Finance Is to Blame for Rise in Inequality
Economists, policy wonks, and politicians of both persuasions agree that middle class income stagnation, and the inequality that it causes, is the principal economic challenge for the nation. U.S. inequality has been on the rise for more than 30 years, and the Organization for Economic Cooperation and Development estimates that it has reduced U.S. economic growth more than even the financial crash. This cost is still accruing.
There are vast differences in views of inequality’s causes. At one end of the spectrum, conservatives believe that the “makers” create a “rising tide” that lifts all boats. Mainstream progressives take a middle view, believing that individuals fail to take advantage of capitalism’s opportunities because they are insufficiently educated or suffer from debilitating disadvantages.
There is one major problem with these beliefs: They are both inconsistent with the facts.