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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: 1, Insightful) by Anonymous Coward on Saturday July 29 2017, @09:53PM (1 child)
So is trickle-down. And shock doctrine. And Keynesianism. And all the others actually, because if there is one working great somewhere on this planet, tell me, I'd like to move over there.
Most of it is para-psychological voodoo using unrealistic hypothesis and scenario, one of them being that Humans are perfectly predictable and rational creatures. So if by "solved problem" you mean "we should just burn the whole thing and restart from scratch", yeah, maybe.
Uh? Republic, democracy and socialism are three independent axes. One cannot "decay" (whatever that was suppose to mean, but I guess it was a judgment of value on your behalf) into another.
And yes, Hawking should stick to astrophysics.
(Score: 2) by jmorris on Saturday July 29 2017, @10:48PM
No, that is the sperg libertarians. A society made only them might actually approximate "perfectly rational" enough to work. But humans aren't like that and Mises doesn't make the mistake of believing they are. Go read the book, economics IS a solved problem. Our politics is what we still don't know how to do. All of the proposed political systems have obvious flaws and when put into practice they fail exactly like they can be predicted to do. So we keep rotating through the same cycles.
Anonymous Conservative is probably on the right track defining the base problem but how we use that knowledge to build a better political system to resist the cycle is still an open problem.