The Great Divergence

[Jester]

I have to add that I am amused at just how fast kandrathe managed to derail the discussion I thought I was introducing on the reasons for the Great Divergence. Some things never change, but 30 minutes is fast!

The question of wealth inequality is also an important aspect of the divergence, Kandrathe's not wrong about that. It's especially pronounced if you look at the racial aspect - racial minorities, especially African-Americans, have seen much less catchup in their net wealth when compared with their incomes.

However, the key point still seems pretty rock solid to me. Top marginal tax rates took a massive nosedive, removing the great society mechanism that squashed the inequality curve from the top end. And, judging from the stagnation of working wages, the "trickling down" happened a lot less than the mere accumulation of wealth at the top, precisely as its critics said it would.

However, there are other aspects to consider. Globalization is the big one. Third world countries do not generally produce the high-end goods and services that the highest earners depend on for their income, and so the market for those things has increased, especially in the English-speaking world. Meanwhile, the things that your "proletarians" produce are now the subject of fierce competition around the world from workers whose wages are a tiny fraction of an American workers' wage, but still several times what they'd earn back on the family farm. There's not much to be done about that process, although perhaps we can take the edge off it with social programs.

-Jester