- Hardcover: 328 pages
- Publisher: The New Press (January 6, 2006)
- Language: English
- ISBN-10: 1565849957
- ISBN-13: 978-1565849952
- Product Dimensions: 5.8 x 1.5 x 8 inches
- Shipping Weight: 15.2 ounces (View shipping rates and policies)
- Average Customer Review: 10 customer reviews
- Amazon Best Sellers Rank: #3,090,509 in Books (See Top 100 in Books)
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Inequality Matters: The Growing Economic Divide In America And Its Poisonous Consequences Hardcover – January 6, 2006
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From Publishers Weekly
With the exception of Bill Moyers's fiery foreword, most of the essays in this collection examine the growing divide between the rich and the poor with irrefutable calm. "Today the United States is by far the most unequal rich democracy in the world," Christopher Jencks observes in his essay, "The Fork in the Road," which traces wealth disparity to constitutional design. "Gaps in [college] enrollment by class and race, after declining in the 1960s and 1970s, are once again as wide as they were thirty years ago, and getting wider," remarks Tamara Draut; at the same time, she points out, the wage disparity between college-degree-haves and have-nots grew starker. Meanwhile, Robert H. Frank analyzes how "spending cascades"— in which high-end wage earners "initiate a process that leads to increased expenditures... even among those whose incomes have not risen"—may have aggravated middle class bankruptcy. Though less vividly written than the New York Times' recently published Class Matters, this collection presents a similarly troubling vision of America's economic future. (Dec.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
The middle class and working poor are told that what's happening to them is the consequence of Adam Smith's "Invisible Hand." This is a lie.
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A conference was held in June 2004 to explore the reasons why it ended. This book is the result. It is a compilation of essays by the volume's editors and various others, including well-known figures like Barbara Ehrenreich and David Cay Johnston. The essays range from anecdotally descriptive, as with Ehrenreich, to compilations of statistics, as in the lead-off essay "What the Numbers Tell Us" by Heather Boushey and Christian E. Weller.
I doubt that anyone has ever had trouble reading Barbara Ehrenreich's work. That is certainly the case here with "Earth to Wal-Mars." But inequality is a complicated matter and requires complicated treatment; some of the essays are hard going, dense with numbers and reasoning. Nevertheless, this book addresses an important problem — arguably even more important now, ten years after it was published. There are more recent books on the subject, of course, and many are excellent. The essays in this book hold up well and make a worthy contribution.
The contributors to this book make clear how it is happening, and what should be done to address the problem.
I recommend it highly.
Issue #1: Worldwide inequality
Worldwide economic inequality is on the decline. The major reason for it is the shift of China and India towards capitalism. This is the most promising and powerful change for the lives of the poor since the Industrial Revolution. Now, development takes more than just free markets (see The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good), but free markets are an important component.
Issue #2: Wages are not stagnant
Progressives are correct to favor median income over average income because average income can be skewed by a few really rich people. But median wages can be misleading too. The major factors which pull down median income are (1) increased immigration because most new immigrants are below the median. They also pull down the wages for unskilled workers although the effect is slight. (2) The decline of the married two-parent family. It has been concentrated among the poor, which increases the number of low income households and pulls down the median. (3) A focus on weekly wages because married women have joined the workforce and married women are disproportionately likely to work part-time. (4) The decline of unions. This has not happened because of sectoral shifts to a nonunion service economy. The decline of unions has happened within each market as unionized firms lose out to nonunion firms. The only exceptions are public sector unions such as teachers which are prevented from competition. Construction unions also do well because many states require the government to use union firms. (5) Demographic shifts in the aging of the population which results in above median workers retiring and moving below the median.
These points are documented with references in the excellent article _Nostalgianomics_ by Brink Lindsey. It is available for free with a quick google. Also see Economic Facts and Fallacies by Thomas Sowell and Income and Wealth (Greenwood Guides to Business and Economics)
Issue #3: A Free Market Backlash?
Bill Moyers blames a free market backlash for the growing corruption in government. But the facts don't fit his thesis. Ronald Reagan, Newt Gingrich, and both Bushes have talked a good game about free markets but the government has consistently grown under their watch, albiet at a slower rate. government spending as a percentage of GDP was 27.5% in 1970 and 29.5% in 2002. That's despite a 4% of GDP drop in defense spending. Milton Friedman used the size of the Federal Register as a proxy for the size of government. It has grown from 20,036 pages in 1970 to 78,851 pages in 2004. Inflation adjusted federal spending on regulatory agencies has increased by a whopping factor of six since the 1970's. If the government is more corrupt today than it was in the past then blame big government.
I would recommend an alternative approach that is heavily influence by the former Marxist economist Herb Gintis who has since become nonpartisan. Read Moral Markets: The Critical Role of Values in the Economy,Moral Sentiments and Material Interests: The Foundations of Cooperation in Economic Life (Economic Learning and Social Evolution), and The Bounds of Reason: Game Theory and the Unification of the Behavioral Sciences. The latter is a pretty mathematical book about game theory and choice theory, but it is worth getting just to reach about the problem in game theory of the hawks and the doves and the origin of property rights. That part is not mathematical.