should first ask whether there is anything to do at all. For Project Syndicate, Rogoff recently wrote an interesting article on inequality. His main hypothesis is that in a free market system, most inequalities would naturally balance out. The reason is simply that if some people earn a very high income, companies will try to economize on their high-paid services. Moreover, inventions usually target on those products and services that are very expensive.

In his article Technology and Inequality, Kenneth Rogoff concludes:

Given the remarkable flexibility of market forces, it would be foolish, if not dangerous, to infer rising inequality in relative incomes in the coming decades by extrapolating from recent trends.

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