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"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)
(Score: 1) by khallow on Tuesday August 22 2017, @11:53PM (1 child)
Those are excellent questions. But let's start with the obvious implied question. What is the problem with wealth inequality in the first place? As The Mighty Buzzard pointed out, Bill Gates being worth a trillion dollars or a million isn't going to matter one whit to whether we have a society that can check off the points on your list. None of those items require us to cap our wealthiest.
Second, the key reason that the wealthier get wealthier is due to the increase in the size of the labor force over the past 50 years. Developed world labor lost some of its pricing power as a result. Meanwhile capital and other investments aren't similarly affected. Thus, the wealthy got wealthier relative to those whose wealth is highly dependent on the wages that their salaries command. Thus, wealth inequality increases are the result of global labor competition - a symptom of a problem rather than a problem in its own right.
The other big contributor to wealth inequality is the grotesque regulatory environment and the shifty economic schemes cooked up and enabled by government (such as the monetary policies mentioned in the main story). Big corporations can more easily navigate such environments as well as influence the government to act in their favor. My view is that most plans and policies intended for the improvement of labor's situation instead act to strengthen the economies of scale advantages of large corporations without doing much of anything for labor.
In addition, I'll note, once again, that the scarcer party in the employment relation is the employer. There are plenty of would-be employees out there, but not so many employers. Sorry, but that makes the employer more valuable than the employee and why I favor policies that help employers over policies that help employees. In particular, I think it highly delusion to assume that employers will continue to employ people in the face of aggressive laws attacking employment or the holding of wealth. We have contrary to the assumption strong indications that employers will drop developed employees for automation and outsourcing to the developing world whenever possible. That indicates to me that employers are far more sensitive to costs of employment than the idealists would like, and that it'll be disaster when someone finally shoves in a rule that heavily disrupts employment (like for example, a universal $15 per hour minimum wage, the dissolution of corporations because "corporations aren't people", or the widespread seizure of assets of the wealthy).
I'll note here that contrary to the assertions of the parent poster, I have never advocated policies that favor the wealthiest aside from opposing schemes to destroy the wealth of the wealthiest on basic principles of fairness and sanity. I just don't take concerns /about wealth inequality seriously since that's not a major contributor to the problems that humanity faces. My view is that the concern about wealth inequality is first and foremost a propaganda move. Most places, world-wide are making even the poorest better off. But focusing on wealth inequality allows one to continue to flaunt concern for poverty even when poverty is declining over most of the world.
(Score: 1, Insightful) by Anonymous Coward on Wednesday August 23 2017, @09:44AM
I agree so far, but for me that means that we lack employers, and instead of putting our help to incumbent employers, we need to re-widen their base and their supply on the market, as competition puts them out.
Obviously, what we have there is regulatory capture - wealthy employers wouldn't want employees to get too much, but they certainly don't want to make it easy for wage slaves to cross over and become small businesses too easy, hence, laws which on their surface look like they are designed to protect employees (or customers, or others) are actually there mostly to keep employees corralled in the pen.
So, not all wealthy are employers, but wealthy employers want to make it difficult for the poor to become employers (or self-employed).
I must add that there is not one single line of division: Among wealthy employers, those wealthier are pushing for the laws which hinder and put under pressure those less wealthy. That is the origin of legislature which "protects" employees.