You’ll never believe who presented a good explanation of why the top 1 percent’s income has risen faster than that of other groups: Bill Moyers.
Moyers cited one Dieter Braeuninger, who points out that rapid technological change is resulting in a shift to more technology-intensive production methods, i.e. automation, and thus higher demand – and higher pay – for for highly-skilled workers who are able to operate such technology. Those smart enough to invest in such technology enjoy a higher payoff as well. Braeuninger adds, “The supply of basic labor has increased enormously… As long as less-skilled workers cannot shift to more productive tasks, increasing income inequality remains a threat.”
In other words, it’s differences in education levels, and an oversupply of low-skilled labor, that explain inequality, not sinister plots by the rich.
And even then, in the U.S. the lower-income groups’ incomes have risen over the past few decades – just not as fast as the higher-income groups. If people are all bent out of shape over the poor getting richer while the rich get richer faster, then your problem is an oversupply of envy. The solution isn’t taxation, but education – not only educating people to acquire the skills of the modern technological world, but also educating the enviers on why they should let go of such a destructive and useless emotion.
Moreover, the rich have been getting richer at least since the dawn of agriculture, some 10,000 years ago. Since then, and especially in the past few hundred years, humans have been continuously adopting more technology-intensive methods requiring higher skill levels. We’ve gone from hunter-gatherer societies where people’s incomes were more equal than today – and equally poverty-stricken – to a highly complex economy requiring an immense differentiation of tasks and skill levels (and thus pay levels).
That said, Moyers also turned to a usual suspect, Robert Reich, who preposterously implied that the rich get richer at the expense of everyone else – by taking away the money of the nonrich. Reich writes, “Now, when they’re taking home that much, the middle class doesn’t have enough purchasing power to keep the economy growing.” Of course he doesn’t explain how such a process would work. The absence of such explanations is a common occurrence among the left. It’s one of the things the prompted me to abandon them long ago.