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posted by FatPhil on Tuesday August 22 2017, @01:23PM   Printer-friendly
from the Philosophers-Stone dept.

"Although today high levels of inequality in the United States remain a pressing concern for a large swath of the population, monetary policy and credit expansion are rarely mentioned as a likely source of rising wealth and income inequality. [...]

The rise in income inequality over the past 30 years has to a significant extent been the product of monetary policies fueling a series of asset price bubbles. Whenever the market booms, the share of income going to those at the very top increases.[...]

[F]inancial institutions benefit disproportionately from money creation, since they can purchase more goods, services, and assets for still relatively low prices. This conclusion is backed by numerous empirical illustrations. For instance, the financial sector contributed massively to the growth of billionaire's wealth"

Source: https://mises.org/library/how-central-banking-increased-inequality

I'll leave my comments as comments, but note that The Mises Institute is proudly, one might say almost by definition, Austrian School. Both the Institute and the School have had their fair share of criticism. Which of course doesn't mean that individual author is wrong on this particular matter. -- Ed.(FP)


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  • (Score: 2) by Non Sequor on Tuesday August 22 2017, @06:57PM

    by Non Sequor (1005) on Tuesday August 22 2017, @06:57PM (#557638) Journal

    I think it's something of a Rorschach test. I think economists' read on it is particularly poor. Economists want to believe compensates related to quantity and quality of output.

    As a mathematician I'll note that the examples of "cost disease" are jobs without a linear notion of quality or quantity. Assigning compensation to them has to project them onto a linear basis and that requires making arbitrary decisions. People don't actually make conscious decisions on how much to compensate orchestra musicians or artists, but at least some subset of these groups benefits from arbitrary comparisons against luxury goods. The budget for new paintings and donations to the orchestra is weighed against what the same money could purchase in terms of high end eel estate or other goods with materials costs or other costs that experience inflation. To some extent the price allocated in this manner has to be sufficient to convince musicians and artists not to pursue alternate careers, but it's not clear what the sensitivity is and what role money plays in these decisions.

    I see no evidence that you can pick an "optimal" outcome in cultural goods and services, regardless of how you define your optimum. Implicitly there are arbitrary decisions to make about how much of these things should be produced and how dearly their makers should be compensated.

    These same kinds of arguments may also apply to jobs like teachers and managers. The value added to society is difficult to measure and different assumptions, methods, and priorities generate different answers. That's why I say it's a Rorschach test.

    --
    Write your congressman. Tell him he sucks.
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