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Today the trend to greater equality of incomes which characterised the postwar period has been reversed. Inequality is now rising rapidly. Contrary to the rising-tide hypothesis, the rising tide has only lifted the large yachts, and many of the smaller boats have been left dashed on the rocks. This is partly because the extraordinary growth in top incomes has coincided with an economic slowdown.
The trickle-down notion— along with its theoretical justification, marginal productivity theory— needs urgent rethinking. That theory attempts both to explain inequality— why it occurs— and to justify it— why it would be beneficial for the economy as a whole. This essay looks critically at both claims. It argues in favour of alternative explanations of inequality, with particular reference to the theory of rent-seeking and to the influence of institutional and political factors, which have shaped labour markets and patterns of remuneration. And it shows that, far from being either necessary or good for economic growth, excessive inequality tends to lead to weaker economic performance. In light of this, it argues for a range of policies that would increase both equity and economic well-being.
Five minutes to midnight, marginal productivity theory "needs urgent rethinking."
[Wikipedia: Joseph Eugene Stiglitz is an American economist and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences and the John Bates Clark Medal. He is a former senior vice president and chief economist of the World Bank and is a former member and chairman of the Council of Economic Advisers. --Ed.]
(Score: 0) by Anonymous Coward on Saturday July 29 2017, @06:43PM (1 child)
Life in a truly free market it would be dictatorial. In capitalism capital is power. Power without restraint is a dictatorship, even if benevolent.
Relative equality would preclude this endgame, but I think it's clear that competition alone is insufficient to ensure this. And I think there's one very specific reason for this - a very bizarre characteristic of capitalism. In the capitalism the more successful you are, the easier it becomes to become even more successful. In most of any normal competitive venture, the higher up you go - the harder and harder it becomes to go even higher. A world class swimmer taking half a second off his laps would be a superhuman accomplishment. A beginner to intermediate swimmer taking seconds off his laps is standard. Now imagine if in basketball, for instance, professionals could somehow absorb the power of other athletes - similar to an economic acquisition. The entire field would be a complete cannibalistic shit show that would ultimately result in whoever gets to the top first growing absurdly hugely out of control. And while there are exceptions in capitalism (Google, for instance, literally did not exist 20 years ago) they are definitely the exception to the rule.
(Score: 0) by Anonymous Coward on Sunday July 30 2017, @10:31PM
It would suffice to make a rule that in cup tournaments, round winning team's coach is free to take whichever players from defeated team he wishes and keep them in his team until the end of tournament. It would make things a tad more interesting.