The Great Divergence

[ShadowHM]

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

Ahem.

Decent points, Jester. However, you missed my point. The last essay in the series wasn't even published when I gave the initial link. Since reading and digesting the information in the series is something I have not yet managed, it was a bit over the top to see a post purporting to respond to the issues in less than 30 minutes.

Here is the summary offered by the author of the series in essay #9 of the 10 (for those who read here only and don't want to read the full essays):

We have now reviewed all possible causes of the Great Divergence—all, at least, that have thus far attracted most experts' attention. What are their relative contributions? Here is a back-of-the-envelope calculation, an admittedly crude composite of my discussions with and reading of the various economists and political scientists cited thus far:
Race and gender are responsible for none of it, and single parenthood is responsible for virtually none of it.
Immigration is responsible for 5 percent.
The imagined uniqueness of computers as a transformative technology is responsible for none of it.
Tax policy is responsible for 5 percent.
The decline of labor is responsible for 20 percent.
Trade is responsible for 10 percent.
Wall Street and corporate boards' pampering of the Stinking Rich is responsible for 30 percent.
Various failures in our education system are responsible for 30 percent.