Comment 42798

By Capitalist (anonymous) | Posted July 06, 2010 at 13:12:29

"Incidentally, the period over which inequality has grown has coincided with lower average economic growth rates, while the postwar period of relatively small inequality coincided with very high average economic growth rates.

It may just be that extreme concentration of wealth is bad for overall economic growth."

Or the other way around?

This inequality analysis excludes many things:

1. It doesn't control for demographics. People who are middle aged and older tend to have more wealth then recent university graduates because they had time to build wealth.

2. It doesn't control for people's occupations. Someone employed as a doctor will earn more than a social worker and build more wealth over time.

3. It doesn't control for people's risk tolearance. People who are entrepreneurial and take on more risks are likely to be rewarded with greater wealth.

If you were to do an anlysis controlling for these factors you will discover that wealth is much more evenly distributed than you think. You can't just take the whole nation and state the wealth is disproportionately distributed when you don't take the above factors into account.

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