Thursday, January 25, 2024

Does inequality make us rich?

The theory is right out of Chapters 1 and 2: incentive alignment means that those who create more wealth earn more.  

Evidence comes from the Great Depression (link):
Roughly four-fifths of the “golden age” of equality (between 1950 and 1980) owed to the Great Depression, not tax policy. This finding is hard to celebrate because it means that greater equality was achieved while everyone was getting poorer.

Evidence also comes from the decline in life-span inequality: as lifespans grow, inequality between residents of a country declines.  

No comments:

Post a Comment